The INE reference index for rent updates rose to 2.15% in July.

The National Statistics Institute (INE) published this Wednesday the reference index for the annual update of rental contracts, which stood at 2.15% year-on-year in July of this year, compared to 2.1% the previous month.

Rental contracts whose rent will be updated starting this year and signed since the Housing Law came into force on May 25, 2023 , must use this new index created by the INE to review their annual rent.

The statistical agency publishes this index monthly, which will be used as a threshold for the annual update of housing lease contracts . Expressed to two decimal places, using the latest available monthly data, this index will determine the revaluation price for lease contracts signed after May 2023.

This index jointly considers the Consumer Price Index (CPI) , underlying inflation and the differences between the annual growth rates of both the CPI and underlying inflation for each month, and a parameter, defined at the proposal of the General Directorate of Economic Policy, which relates to the expected long-term growth of said index.

A moderating coefficient is applied to these differences, defined at the joint proposal of 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 circumstances of the housing rental market .

Thus, the reference index used as a limit for the annual update of housing lease contracts will be the lowest value between the annual rate of change of the CPI, the annual rate of change of underlying inflation, and the adjusted average annual rate of change, prepared according to the approved methodology.

With the publication of this index, Statistics complies with the eleventh additional provision of the Law on the Right to Housing , which establishes that the agency will define, before December 31, 2024, a reference index for the annual update of housing lease contracts, which will be set as a limit in order to avoid disproportionate increases in the rent of lease contracts.

In 2024 , the annual rent increase was exceptionally limited to 3% due to the increase in prices resulting from the war in Ukraine.

However, this limit is not the only one the government has approved in response to the inflationary crisis caused by the war in Ukraine. Through a Royal Decree-Law, the government already limited the annual rate adjustment of lease contracts for 2022 and 2023 based on the Competitiveness Guarantee Index (CGI) , which is capped at 2% and can never fall below 0%.

For their part, contracts signed before the Right to Housing Act came into force, that is, signed before May 2023, will continue to have their annual rent updated with the CPI or IGC data, as stated in the signed rental contract.

According to sources from the Ministry of Housing, who spoke to Europa Press, depending on what tenants signed in their rental contracts prior to May 2023, the annual revaluation of this rent will be based on the inflation rate as of each update or the IGC (General Consumption of Income), which may never exceed 2%.