Increases in Rent
The New Housing Law and Its Entry into Force
The new Housing Law (known as the modification of the Law on Urban Leases) introduces significant changes in rent regulation across Spain.
Although the draft had been on hold since May 2022, it was finally approved by the Transport, Mobility and Urban Agenda Commission on 20 April 2023.
After its passage through the Congress and the Senate, the law became part of the Spanish legal system on 28 May 2023.
This article summarises the main updates concerning rent increases and how they affect both tenants and landlords.
(You can consult the full Law on Urban Leases – Ley de Arrendamientos Urbanos on the BOE for reference.)
Limitation on the Increase of Active Leases
Previously, rent increases were tied to the Consumer Price Index (CPI).
However, since March 2022, to contain inflation, the Competitiveness Guarantee Index (IGC) —capped at 2%— has been used instead.
This limitation remains in place until the end of 2023.
The new Housing Law gives the National Institute of Statistics (INE) the authority to create a new reference index, permanently replacing the CPI.
Additionally, rent increases for large landlords cannot exceed 3% of the existing rent.
When the landlord is not a large holder, the increase must be agreed between the parties, but it may never exceed 3% in the absence of an agreement.
Limitation on the Price of New Leases
For new rental contracts, the effect of the law depends on whether the lessor qualifies as a large holder.
If the lessor is not a large holder
The rent may not exceed that of the previous contract, after applying the annual update clause, except in the following cases, where it may rise by up to 10%:
- When rehabilitation or energy efficiency improvements have been made in the past two years.
- When accessibility improvements have been completed within the same period.
- When the new lease term is ten years or more.
The tenant may not be charged fees or expenses not foreseen in the previous lease.
If the lessor is a large holder
The rent for the new contract cannot exceed the limit set by the forthcoming reference price index system, which will be established by the government.
This restriction will apply once the index system is officially approved.
Definition of a “Large Holder”
According to the draft, a large holder is an individual or legal entity owning more than ten residential properties, or a built area exceeding 1,500 m² for residential use (excluding garages and storage rooms).
However, in areas with a tight residential market, Autonomous Communities may lower this threshold to five or more properties.
This flexibility allows regional authorities to adapt the law to local housing conditions.
Legal Guidance from Frau Legal
At Frau Legal, we provide comprehensive and up-to-date legal advice regarding the latest amendments to the Urban Leases Law (Ley de Arrendamientos Urbanos), also known as the Housing Law.
Our team is fully informed of the new regulations and can help you understand the limits on rent increases and pricing restrictions for new contracts.
We also advise on regional applications in areas declared as stressed residential markets.
Frau Legal offers strategic, effective legal solutions, ensuring our clients are protected and informed within the evolving framework of Spanish urban lease law.
