What is IPC?
In Spain, whether you are renting a house or a store, you will often see a clause in the contract that the rent will increase with the IPC.
IPC is the Spanish acronym for Índice de Precios al Consumo, which means price index.
It is common for rents to be updated with the IPC.
When the IPC goes up, it means that prices in general goes up. Usually the IPC goes up 1% to 2% every year, so the amount involved is not very big and it does not have a big impact on the tenant. Nevertheless, during the last years IPC index has increased a lot due to the Covid and global economical context.
What are the disadvantages of the IPC clause for the tenant ?
The IPC clause is mainly a landlord’s fear that the living cost will go up while the rent remains the same. This clause is to protect the interests of the landlord. In general, prices rise every year, so the IPC clause is equivalent to the tenant having to pay more rent every year. Although the amount is not very large and such a clause is within the realm of reason, it would be best if it could be avoided.
Rent increase limit 2%
In order to protect tenants from price increase, the Spanish goverment has established a limit of 2%. Landlords will only be able to raise their tenants’ rents by a maximum of 2% during 2023.
