The Government has approved a series of measures to address the economic and social consequences of the war in Ukraine, with the aim of mitigating the current situation of rising prices affecting our country. All the measures adopted are included in Royal Decree-Law 6/2022 of March 29 (hereinafter “RDL 6/2022”), which came into force on March 31, 2022.
With regard to leases, RDL 6/2022 introduces the extraordinary limitation on the rent update of residential lease agreements.
As established by Article 18 of the Urban Leases Act (hereinafter “LAU”), the CPI is the maximum legal amount for the annual rent update in residential lease contracts. Given the high CPI figures published for the months of February and March 2022, 7.6% and 9.8% respectively, and with the expectation that these high levels will persist in the coming months, the Government has approved a maximum limit for rent updates, as established in Article 46 of RDL 6/2022.
In accordance with the provisions of RDL 6/2022, for residential lease agreements whose rent must be updated in the months of April, May, or June 2022, the variation of the Competitiveness Guarantee Index (hereinafter “CGI”) at the date of the lease update shall be used as the reference value for the update.
The applicable regulations for the CGI establish that when the rate of variation of this index is below 0%, this shall be taken as the reference value, which would equate to applying the no-update rule. Likewise, when the rate of variation of this index exceeds the European Central Bank’s medium-term annual inflation target (2%), this target shall be used as the reference value, thus setting limits whereby the CGI cannot be lower than 0% nor higher than 2%.
Therefore, even though the last published CGI update was 2.75% for February 2022, the maximum value to be applied to rent updates in residential lease agreements will be 2% during the months of April, May, and June. This period is considered provisional, as it may be extended.
The regulation applies to all residential leases and to all landlords, whether or not they are large property holders. It shall not apply to commercial premises, warehouses, or garages, as it is strictly limited to residential leases subject to the LAU.