The Government of Spain has imposed a temporary cap to the clause of housing rental contracts that allows landlords to increase the amounts of rents according to the Consumer Price Index (CPI). During the next 3 months, said increase may not exceed 2% of the price previously set in the rental contract.
The government frames this measure, which will be in force until June 30, within its War Response Plan of € 16,000 billion euros in state aid and loans. With this plan, which the Council of Ministers will approve on Tuesday, Prime Minister Pedro Sanchez wants to put a stop to the sharp increase in inflation, which in February was 7.6%.
According to figures published by the economic newspaper Cinco Dias, in February 2022 the average increase in rents in Spain was 53 euros more per month as a result of the 7.6% rise in the Consumer Price Index. That is 636 euros more per year on average, an amount that many tenants cannot afford now.
For weeks, the coalition government formed by the PSOE (social democratic) and Unidas Podemos (left) parties has been working on a plan to deal with the economic crisis caused by the Russian invasion of Ukraine.
And one of the objectives was to extend the so-called 'social shield' designed to deal with the previous crisis, caused by the Covid-19 pandemic. At that time, the rental contracts were already extended with the same rents and under the same conditions.
Minimum Vital Income
In this sense, with the aim of maintaining the so-called 'social shield', the Government announced that it will also increase the amount of the minimum vital income (MVI) by 15% for three months.
Along with this, the Government will also extend until June 30 the tax reductions linked to the electricity bill. Thus, the VAT rate will continue at 10% for small consumers, the Special Tax on Electricity will continue at a minimum of 0.5% and the suspension of the tax on Electricity Generation will be extended.