The National Institute of Statistics (INE) disseminated this Thursday the updated data of the reference index for the annual review of rental contracts. In July, this indicator stood at 2.49% year-on-year, which represents 0.05 points more than in June and marks the highest level since the start of the statistical series in November 2024.
With the figure for July, the index has now chained 14 consecutive months above 2%, consolidating a path of moderate but persistent increases.
The rental contracts that must review their rent and that have been signed since the entry into force of the Housing Law, on May 25, 2023, are obliged to use this index designed by the INE as a reference for the annual update.
The statistical body publishes this indicator monthly, which acts as a cap for the revaluation of residential rental contracts. It is expressed with two decimals and is calculated with the latest available monthly data, being the one that will determine the maximum percentage increase of the rents of contracts signed from May 2023.
For its preparation, the index jointly integrates the Consumer Price Index (CPI), core inflation, and the differences between the annual variation rates of both the CPI and core inflation for each month. In addition, a parameter proposed by the General Directorate of Economic Policy is added, linked to the expected long-term growth of this indicator.
On these differences, a moderating coefficient is also applied, defined jointly by the General Directorate of Housing and Land of the Ministry of Housing and Urban Agenda and the General Directorate of Economic Policy of the Ministry of Economy, Trade, and Business, taking into account the situation of the residential rental market.
Thus, the reference index that will be taken as a limit for the annual review of rents will be the lowest value between the annual variation of the CPI, the annual variation of core inflation, and the adjusted average annual variation rate, calculated according to the methodology approved for this indicator.
With this publication, the INE complies with the eleventh additional provision of the Law for the Right to Housing, which obliges the agency to define, before December 31, 2024, a reference index for the annual update of housing lease contracts. This index is set as a cap with the aim of avoiding disproportionate increases in rental prices.
During 2024, the review of annual rental prices has been exceptionally limited to 3% due to the sharp rise in prices caused by the war in Ukraine.
How contracts prior to May 2023 are updated
In the case of contracts signed prior to the entry into force of the Law for the Right to Housing, that is, those signed before May 2023, the annual update of the rent will continue to be linked to the CPI data or the Competitiveness Guarantee Index (IGC), as specifically stated in each contract.
Sources from the Ministry of Housing explained to Europa Press that, depending on what was agreed upon by the parties in contracts prior to May 2023, the revaluation of the rent will be carried out using the inflation data at the date of each review or the IGC, which in no case may exceed 2%.