On 27 December last, a new royal decree was approved which, among other measures, extends, in an extraordinary way, and with effect until 31 December 2023, the limitation on rental prices.
This is Royal Decree 20/2022 of 27 December. Specifically, in article 46, it states that those people who have a rental contract subject to the Law on urban leases 29/1994 and the contract has to be updated to meet the annual period of its validity within the period between the entry into force of the aforementioned Royal Decree and 31 December 2023, may negotiate with the landlord, i.e. the owners of the property, what increase the rental price will have.
Conditions to be followed by the negotiation
- If the lessor is considered a "Big tenant" or lessor who owns more than ten residential properties (not counting garages or storage rooms): the increase in the rent will be that which is agreed between the parties, but which in no case may exceed the result of applying, on the rent, the annual variation of the Competitiveness Guarantee Index, taking as a reference month the last index published on the date of updating the last contract signed by the parties. This index is updated every month, so at the time of signing the contract, the latest published index must be applied.
- Small tenants or not "big tenants": an agreement will have to be reached between the two parties for the increase of the rent. If no agreement is reached, the Competitiveness Guarantee Index will be applied, with the same conditions as if the tenant is a "big tenant".
Effects of the regulation
This new Royal Decree that extends the effects on the price of rent does not have retroactive effects and is only applicable to the rents that have to be updated while the aforementioned legal text is in force.
In the absence of an agreement between the parties, the rent increase may not exceed the result of applying the annual variation of the GCR at the date of the update, but this index takes into account not only the evolution of prices, but also the evolution of Spain's competitiveness with its European partners, and has the characteristic of having ceilings of between 0% and 2%, while the European Central Bank's inflation target for the Eurozone is 2%. Thus, if the rate of change of this index is below 0%, this value will be taken as a reference, which would be equivalent to the application of the non-revision rule. When the rate of change of this index exceeds the European Central Bank's annual inflation target (2%), this value will be taken as a reference.
Extraordinary extension of habitual residence lease contracts
All those contracts that fall under the Urban Lease Law 29/1994 of 24 November and whose contract extension period expires between April 2022 and December 2023, may request an extraordinary extension of the contract for up to 6 months after the end of the contract as long as the same terms and conditions already established are maintained.
This extension will have to be accepted by the landlord unless prior conditions have already been set and accepted by both parties. It may also be that the tenant has communicated within the period established by law that he/she needs the property to use as a permanent home for him/herself or his/her first-degree relatives, adoption or the spouse with separation, divorce or marriage annulment sentences.
For any questions or more information, you can contact our Legal Department by calling:
933 03 060 (Barcelona)
972 505 100 (Figueres)
972 940 940 (Girona)