Rental price increases are limited to a maximum of 2% and are disconnected from the CPI.

How will the temporary limit on rental price increases work?

Since the beginning of the year, the CPI, the index by which inflation is measured and by which most rental contracts are governed, has seen an unprecedented rise. Last month, it stood at 7.6% year-on-year, and experts predict that this month, the CPI could reach 8.6%.

With these figures, a tenant with a rent of 1,000 euros which renews its rent and increases its price in line with the CPI could see its monthly rent increased by 76 euros, representing an annual rental price increase of 912 euros.

With this in mind, and anticipating that this rise will not stop in the coming months due to the war, the Government will today approve a measure to limit this increase. With this limit, rents cannot increase by more than 2%. Rent increases will therefore be dissociated from the CPI and will be governed (for at least three months) by this new index. with a maximum increase of 2%.

Thus, the same tenant with a rent of 1,000 euros will see his rent increase by 20 euros, which will mean an annual increase of 240 euros, i.e. 672 euros less per year than if updated with the current CPI .

This measure will continue until June 30, 2022. In other words, from April 1 and for the following 3 months, tenants who see their rent revised will not have to face a sharp increase in their rents.

Key features of the new rent ceiling

• Effective April 1, 2022
• Ends June 30, 2022
• Limit rental price increases to a maximum of 2%.
• Affects all tenants who must update their rent between April 1 and June 30
• It applies to both large forks and private households.

“The government must protect both tenants and landlords from price rises by establishing anti-crisis measures for both.”

Fotocasa considers that intervening in a market as sensitive as the rental market with restrictive measures may have the opposite effect to that intended.

At Fotocasa, we see this as an extraordinary temporary measure to deal with a situation unprecedented in the history of our market.
At the moment, the temporary dissociation of CPI lease renewals will provide a clear respite for tenants Since the second half of 2021, these tenants have begun to see how to cope with their rent payments.
What’s more, against a backdrop of galloping inflation, energy and gas bills have also risen, and these are supplies that tenants have also had to contend with.

In cities like Madrid or Barcelona, where monthly rents are around €1,200/€1,300, the link with the CPI would mean an increase of around 85 euros a month, which would mean paying seniors almost a month’s rent at the end of the year. .
Un aspect suffocant pour ceux dont les salaires n’ont pas augmenté au même rythme.

However, although inflation affects the tenant more, the tenant will also be affected not only because he will no longer receive an amount whose variation was stipulated in the contract while the cost of living continues to rise, but also because many of the direct expenses of the house that the landlord has to face are also likely to increase.

Consequently, the administration should add additional measures to ensure that this CPI limit does not fall on the shoulders of homeowners. but also that compensation formulas are applied so that they are not affected.

In such cases, both parties to the contract deserve exceptional measures. Private landlords should not be held responsible for price rises, as the global economic and business situation is not in their control.
On the contrary, it is the tenant who decides whether or not to place his or her property on the rental market, and whether or not to do so in a discouraging environment of constantly changing regulations, it is likely that he will prefer the sales market and will be able to withdraw his unit from the rental market, which would further reduce supply .

Insecurity due to the limitation of rental price increases could reduce supply by 20%?

In this context, it’s worth noting that the latest CPI interannual rate data corresponded to 7.6%, which means that the decision announced by Sánchez would reduce it by five points. Iñaki Unsain, president of the Spanish Personal Shopper Real Estate Association (AEPSI), regrets that the Sánchez government is opting for interventionism and leaving aside the law of supply and demand.
“If it’s a law that’s only valid until June, it’s more of a fantasy law than something that will have implications for the real estate market,” explains the president.

Insecurity in the face of price controls

Government intervention on contracts already signed creates legal uncertainty about the value of the house as an investment. Montse Moreno, vice-president of AEPSI, explains “it seems that the only people who are not affected by the crisis, according to the government, are property owners, although they don’t take into account the fact that most of them are small landlords and that rental income is a way of supplementing their income.

In this sense, the possible limitation of rental prices due to the Housing Act has already generated instability among landlords, increasing the purchase of non-payment insurance by up to 15%. .
Unsain explique que “ce type de décision amènera les propriétaires à décider de retirer leur logement du marché et l’offre pourrait être réduite de 20%”.