Landlords & rental

Spain’s New Rental Price Reference Index Dips To 1.98pc In March

Published

1 week ago

April 16, 2025

spain’s-new-rental-price-reference-index-dips-to-1.98pc-in-march

Landlords updating contracts under Spain’s new housing law must apply the revised INE index, which drops slightly from February’s 2.08%, offering tenants a modest reprieve.

Spain’s new rental price reference index, introduced under the 2023 Housing Law, has eased to 1.98% year-on-year this March, down from 2.08% in February, according to figures released by the National Statistics Institute (INE).

The index, designed to prevent excessive rent hikes, applies to lease agreements signed from 25 May 2023 onwards and must be used for annual rent updates. It serves as a cap on rent increases amid a broader effort to stabilise the housing rental market following years of turbulence, including pandemic-era volatility and the price surges linked to the war in Ukraine.

The INE-developed index is now the official benchmark for revising rents annually in post-May 2023 contracts. Updated monthly, it provides a calculated limit based on a blend of inflation data and long-term expectations. More specifically, the index incorporates:

General inflation (CPI)
Core inflation (excluding food and energy)
Annual growth differences in both these indicators
A long-term expectations parameter proposed by the General Directorate of Economic Policy

These elements are passed through a moderation filter established by the Ministry of Housing and Urban Agenda and the Ministry of Economic Affairs, taking into account the broader state of the housing rental market.

The ultimate figure used for updating rental contracts is the lowest between the general CPI, core inflation, and the adjusted average annual variation calculated as per the approved methodology.

Legal background and transition rules

This new mechanism fulfils the legal obligation under Spain’s much-debated Housing Law to create a structured, transparent, and restrained approach to annual rent increases. The law stipulates that the INE should define and publish this cap before the end of 2024—and it is now in full effect.

For 2024, the government has already implemented an extraordinary 3% cap on rent updates as a temporary measure to shield tenants from inflationary shocks stemming from geopolitical crises, particularly those related to the war in Ukraine.

Earlier efforts had already introduced limits using a different benchmark—the Competitiveness Guarantee Index (IGC), which was capped at 2% and never allowed to fall below zero. This IGC-based mechanism applied to rent reviews in 2022 and 2023 under emergency inflation-control legislation.

What about pre-law contracts?

For leases signed before 25 May 2023, the update formula depends on existing contractual terms. Most commonly, rent revisions will continue to use the CPI or the IGC, as stipulated in each agreement. Ministry of Housing officials confirmed to Europa Press that landlords must adhere strictly to whatever mechanism is outlined in these older agreements—even if it differs from the new INE index.

Whatever the formula, tenants with older contracts can rest assured that if the IGC is applied, the increase will never exceed 2%.

With the rental affordability crisis still simmering beneath the surface of Spain’s housing market, this updated index is intended as a pressure valve—offering landlords some flexibility, while narrowing the scope for sharp monthly rent hikes. While a 1.98% increase may still sting for some, it’s a far cry from the double-digit jumps seen in previous inflationary waves.

Related Topics:EuroWeekly Landlords & rental News Rent controls Rental Insight

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Barcelona

Rent caps stabilise prices but stall the market in Catalonia

Published

1 week ago

April 16, 2025

admin

Twelve months after Catalonia became the first and only Spanish region to universally apply rent caps under Spain’s new national housing law, preliminary data suggests limited success in curbing housing pressures. While average rents in regulated “stressed zones” have indeed fallen by 3.7%, the market itself seems to be grinding to a halt.

New figures from the regional government based on data from Incasòl — Catalonia’s public land and housing agency — show that the number of newly signed rental contracts has dropped significantly, especially in the city of Barcelona, the epicentre of the region’s housing crisis. Stakeholders from tenant unions to property owners agree on one thing: finding a reasonably priced flat remains as difficult as ever.

Rent prices drop, but availability dries up

According to Incasòl, average contractual rents in Catalonia’s 140 designated “stressed” municipalities fell from €911/month in Q1 2024 to €878/month in Q4. In Barcelona, rents dropped more steeply, by 6.4%, ending the year at an average of €1,117/month — still among the highest in Spain.

However, those gains come at a price: liquidity. Rental contract signings in these areas have plummeted. Across the designated municipalities, new rental agreements dropped 21% from Q1 to Q4 in 2024. In Barcelona, the number of contracts declined 17% in the three quarters following the introduction of the price caps.

Barcelona rental contracts under rent control

Even more concerning, the balance between new leases and contract terminations is now at its weakest point since records began — excluding the COVID year. In 2024, Barcelona saw just 2,724 more rental contracts signed than ended, and 71% of that slim surplus came in the first quarter, before rent controls took effect.

Property owners say the rules are pushing flats off the market or into sales channels. “The market is stagnating,” said Òscar Gorgues, director of the Barcelona Chamber of Urban Property. “New rental supply is drying up, and much of it is going to the for-sale market instead.”

