Nearly one year after the entry into force of the 2% limitation in the annual renewal of housing lease contracts government imposed, we analyze how the update of rents in the capitals is after knowing the final inflation data in January (5.9%). On a national average, the increase will be 170 euros a year, being more than 200 euros in Barcelona, San Sebastián or Madrid, and barely 85 euros in Teruel or Ciudad Real. With the latest CPI rate, rents would have registered a rise of almost 500 euros more per year.
This limit of 2% to the annual increase in rents in those contracts that stipulate it and that they have to negotiate its renewal celebrates 11 months of impact on the rental market in Spain since its entry into force at the end of March 2022.
The measure, which was promised to be temporary, will be extended for at least 21 months after the last expansion of the package of measures to alleviate the economic consequences of the war in Ukraine.
Meanwhile, negotiations are underway between the coalition government and its investiture partners on final text of the Housing Law that has been stranded in the Congress of Deputies for more than a year, before the avalanche of amendments. One of the points of discussion is whether to introduce a limit to the increase in rents of 3% in general, and not only for those areas that are declared as a stressed area for rent, one of the star measures of the State Law. A way to avoid that the CCAAs or the competent town halls finally decide not to ask for it, even if it meets the requirements, as the regional governments of the PP have already announced.
For now, the housing rental contracts that correspond to their annual update during this 2023 will see their increase limited to 2%, linked to the Competitiveness Guarantee Index (IGC), and not to the Consumer Price Index (IPC). in general, as it appears in the Urban Leasing Law (LAU), which after knowing the final data for January, closed at a rate of 5.9%.
Therefore, the renewal of the rental contract of a two-bedroom apartment will have an updated rent of about 715 euros per month on average at the national level, after the limited increase of 2%, which means just 15 euros more. from next month compared to the previous income, and which is equivalent to an increase of almost 170 euros per year, according to the study carried out by idealista, the real estate marketplace in southern Europe. The exact data can be seen in the table below.
In the analysis by province capitals, this limited renewal of rental income supposes, despite everything, a different evolution of prices. The leases that have to update their contract during February in Barcelona and San Sebastian will now have an average income of 949 euros/month, a annual rent increase of 223 eurosor 19 euros more per month.
Behind, is Madrid, with a new updated income of 918 euros per month, which represents an increase of 216 euros per year, that is, 18 euros each month. Bilbao and Palma are also among the capitals with the highest increase in rents, within the limit of 2%, where they will rise 192 euros more per year, after leaving a monthly rent of 816 euros.
Below increases of 100 euros per year in the renewed rental price, the cities of Teruel and Ciudad Real reappear, with just 84 euros per year, and leave an updated rent of 357 euros/month, in both cases, together with Ourense and Lugo, with an annual update of 96 euros, after leaving a renewed lease of 408 euros/month, respectively.
The renewal of rents linked to the CPI would have led to increases of almost 500 euros a year
Since the entry into force of the cap imposed for the renewal of lease contracts, we compare what it would have meant to continue linking rents to the CPI, and the difference it is making for both tenants and owners.
The contract renewal in February with the current inflation rate of 5.9% It would have meant an average increase of almost 500 euros per year at the national level, and would have left a new rental fee of more than 740 euros per month on average in Spain, for a typical two-bedroom home. The difference between the application of one index and another is close to 330 euros per year.
Among the provincial capitals, the renewal of rents in Barcelona and San Sebastian This February (with January inflation) would have seen an annual increase of almost 660 euros on average, in both cases, compared to 223 euros/year with the current limit of 2%, with a new updated rental income that would have reached the 985 euros/month. The difference between one rate and another is 435 euro per year.
In Madrid, the rent update referenced to the CPI of 5.9% would have left almost 640 euros per year more in rent, with an average renewed rental price of more than 950 euros/month. The difference is something more than 420 euros with the current limit of 2%.
Big capitals like Palma, Bilbao or Valencia They would also have led to increases in rents with the CPI above the national average (500 euros per year), with updated rents ranging from 790 euros/month to 845 euros/month. would have meant annually more than 350 euro above the current regulations for updating housing rental contracts, limited to 2%.