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RENTING

How much can my landlord legally increase my rent by in Spain?

What’s the maximum amount Spanish landlords can increase the monthly rent of tenants by? Is there any legislation in Spain to protect renters from spiralling inflation? And when is it not legal for landlords to put up the rent?

how much can landlord increasy my rent by in spain
Before the Spanish government put the cap in place, the average increase in rents in Spain was €53 more per month when tied to the 7.6 percent CPI rate. (Photo by Cristina Quicler / AFP)

In March 2022, the Spanish government introduced what was intended to be a short-term cap on increasing rent prices.

It was one tool in an arsenal of measures attempting to soften the blow of record inflation and skyrocketing prices affecting Spaniards, including a €16-billion subsidies package and a 20 cent per litre discount on fuel.

In Spain, when renewing rental contracts landlords have the right to increase the price of the rent according to the Consumer Price Index (CPI), the figured used to measure inflation.

The CPI rate effectively acts as an upper limit on how much monthly rents can be increased by for housing rental contract renewals, according to Spain’s current Urban Leases Law.

READ MORE: Rising inflation in Spain: Six cost-cutting ways to fight it

But with inflation at 7 percent in March (in July it increased to a staggering 10.8 percent, an almost 40 year high), the Spanish government were keen to stop landlords from trying to hike rents in line with the unnaturally high inflation rate.

Before the government put the cap in place, the average increase in rents in Spain was €53 more per month when tied to the 7.6 percent CPI rate.

That would add €636 more to rent bills over a year, an amount many in Spain cannot afford to pay.

How much can my landlord in Spain put up the rent?

To try and stop landlords putting up rents by 8, 9 or 10 percent (in line with inflation) the government introduced Royal Decree-Law 6/2022, a temporary limit on a housing rental contract clause that allows landlords to increase the amounts of rents to only 2 percent more than the price previously outlined in the contract.

The cap was initially intended to last until the summer, but with the economic outlook worsening since March, the Spanish government unsurprisingly decided to extend the measure until the end of the year.

The 2 percent figure is tied to the ‘Competitiveness Guarantee Index’ (IGC). The IGC is another economic measure published by Spain’s national statistic body, the INE, and its regulations have upper and lower limits, meaning that the index can never be less than 0 percent or more than 2 percent.

That means, even when the IGC exceeds 2 percent, as it has done recently, 2 percent is taken as a reference value as was done with relation to the rent cap.

READ MORE: How will rising interest rates affect my life in Spain?

Which rentals are affected?

The 2 percent limit includes all rental contracts signed under the Urban Leases Law 29/1994, effectively applying to all rental contracts signed from January 1st, 1995 until December 31st 2022.

It remains to be seen if the Spanish government will further extent the cap into 2023.

READ MORE: Renting in Spain: Can my landlord put up my rent due to rising inflation?

Is it always legal for a landlord in Spain to increase the rent?

Yes, but only in certain circumstances. Putting aside the economic turbulence, Spain’s Urban Leasing Law allows the monthly rent paid by a tenant to be updated in accordance with the IPC.

However, this can only be done if previously agreed between tenant and landlord and it must be clearly stated in the contract that the rent is subject to IPC changes.

In such cases, the lessor must wait for the first year of tenancy to have been completed for the IPC rise to be applied, and from then on only once a year and based on the most updated IPC amount. 

So if the tenancy contract was signed in February 2021 for example, the prearranged IPC update in the following years should also be in February.

Landlords can therefore not increase the rent several times a year or every month based on varying IPC rates.

But skyrocketing inflation has changed all that, for now. Due to the government decree, the maximum amount any landlord can increase the rent on a private rental is capped at 2 percent until the end of the 2022.

Member comments

  1. Can somebody please point out the section of Royal Decree-Law 6/2022 that shows “a temporary limit on a housing rental contract clause that allows landlords to increase the amounts of rents to only 2 percent more than the price previously outlined in the contract.”
    I appreciate your help!
    Ken

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For members

PROPERTY

Why Spain is unlikely to ever ban foreigners from buying property

After several regions around Spain have attempted to bring in limits on property purchases by foreigners, members of Spain's government coalition have even started floating the idea of an outright ban at a national level.

Why Spain is unlikely to ever ban foreigners from buying property

In recent years several regions around Spain have attempted to put limits on foreigners buying homes and clamped down on tourist rentals. These are mainly in areas traditionally popular with foreigners, and many have become places with highly inflationary property markets.

In 2022 Canary nationalist political party Nueva Canarias demanded the regional government address the large number of property purchases by non-residents in the archipelago, and even suggested a limit on the number of properties that can be bought by foreigners altogether in the popular holiday islands.

READ ALSO: Will Spain’s Canary Islands limit sale of properties to foreigners?

