Pedro Sánchez’s government made the announcement on Tuesday after receiving the support of Basque nationalist party EH Bildu, a necessary step for Spain’s General Budgets for 2023 to be approved.
Spain’s ruling Socialists first introduced the rent increase cap in March 2022, which was meant to be a temporary measure to protect the 30 percent of people in Spain who rent from spiralling inflation.
Prior to that, many landlords had the right to increase the price of the rent on a yearly basis based on the Consumer Price Index (CPI), the figure used to measure inflation.
The CPI rate effectively acted as an upper limit on how much rents could be increased if agreed to or mentioned on the contract.
So if inflation was at 9 percent and it was time to renew a rental agreement for another, landlords could in many cases increase the rent by 9 percent.
This clause in Spain’s Urban Leases Law is currently not applicable given the extension of the 2 percent increase limit.
According to ministerial figures, 3.5 million rental agreements in Spain are currently subject to potential increases.
The measure, which was due to expire this December, will be in place until December 31st 2023.