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.

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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.

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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.

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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.