CPI Rental Updating
Updating the rent of property leases (flats, business premises…).
In order to facilitate this updating we provide you with a link to the website of the National Institute of Statistics (CPI calculation) which will allow you to obtain the updated rental amount. Just introduce the current rental amount and the period that you wish to update and you will immediately obtain the new updated amount and the percentage variation applied.
Replacing the CPI with the Competitiveness Guarantee Index (Índice de Garantia de Competitividad, IGC)
On 31st March the Official State Bulletin (Boletín Oficial del Estado, B.O.E.) published Law 2/2015 of 30th March on the deindexing of the Spanish economy.
This Law modifies Article 18 of the Law on Urban Leasing (Ley de Arrendamientos Urbanos, LAU) 29/94 in such a way that as from 1st April in the absence of an express agreement between the parties on the revision mechanism it will be necessary to be up-to-date with the Competitiveness Guarantee Index (IGC), which is unknown to most players on the leasing market.
The IGC takes as a basis the CPI of the eurozone, from which a part devoted to the compensation of the competitiveness lost in previous years is deducted. Moreover, to make it more stable this IGC will have the limit of a ceiling that may not exceed 2% and a minimum that must be at least 0%.
In consequence, in order to revise the rent of a leasing agreement for housing we must take its date into account:
1.- For contracts subsequent to 1st January 1995 and prior to 6th June 2013:
The revision is carried out according to the CPI during the first five years and subsequently in accordance with what the parties may have agreed in the contract.
2.- For contracts subsequent to 6th June 2013 and prior to 1st April 2015:
That agreed in the contract is applied at all times; nif nothing has been agreed the CPI will be applied.
3.- For agreements subsequent to 1st April 2015:
Section 1 of Article 18 is drafted as follows: the will of the parties continues to apply and the rent will be applied in the terms agreed. If no such agreement exists, however, the revision will not be carried out.
If the lessor and the lessee have stipulated the revision of the rent but not the system or index to be considered, the new Competiveness Guarantee Index (IGC) will be applied and not the CPI. In other words, the subsidiary application of the CPI is replaced with the IGC in order to update the rent of the leasing agreement for the housing, although the parties may continue to agree that the revision is carried out according to the CPI.