What will happen with Spain’s 2 percent rent cap in 2024?
We are now in the final few weeks of Spain's 2 percent rental price cap, but what will happen to it in 2024?
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One of the most eye-catching aspects of Spain's housing law (ley de vivienda) approved back in April was the rental cap. The law was a wide-ranging piece of legislation that covered agency fees and outlined 'stressed' rental markets, among many other measures that benefited renters in particular. But the 2 percent cap on annual rental price increases was the one that really stood out, and formed part of broader efforts to help out renters during the cost of living crisis.
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. In bigger cities such as Madrid, Barcelona, Valencia and Málaga, that figure is creeping closer to the high-teens and twenties.
READ ALSO: What will happen to property prices in Spain in 2024?
Rental cap
Up until the introduction of 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, the index used to measure inflation. 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.
READ ALSO:
- What Spain's new housing law means for you if you're a landlord
- How Spain's new housing law will affect you if you rent
"The CPI is eliminated as a reference index for the annual update of the income of contracts," the text of the law stated, clarifying that the "CPI has proven to be an index that can generate huge fluctuations with increases in a matter of months that make rentals more expensive without limit as the renewal of the contracts is indexed to it."
But that 2 percent measure was for 2023 only, so that period is now coming to an end. So, what will happen in 2024?
2024 rent cap
In 2024 a 3 percent cap will apply, whatever the level of inflation. That is to say, landlords may not raise the price of their contracts already in force above 3 percent, but unfortunately, this rental cap does not apply to new contracts signed, nor those signed after 2019.
The price cap is linked to the Competitiveness Guarantee Index (IGC), and the government has already announced that from 2025 it will apply a new reference index for updated rental contracts, so technically speaking the CPI has already stopped being the reference index for contract renewals under the protection of the Urban Leases Law (LAU).
Idealista has an incredibly useful tool that allows you to check your town or city (given it's a provincial capital) and check what the price rise could be, but also what it would have been without the government imposted price cap.
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One of the most eye-catching aspects of Spain's housing law (ley de vivienda) approved back in April was the rental cap. The law was a wide-ranging piece of legislation that covered agency fees and outlined 'stressed' rental markets, among many other measures that benefited renters in particular. But the 2 percent cap on annual rental price increases was the one that really stood out, and formed part of broader efforts to help out renters during the cost of living crisis.
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. In bigger cities such as Madrid, Barcelona, Valencia and Málaga, that figure is creeping closer to the high-teens and twenties.
READ ALSO: What will happen to property prices in Spain in 2024?
Rental cap
Up until the introduction of 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, the index used to measure inflation. 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.
READ ALSO:
- What Spain's new housing law means for you if you're a landlord
- How Spain's new housing law will affect you if you rent
"The CPI is eliminated as a reference index for the annual update of the income of contracts," the text of the law stated, clarifying that the "CPI has proven to be an index that can generate huge fluctuations with increases in a matter of months that make rentals more expensive without limit as the renewal of the contracts is indexed to it."
But that 2 percent measure was for 2023 only, so that period is now coming to an end. So, what will happen in 2024?
2024 rent cap
In 2024 a 3 percent cap will apply, whatever the level of inflation. That is to say, landlords may not raise the price of their contracts already in force above 3 percent, but unfortunately, this rental cap does not apply to new contracts signed, nor those signed after 2019.
The price cap is linked to the Competitiveness Guarantee Index (IGC), and the government has already announced that from 2025 it will apply a new reference index for updated rental contracts, so technically speaking the CPI has already stopped being the reference index for contract renewals under the protection of the Urban Leases Law (LAU).
Idealista has an incredibly useful tool that allows you to check your town or city (given it's a provincial capital) and check what the price rise could be, but also what it would have been without the government imposted price cap.
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