Spain’s CPI trajectory and rent rule changes explained
In the summer of 2022, Spain faced a pronounced inflation surge measured by its Consumer Price Index (CPI). Year-over-year figures climbed into double digits, signaling a broad rise in living costs. Specifically, June 2022 saw the CPI reach 10.20%, July 10.80%, and August 10.40%. Over the next year and a half, the pace of inflation gradually cooled, culminating in an annual rate of 3.4% by January 2024, according to the latest data available.
To cushion renters from the blow of these inflationary pressures, the government introduced a temporary cap on rent increases. From April to December 2023, rent increases were limited to 2%. Beginning January 1, 2024, the cap rose to 3% and applied for the entire year, as reported by the property portal Idealista.
How the CPI is calculated
The CPI is a key economic indicator that tracks changes in the cost of a basic basket of goods and services, directly influencing standard of living and purchasing power. A positive CPI indicates rising prices, while a negative figure signals price declines. The National Institute of Statistics computes this index, using a representative shopping basket that captures items and services frequently purchased by households. Prices are compared against those from previous periods to determine the rate of change.
Rent adjustments tied to the CPI are governed by Article 18 of Spain’s Urban Leases Act. When landlords and tenants explicitly agree on a yearly update, that agreed method governs the adjustment. In the absence of a detailed agreement, the variation tied to the Competitiveness Guarantee Index is applied on renewal date, referencing the month of the last index published at the time of contract renewal. If no update is agreed, rents remain unchanged for the lease duration. In practice, the CPI remains the most common reference for increases, with the reference period typically based on the value published two months before the rent review since official data are usually published around the 15th of each month.
Maximum CPI-driven rent increases
The INE provides a tool to calculate rent adjustments by entering the current rent and the CPI value two months ahead of the contract anniversary. After the adjustment is computed, landlords must notify tenants at least one month in advance. For the January 2024 adjustment, the CPI from November 2023 was used, standing at 3.2%. In a scenario where a rent is 1,200 euros, the adjustment would raise it to 1,238.40 euros until the next update.
Idealista notes that because of inflation, the CPI-based increase cannot exceed the 3% government ceiling for all of 2024. Here is a simple example using a sample rent of 1,000 euros:
- Current monthly rent: 1,000 euros.
- Maximum CPI increase is 3%, so multiply 0.03 by the rent: 1,000 x 0.03 = 30.
- New rent becomes: 1,000 + 30 = 1,030 euros.
In summary, all leases renewing through the end of 2024 follow this government directive, with rent increases capped at 3% to provide stability amid CPI fluctuations.
(Source: INE; Idealista)