It was a mandate from the state housing law. The National Institute of Statistics (INE) had to prepare before December 31 a new reference index for the annual update of rental contracts. That indicator is already here: it is a formula that takes into account the CPI and the underlying PCS, a long-term estimate from Economy on these long-term parameters and a coefficient established by Housing, which will take into account “the market circumstances of the rent”.
The first data, as indicated by the INE, will be known on January 2. The formula, indicated by the Ministries of Housing and Economy, “incorporates correction mechanisms for moderation in case of increases greater than 2%.” In fact, the rule already stated that the objective of this index, which the INE will publish month by month, was “to avoid disproportionate increases in the annual housing rental updates”, caused by the very high increases in the Consumer Price Index ( CPI) experienced in recent years.
Faced with this situation, aggravated by the Russian invasion of Ukraine in 2022, the Government had already capped price increases. For this year 2024, the limit was 3%.
The index, however, does not affect all lease contracts. Only tenants who have signed as of May 25, 2023, under the umbrella of the new state standard, will benefit from this formula. Neither do new contracts, because it does not prevent an owner from setting the price they want from the start, only the updates.
The Secretary of State for Housing and Urban Agenda, David Lucas, has indicated that the objective is to “safeguard the prices of all rentals.” Furthermore, the Ministry headed by Isabel Rodríguez points out that “a system will be launched to help all citizens of this country know how the price of their rent is updated”, while waiting to know the first information. fruit of this new formula.
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