As of January 1, 2024, the extraordinary limit on the annual rent update for housing rental contracts governed by the Urban Leases Law (LAU) is extended. Since March 2022, the variation of the Competitiveness Guarantee Index (IGC), with a maximum cap of 2%, has been used instead of the Consumer Price Index (CPI). In the annual rent renewal, landlords and tenants must agree on any increase, and in the absence of agreement, the increase cannot exceed 3%.
The amendment, established by the sixth final provision of the Housing Law, affects contracts in force between January 1 and December 31, 2024. For large landlords, the increase is subject to agreement between the parties, with a limit of 3%, and in the absence of agreement, the same limit applies. For landlords who are not large landlords, the increase is subject to agreement between the parties or, failing that, to a limit of 3%.
The 3% capped increase from January 2024 has faced criticism, as some argue it does not reflect market reality. The average rent for two-bedroom homes in Spain stands at 775 euros per month, and the maximum increase would represent approximately 23 euros more per month.
It has been noted that the cap on price increases is not the only cause of the reduction in rental supply. The fear of non-payment and property occupation also plays an important role. To address these issues, solutions such as rent default insurance for landlords and the consultation of delinquency databases when selecting tenants are suggested.