The rent increase limit will be automatic for large landlords and negotiable for small landlords

The government described in detail this Tuesday a “historic measure” to mitigate the impact of the current inflation peak on “people renting their own homes”: limit rent reassessment to 3% over three months. The measure, which is included in the Royal Decree Law approved by the Council of Ministers, will apply to contracts that are renewed from the date of publication of the Rule in the Official Gazette (BOE) until 30 June.

Technically, the limit will have two speeds, as explained by the Second Vice President and Minister of Labor and Social Economy, Yolanda Diaz: it will be automatically linked to the General Competitiveness Index (IGC) in the case of large owners and will have to. Re-negotiate with tenants in case of small landlords. In other words, they may agree to discuss more than this 2%. Always, with a 2% limit, if there is no agreement, it is the same as the IGC itself.

This emergency measure means that the large owner is any natural or legal person who owns more than ten urban properties for residential purposes or owns more than 1,500 m2 of living space, with the exception of garages and storerooms in any case. .

The only reference index will be at IGC by June 30th

The annual renewal of most housing rental contracts is currently linked to the overall CPI, which in turn is the maximum limit by which rent can be revised upwards, although this is not the only indicator by which the law allows them to be indexed. Leases can, in fact, never be renewed until they are in effect unless otherwise stated.

When this is projected, it is done against the general CPI, or, in some cases, at least, according to various sources in the real estate sector, against the CPI for rental housing, which has hardly tightened in recent months. Or with respect to IGC, which is also calculated by INE if an annual update is collected but not a reference.

This latest index will be the only indication since the publication of the Royal Decree Law in response to the impact of the war on the BOE by 30 June.

In Spain, for example, the average rent, which is around 700 euros, will increase by only 14 euros in the coming months (2%) and not by 53.2 euros, which will increase by 7.6% according to the February CPI.

And that is that this measure will free the tenants, who will renew the rent in the next three months, although the revised rents since October have already increased by more than 5%, as well as increased basic supplies: electricity, gas …

Only until June 30?

The 2% rent increase limit should not be a time-limited size. So think the union of tenants and loggers, who support that this measure should be permanent and included in the new housing law, which is already in the parliamentary process.

This Thursday, the unions will present in the House of Representatives the changes they are proposing to the text, including this 2% limit related to the Competitiveness Guarantee Index (IGC).

The restriction they have already offered in previous cases. For example, a meeting with Minister Raquel Sanchez at the Ministry of Transport, Mobility and Urban Agenda a few weeks ago; And Housing Secretary, David Lucas.

This use of IGC will be an alternative to the price index provided by law and which only plans to stop growth in areas with high prices and only for large owners.