Housing is one of the problems that currently worries the Spanish population the most and among all the aspects that this issue has, one of the most talked about lately is also rent. The supply of rental housing is decreasing, among other reasons because many owners do not dare to rent as the economist Gonzalo Bernardos stated. And if we add to this that the prices for renting a room are increasingly prohibitive, the situation becomes practically unsustainable for those young and not so young who need to rent.
The price situation in rental housing is not improving; in fact, with the CPI data that we learned this Friday, it is going to get worse. The inflation figure, which has been the highest since June 2024, also causes an update in rental prices in those contracts that need to be reviewed this November with an increase in the amounts.
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To be more exact, homeowners who depend on an update in November will have the possibility of raising the amount of rent for their tenants by 2.25%, the highest percentage since the housing rental reference index was launched, which has been published by the National Institute of Statistics since last January.
The increase responds to the evolution of the Housing Lease Reference Index, one of the mechanisms implemented in the State Housing Law to limit annual reviews. With this system, the Government wanted to unlink CPI updates to “avoid disproportionate increases” when inflation exceeded 2%. However, the rise in the cost of living, driven above all by electricity, transportation and basic foodstuffs, has gradually raised the indicator in recent months.
The index, which went into effect on January 1, 2025, had remained around 2% until early summer. Since June, it has accumulated five consecutive increases, reaching the current 2.25%, the highest figure since its creation.
It does not affect all contracts equally
The 2.25% limit applies exclusively to contracts signed since May 2023, when the Housing Law came into force. Previous rents are still linked to the CPI, so their update can reach up to 3.1%.
In practice, this generates notable differences. A tenant with a rent of 1,000 euros per month signed in November 2022 could face an increase of 31 euros per month (372 per year). Meanwhile, another with an equivalent contract signed a year later would see their rent increased by 22.5 euros per month (270 per year).
The new contracts are not governed by the index either, although in the areas declared stressed (where some nine million people live, according to available data) the starting prices are linked to the previous income or to the specific index determined by each autonomous community. Catalonia, Euskadi and Navarra concentrate most of these areas, to which is added a part of Galicia.
A mechanism that is activated when inflation exceeds 2%
The Ministry of Economy explains that the index incorporates “correction mechanisms” to prevent inflationary tensions from being automatically transferred to the rental market. When general or underlying inflation is below 2%, the lowest value is taken as a reference. If both indicators exceed that threshold, as is the case now, a formula is applied that seeks “an intermediate point” between the two rates, also including an economic estimate and a coefficient linked to market conditions.
This system will complete its first year of validity in January and it will be then that the Government will evaluate its impact on the evolution of prices, as well as its ability to contain the escalation of rent in a market marked by a shortage of supply and growing demand.