We’re living in uncertain financial times where conflict, a pandemic, rumours of another property bubble and other world events make it difficult to know what’s coming next and what it will mean for our wallets.
What can be said for certain is that most living costs in Spain are getting more expensive this year.
In February 2022, inflation reached its highest level in 33 years - 7.4 percent - and Russia’s invasion of Ukraine has economists suggesting it will hit 10 percent this spring.
One of the consequences of the rise of the IPC (CPI in English- Consumer Price Index) in Spain is that many landlords are using this general increase in costs to raise the rents of their tenants.
With the current inflation rates, this can result in an average rise of €40 to €50 a month for renters in Spain.
Is it legal to do this?
Yes, but only in certain circumstances.
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. It should also 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.
The property owner will also have to give their tenant one month’s notice and apply the rise to the following month. This must be in writing and the landlord must state what the rent increase is and how it corresponds to correct IPC figures.
It’s important to remember that under no circumstances can a landlord increase the rent of a tenant by an amount higher than the IPC. The most updated IPC figure must always be applied.
Other indicators or reasons other than an IPC can be given by a landlord to increase the rent, but the amount they put the rent up by can’t be higher than the IPC under any circumstances.
Tenants should also keep in mind that if the IPC were to drop and they had pre-agreed with the landlord that the contract would be subject to IPC changes, they are within their rights to request a reduction of their rent.
The IPC (Índice de Precios al Consumidor) is published by Spain’s National Statistics Institute on a monthly basis and is based on the country’s latest inflation figures. You can easily check what rise or reduction applies to your property here.
Spain’s Rental Negotiating Agency (ANA) has recommended that landlords don’t apply the latest so-called "war CPI" caused by the conflict in Ukraine, arguing that a large rise in rent could result in some tenants ending their rental contracts or struggling to pay.
One of the tools that tenants can use to lessen the blow of sky-high inflation is to tell their landlords that, if at all, they should apply the IPC de Vivienda (Property CPI) rather than the IPC General (General CPI), as the former is generally less volatile than the latter and Spain's Urban Leasing Law does not specify which should be used to increase or lower rent.
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