On February 27, the Government revealed the reference index that will regulate rental prices in tense areas throughout Spain, a measure expected since the entry into force of the Housing Law 12/2023 in May 2023.

It is important to highlight that so far, only Catalonia has shown interest in applying this index limiting rental prices.

The index will be available on the Ministry of Housing website and will come into force on March 13, 2024.

According to the law, it will have an initial duration of three years, with the possibility of extension if price tensions persist. For the duration of 2024, the maximum annual increase of 3% in rent is applicable. Starting in 2025, a new reference index will be introduced.

What will it do?

This new index will establish a maximum limit for the price of new rental contracts in tense areas, as well as for large property holders (owners of more than 5 properties known as Gran Tenedores).

Large property owners:
  • Large property owners will not be able to sign new rentals with prices higher than the Reference Index for their area, nor with increases higher than the maximum update increase allowed with respect to the price of the previous contract.
  • Large property holders must adhere to the maximum limit established in the area, meaning that the rental price cannot exceed the reference index, regardless of what they have previously charged.
Small property owners:
  • Owners who are not large property holders must keep the price frozen, that is, they will not be able to set a price higher than the last contract in force, with a maximum update of 3% permitted by law.
  • For small owners, increases in new contracts may only be the annual update percentage allowed on the price of the previous contract.
Other points to keep in mind:
  • Furthermore, rent in homes that have not been rented in the last 5 years may be limited to the maximum price set by the Reference Index.
  • The index offers a price range based on the specific characteristics of each home, such as its size, state of conservation, and available services, among others.

Regarding Catalonia, although it is the only community interested in this regulation, the Generalitat expressed its disagreement with the Government’s methodology, which establishes a price range instead of a fixed price. The Generalitat considers that this can lead to excessive increases and proposes setting a single price.

This measure will affect 140 municipalities in Catalonia, including Barcelona and most of the towns in the metropolitan area, as well as the 4 provincial capitals, which have been officially designated as stressed market areas.

  • You can find here the designated stressed residential market areas.

In sum, the new rent cap will exacerbate the shortage of properties that currently exists.

If you are moving to Spain let our team of experts guide you through your relocation process.

For FAQS regarding your relocation head here, for any FAQS about the reference index please head to the Ministry of Housing Website.