Capping the rental price of housing at 2% in 2023.

Jan 13, 2023 | Current affairs, Featured, Post, Thursday Daily Bulletin, Tradition

Landlords will be allowed to raise the rent to their tenants by a maximum of 2% during 2023. Rental contracts that end before 30 June 2023 may be extended for 6 months.

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Capping the rental price of housing

On 27 December 2022, the Council of Ministers approved the extension of the 2% limit on rent rises, which was agreed on 29 March of that year within the framework of the National Plan to respond to the economic and social consequences that Russia’s invasion of Ukraine is having on citizens.

The aim of this extraordinary measure is to mitigate the effects that the rise in the Consumer Price Index (CPI) may have in the area of rental housing, given that it is a common index in contracts.

The rent update may not exceed the result of applying the annual variation of the Competitiveness Guarantee Index, which is published by the National Statistics Institute every month and is capped at 2%. The use of this reference index responds to reasons of extraordinary and urgent necessity.

What can I do if my rental contract ends?
The tenant of a property can negotiate with the landlord to increase the rent.

If the lessor is a large landlord, i.e. an individual or legal entity that owns more than ten urban properties for residential use, the rent increase will be that agreed between the parties, although it may not exceed 2%.
If the landlord is not a large tenant, the rent increase may be higher than 2% if both parties agree. If they do not reach an agreement, the increase will not exceed the result of applying the annual variation of the GCI (Competitiveness Guarantee Index), with a maximum of 2%.
Can I apply the increase in the CPI if I update the rent of my property?
No. The landlord of a property, when the time comes for the annual rent update, will not be able to apply the CPI, even if it is stipulated in the contract, but the IGC (Competitiveness Guarantee Index).

Extraordinary extension of rental contracts

Rental contracts for permanent housing that expire between 28 December 2022 and 30 June 2023 will be extended, at the tenant’s request, for a further six months from the expiry date, maintaining all their conditions.

The extension does not apply if the tenant needs the house to use it as a permanent home for himself or for his relatives in the first degree of consanguinity or by adoption, or for his spouse in cases of separation or divorce, provided that this case has been established in the contract.

Suspension of evictions
The Government has also extended until 30 June the suspension of evictions and eviction proceedings in cases of eviction of tenants considered vulnerable without a housing alternative.

The eviction may be suspended if the property belongs to legal entities or individuals who own more than ten dwellings.

What compensation is available to landlords in the event of eviction?
Landlords affected by the suspension of evictions may apply for compensation until 31 July 2023. The application must include a reasoned and justified statement of the compensation requested.

The compensation would be for the period between the suspension and the moment it is lifted. It consists of the average value that corresponds to a rental of a dwelling in the vicinity of the property plus the current expenses that the landlord proves to have assumed.