New rents with increases limited to 2%, plus inflation from the previous three years | Housing

As already announced by the Government when it presented the legislative package to respond to the housing crisis, rents established in new lease contracts will now be subject to a maximum ceiling. The detailed law proposal, made available this Friday in public consultation, clarifies the terms of these limits: the value of the rents practiced in previous contracts, can only add a variation rate of 2%, as well as the annual update coefficients of previous three years.

“The initial rent of new lease contracts for housing purposes cannot exceed the value of the last rent practiced on the same property in a previous contract, plus a coefficient of 1.02”, can be read in the bill that is now in public consultation. This 2% rate corresponds to the medium-term inflation target of the European Central Bank (ECB).

“Annual coefficients may also be added to the initial rent value, (…) provided that no more than three years have passed since the date on which it would have been initially possible to apply them”. That is, these update coefficients can only be considered if they have not been applied before.

For the year 2023, the diploma also establishes, it is considered that the update coefficient will be 1.0543. This is because the inflation rate that served as a reference for the automatic updating of rents in 2023 was precisely 5.43%. However, within the scope of a series of measures implemented by the Government to respond to the drop in family incomes resulting from the sharp rise in inflation, the automatic updating of rents in existing contracts was, this year, limited to 2%.

Finally, defines the draft law, these rules will only apply “to contracts that affect real estate on which previous leases entered into in the last five years have been levied”.

Considering the limits now defined, rents for new contracts will be calculated as follows: currently, a house is rented, for example, for 500 euros. The contract, which ran for the last five years, is now coming to an end. If the landlord wants to sign a new contract for the same house, the new rent must be limited to 500 euros, plus a 2% variation, as well as the coefficient for automatic updating of rents over the last three years, if have not yet been applied (zero in 2021; 0.43% in 2022; and 5.43% in 2023). The new income will be limited to a maximum of around 40 euros.

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