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Spain has scrapped the rent freeze - what now for tenants?

The Local Spain
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Spain has scrapped the rent freeze - what now for tenants?
Can landlords in Spain put their tenants' rent up now that rental price freeze is set to come to an end? (Photo by Pau BARRENA / AFP)

Spain's rental price freeze is set to come to an end, but what does it mean for tenants moving forward?

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As of July 1st 2023, many of the anti-inflationary measures the Spanish government adopted to mitigate the effects of the war in Ukraine will expire and no longer be in effect.

Most notably among the measures set to expire is the rental price freeze, the extension of which ran from from January 1st to June 30th, 2023.

After the invasion of Ukraine by Russia and the skyrocketing prices that followed, the Spanish government approved "an extraordinary extension of leases by six months from the end date, during which the terms and conditions established for the contract in force will continue to apply." That is to say, a freeze on rents at a time when many landlords could, and likely would, have upped their prices.

READ ALSO: Five key points about Spain’s new housing law

It should be noted that the government's decision not to further extend the rental freeze has nothing to do with the annual 2 percent price cap, introduced as part of the Housing Law, nor the 3 percent cap for 2024.

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What does this mean for renters?

Essentially, the end of the rental freeze means that from the beginning of July 2023 landlords will be able to raise the price of rents again on contracts due for renewal. But this will be within reason. Though the government is ending the total freeze on rental prices, it is not completely lifting the cap and letting the market go wild or giving landlords free rein to rise prices by however much they want.

Up until the Housing Law, during the first five years of rental contracts in Spain the landlord had the right to increase the price each year by the same percentage as the CPI, but the new law capped them for 2023 and 2024, and established an index that will replace the inflation reference when it comes to limiting the annual increase for rental payments from 2025 onwards.  

In doing so, they set a two percent ceiling on increases for 2023. In 2024 a ceiling of three percent will apply, whatever the level of inflation. Rental prices in Spain are now on average 9.4 percent more expensive than last year, according to data from Idealista, Spain's leading property experts.

Landlords may not raise the price of their contracts already in force above these percentages, but unfortunately, this rental cap does not apply to new contracts signed, nor those signed after 2019.

Spain's Minister of Economy, Nadia Calviño, justified letting the short-term freeze expire by pointing to the maximum rent caps for 2023 and 2024 already established by the Housing Law, something that is already in effect. The government have stated that the freeze was introduced to help renters in the aftermath of the pandemic and inflation, two issues which have now subsided considerably in Spain.

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Political splits

The decision to scrap it has not gone down well with left-wing parties Podemos and Sumar ministers in government, however. Sumar's housing spokeswoman, Alejandra Jacinto, said of it: "Indignant is not enough... The Socialist side of the government has just overturned the measure that allowed the extension of rental contracts for six months and prevented abusive price increases and evictions."

Calviño said of the split in government: "I am sorry that there are people who want to generate uncertainty or uneasiness. All our decisions have always been aimed at protecting tenants, especially the most vulnerable." The discomfort between PSOE, Podemos and Sumar ministers comes just weeks before Spain's general election on July 23rd.

Housing Law lag

The extension of the rental freeze was one of the measures demanded by tenants' unions, especially in the regions ruled by the Spanish right who are unlikely to declare any 'stressed areas' - neighbourhoods where prices are particularly inflationary, as created by the Housing Law.

"This measure was approved as a way to freeze rents until the implementation of price regulation. Despite the fact that the Housing Law is in force, the price regulation has not yet entered into force in the autonomous communities," the Sindicat de Llogateres said in the Spanish press. "This means that, due to the necessary procedures, the regulation of rents will not be a reality for a few months. In addition, only Catalonia has declared that it will apply it and many other communities are refusing to do so."

Anti-eviction measures

Suspensions on evictions of vulnerable people were also due to expire on June 30th, but will be extended.

Specifically, there can be no evictions of tenants in a situation of economic vulnerability that makes it impossible for them to find a housing alternative for himself and for the people they live with.

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