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Date Published: 20/12/2024

Spain introduces new system to limit rent increases in 2025

The new indicator will be published monthly and will avoid rent hikes above the CPI

Spain has announced the introduction of a new index that will limit annual rent hikes from 2025, with the aim of reining in the “disproportionate increases” that have been plaguing the housing market, a government spokesperson announced on Friday December 20.

This game-changing move promises to bring some desperately needed stability to renters.

The exact figure for this rent cap index remains under wraps until January. However, its calculation will involve several factors: tracking the evolution of rental prices, assessing expected long-term growth and applying a moderating coefficient to keep any hikes in check, especially if they exceed 2%.

In essence, this new index will act as a "correction mechanism," ensuring rent adjustments remain balanced even in a fluctuating market.

The system combines three metrics - the interannual Consumer Price Index (CPI), the underlying CPI (which excludes volatile elements like energy and unprocessed food) and an adjusted average of the new index. The lowest figure will set the ceiling for rent hikes, ensuring fairer adjustments.

This new mechanism will replace the 3% cap set by the government in 2020 but crucially, it will only apply to rental contracts signed since May 25, 2023, when the state housing law came into effect.

Secretary of State for Housing, David Lucas, added that the new system has been introduced to "avoid disproportionate increases in rent" and "safeguard rental prices."

The National Institute of Statistics (INE) is tasked with finalising this reference index by December 31, 2024. Once in place, it will be published monthly, providing transparency and predictability for everyone in the rental market.

This innovative system could mark a turning point in Spain’s rental market, addressing long-standing challenges and creating a fairer, more sustainable framework for all parties involved.

In other news: Spain extends public transport discounts until June 2025

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