Rental prices in Spain increased by two digits! Spanish Government extends the 2% rental cap to all of 2023

Raymundo Larraín Nesbitt, February, 7. 2023

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As we predicted in previous articles (Spanish Government introduces inflation control in long term rentals – 1^st April 2022 and also Spanish Government extends the 2% rental cap a further 3 months - 21st June 2022), because of Spain’s high inflation, the government would continue to renew the 2% inflation cap on long term rentals.

The Government approved last December 2022 to extend the 2% rental cap for all of year 2023. This means that any rental update, on renewing a rental contract, is capped at 2%. Meaning that landlords have to bite the bullet and withstand the brunt of the (sharp) increase of inflation. Once again the government’s lofty ideals come at the expense of other people’s private property.

Spanish rentals have increased on average by more than 10% in most regions. This is very concerning as it represents a steep spike that affects vulnerable families' pockets.

Spain’s National Bureau of Statistics (INE) reported inflation hit 5.8% Year-Over-Year during January 2023. Although inflation ‘officially’ stands at 6%, in practice, it’s well over 20% as anyone can vouch for.

In view of the continued spike in inflation, the Spanish Government has extended the rental update cap of 2% to all of year 2023.

It has also approved several other measures such as:

Rental contracts that end on or before the 30^th of June can be forcefully extended a further 6 months.
Vulnerable tenants have seen the tenant evictions cancelled over the next 6 months until the 30^th of June (this will likely be renewed again and again by the Government).

For professional landlords (defined as owning 10 or more properties), rental updates are capped at 2%. For laymen, there is freedom to negotiate. However, if no agreement is reached, a 2% limit also applies. In practice, this translates into a 2% limit for everyone.

Again, I stress it is highly likely our government will continue to renew the rental cap indefinitely until Spain’s high inflation is brought to heel, which realistically could take several years, if we are to go by historic records.

So, a far cry from the ‘transitory’ inflation Monetary Authorities claimed we’d live through (as we advised all the way back in 2021: Tax breaks on buying property in Andalusia extended indefinitely! – 8th December 2021). Inflation is here to stay for the long run.

At Larrain Nesbitt Abogados we have over 20 years’ experience buying, selling, and renting properties. We are also specialized in immigration & residency visas. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88, or by completing our contact form to book an appointment.

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