There is also a growing mismatch between recorded rental prices and asking prices, as illustrated by the next chart. This suggests that we are seeing a split market created by rent control. Contract rents are tamed by regulation, but asking rents reflect a shortage of available units and landlords trying to recoup value or navigate around the rules. It’s a classic tension in rent-regulated markets.

Policymakers hail the law as a success

Despite the slowdown, Spain’s Housing Minister Isabel Rodríguez and Catalan Housing Minister Sílvia Paneque defended the rent controls at a press conference in Barcelona on Friday. Speaking alongside the city’s mayor, Jaume Collboni, the trio declared the law a win for affordability.

“The rent caps are having a positive effect,” Rodríguez said, urging other Spanish regions — particularly those governed by the conservative Partido Popular — to adopt the law more widely.

Annual rental averages still rose slightly year-on-year due to a sharp uptick in early 2024 before the cap came into effect. In municipalities declared “stressed” in March 2024, average rent rose to €884.95/month for the year — up from €871.82 in 2023 and €811.76 in 2022. However, the quarterly trend points to a levelling-off or decline since then.

Seasonal rentals surge as workaround

With price caps placing pressure on standard rental contracts, landlords appear to be seeking alternatives. The number of seasonal rental listings — which aren’t currently subject to price controls — shot up by 45% across Catalonia last year.

The Catalan government has pledged to crack down on abuses within the seasonal market, promising tougher oversight and enforcement mechanisms. “Seasonal lets play a role, but we will actively investigate and penalise fraudulent use,” said Paneque.

Tenant groups remain sceptical. The Tenants’ Union (Sindicat de Llogateres) criticised the ongoing unaffordability in key cities and called for tighter regulation of seasonal leases, arguing that price caps without supply-side support are not solving the crisis. They plan to return to the streets with a national demonstration on 5 April.

Rental search now tougher than ever

Meanwhile, prospective tenants are finding themselves in a more competitive race for fewer listings. According to Idealista, now consulted by the Bank of Spain for housing data, around 54 potential tenants now compete for each available rental — up from 40 prior to the law.

“The rental market has become a word-of-mouth game,” said Carles Sala, spokesperson for Catalonia’s Association of Estate Agents. “Flats don’t even make it to the listing stage before they’re snapped up.”

Conclusion: control without supply is not enough

One year on, Catalonia’s rent caps are delivering modest relief in prices — but the persistent lack of supply, sluggish contract turnover, and shifting landlord strategies suggest the market is increasingly paralysed.

While policymakers celebrate headline figures, it’s becoming clear that rent control without a comprehensive plan to boost supply — particularly subsidised housing — may only offer temporary gains. Whether other regions will follow Catalonia’s lead depends on how the long-term effects unfold in an increasingly constrained rental landscape.

Take a deep dive into the figures for the Barcelona rental market.

Landlords & rental

Spanish Government Investigates Property Management Company Over Alleged Illegal Rental Fees

Published

3 weeks ago

April 3, 2025

SPI News

Home » Spanish government investigates property management company over alleged illegal rental fees

Spain’s Ministry of Consumer Affairs has launched formal proceedings against property management and rental agency Alquiler Seguro for allegedly charging unlawful fees to tenants—practices that could result in a fine of up to €1 million.

At the heart of the investigation are complaints from consumer watchdogs like FACUA, which claim the agency charged tenants for services—including property management and contract preparation fees—that, under the new Housing Law, must be borne exclusively by landlords.

Unlawful charges flagged

The probe was sparked by the case of a tenant in Madrid, who was reportedly required to pay the equivalent of one month’s rent, plus 21% VAT, as a commission to Alquiler Seguro. Such fees, according to amendments introduced in Spain’s housing law in 2023, are considered illegal when passed on to tenants.

If found guilty of infringing consumer protection regulations, Alquiler Seguro could face sanctions ranging from €100,000 to €1 million, depending on the severity and scope of the violations uncovered.

Rise in questionable practices

Consumer groups say this case is not isolated. FACUA claims it has documented a growing number of similar complaints in recent months, particularly as Spain continues to grapple with a worsening housing shortage. The imbalance between supply and demand in rental housing has left many tenants in financially precarious positions—conditions that make them more vulnerable to abuse or scams.

Despite apparently halting the disputed practice, the volume of reported infractions has prompted the ministry to take action and open the sanctioning file.

Alquiler Seguro responds

In a statement issued following news of the probe, Alquiler Seguro maintained it complies “strictly” with Spanish legislation and asserted that its services are “audited, voluntary, and publicly accessible”. The company also stated it adheres to the law’s requirement that landlords—not tenants—bear the costs related to rental contract formalisation and management.

Alquiler Seguro added that it is “fully willing to cooperate with the ministry” throughout the investigation.

What’s next?

The case now moves into the official sanctioning phase, during which the ministry will gather further evidence and determine whether legal breaches occurred. If confirmed, Alquiler Seguro would become one of the first high-profile real estate agencies sanctioned under Spain’s updated housing legislation.

As Spain’s rental market gets tighter, tenant protections are expected to remain a high-priority focus for the government—and scrutiny of agents and landlords is unlikely to ease.