What is the extension of the 2% maximum rent increase?

Last December 28, 2022, the Government announced a new extension of the so-called “anti-crisis measures”. The main objective of this regulation is to alleviate the economic effects caused by the armed conflict between Russia and Ukraine.

These measures include the extension of the cap on rent increases to a maximum of 2% throughout 2023, as well as a freeze on lease prices until June.

Extension of the 2% maximum rent increase

All those with rental properties will have very limited possibilities to increase rents to their tenants.

The fact is that rents will continue to be unlinked to the Consumer Price Index (CPI). What does this extension mean? That, although most property leases in Spain are updated based on the CPI, for the next twelve months rents will be linked to the Competitiveness Guarantee Index (IGC). This value is published each month by the National Institute of Statistics and is capped at 2%.

What can you do if you are a landlord?

If you have rental housing, you have the option to negotiate with the tenant to increase the rent. However, always taking into account the following aspects:

• If the lessor is a large tenant – an individual or legal entity owning ten or more urban or residential properties – the rent increase will be agreed upon by both parties and may in no case exceed the 2% limit.

• If the lessor is not a large tenant, the rent increase may exceed 2%, provided that both parties agree. If no agreement is reached, the 2% maximum increase limit will never be exceeded.

How this rent extension affects you if you are a renter

The objective of these measures is that tenants who have a review of their leases will not have to face a large increase in their lease payments.

Thus, if until now they had a monthly rental fee of 1,000 euros, this will be increased by only 20 euros. This will mean an annual increase of 240 euros; that is, 756 euros less per year than if the update were based on the annual CPI.

Extraordinary 6-month extension for contracts expiring before June 30

Rental contracts for regular housing that come to an end between December 28, 2022 and June 30, 2023, may be extended for six months from the date of termination. Provided that this is requested by the tenant and maintaining all its conditions.

There are exceptions. In case the lessor needs the house for his own use or for relatives of first degree of consanguinity, adoption or for his spouse, this extension could not be applied.

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