Property prices have surged across Spain in recent years, sparked in part by an influx of post-pandemic purchases by foreigners, as well as tourist accommodation geared towards wealthy remote workers and digital nomads pushing up rental prices and pricing out locals. Increasingly, landlords will buy properties with the aim of converting them into Airbnbs, thus removing them from the pool of available (and affordable) housing stock for locals.

This comes after Spain’s other archipelago, the Balearic Islands, also started this same debate in November 2022, with the regional Senate agreeing to discuss solutions.

In the two decades from 2000-2020, the islands’ population grew by 50 percent – rising from 823,000 to 1,223,000 inhabitants. Around a third (32.67 percent) of property purchases in the Balearics are made by foreigners, and of those 57.4 percent are residents, while the remaining 42.6 percent are non-residents.

National ban?

But it’s not just a regional issue. In 2024, the debate rumbles on in parts of Spain particularly affected by foreign home owners and members of the Spanish government are even proposing similar measures at a national level. Though, it should be said, no policy has been decided on yet, and any move such as a ban (in whatever form, on whatever type of property) or even a limit would likely face fierce opposition from the main opposition parties, notably the centre-right Partido Popular (PP).

Sumar, the far-left junior coalition partner in the Spanish government, has even gone as far as proposing a three year ban on the purchase of housing by investment funds and non-residents in Spain.

This was recently outlined in a (for now) non-legislative proposal that was presented to the Spanish Congress’ Housing Commission. It was roundly rejected with the vote of, among others, its coalition partner in government, the Socialists (PSOE). That’s not to say the PSOE is totally against the idea, however.

Socialist Minister for Housing Isabel María Pérez said of the plans: “We agree on the philosophy of the proposal, but with nuances,” she said. “We have submitted an amendment but we think it will not be accepted, so we will not be able to support this bill,” she added.

So, from that we can take that the junior partner in the Spanish government wants to ban non-residents and investment funds from buying property in Spain, and the senior partner (Prime Minister Pedro Sánchez’s party, no less) supports the principle but not the practicalities.

READ ALSO: Spain’s new housing minister vows to protect second homeowners

The argument against

Clearly, non-resident foreigners buying up property in Spain, particularly in its space starved archipelagos, contributes to price inflation, saturates the market, and plays a role in pricing locals out of their own neighbourhoods.

However, it’s not that simple. Clearly, there is a difference between a non-resident foreigner buying a holiday home (perhaps to rent out as tourist accommodation for half the year) and a resident foreigner buying property to live in.

READ ALSO: How important are foreign second homeowners to Spain?

This difference has, for now, been reflected in proposed limits at both the regional and national level, rather than outright bans.

However, foreign home owners in Spain also make a huge contribution to the Spanish economy. In 2022 foreigners with a second home in Spain contributed €6.35 billion to Spanish GDP and generated more than 105,000 jobs in the tourism sector, according to the study “The economic impact of residential tourism in Spain” done for the Spanish Association of Developers and Builders (APCE) by PricewaterhouseCoopers (PwC).

The financial contribution made by these second-home owners in Spain is clearly significant. In fact, experts point out that the money brought into the Spanish coffers by foreign homeowners even outstrips some major industries.

“The contribution of residential tourism to GDP is triple that of the textile industry, double that of the timber industry and the same as the manufacture of pharmaceutical products in Spain,” Anna Merino, director of the Economics team at PwC, said when presenting the study. Every euro spent by ‘residential tourists’ adds €2.34 to Spanish GDP. On top of this direct contribution to the Spanish economy, the surrounding economic activity associated with the spending generated 105,600 full-time jobs in 2022.

So, there’s clearly an economic argument against banning foreign property purchases completely.

In the case of the Balearic Islands specifically, the proposals have met some opposition. The Balearics, which generates 35 percent of its GDP from tourism, according to figures from Caixa Bank, has long been a holiday or second-home hub for wealthy foreigners.

On this point, right-wing Popular Party member Sebastià Sagreras suggested in the regional parliament back in 2022 that conflating the foreign-buyer property market with local shortages is unhelpful, adding that the properties bought by foreigners, often worth more than a million euros, “do not compete” with those that cost €200,000 or €250,000 and are largely bought or rented by national residents.

Is it even legally possible?

Denmark, Malta and the Aland Islands in Finland all have restrictions on how non-resident foreigners can buy properties in their territories. However, they introduced these before entering the EU and these limits were factored in and accepted by Brussels. For Spain to do this, it would be much more difficult.

For local authorities in both the Balearic and the Canary Islands it could prove difficult to go against the EU’s legal principles of the free movement of people and capital, experts say.

This means that other potential solutions may be needed. Though there doesn’t seem to be a national level ban on foreigners from buying properties in Spain anytime soon, several regions have been attempting to do it for a couple of years, at least for non-residents, and even the national government is beginning to try and do something about it.

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