How to update the rent of a rental contract in Fuerteventura?

How to update the rent of a rental contract in Fuerteventura?

So you will have to update the rent of a rental contract in Fuerteventura after the entry into force of the 3% rent limit.

The rental price in Las Palmas has risen by 12.5% in the last year, from 12.8 euros per square meter in May 2023 to 14.4 euros per square meter in May 2024. This is reflected in the latest prices published by Idealista.

*Find out all the details about house prices in Fuerteventura by downloading our latest real estate report.

Fuerteventura Price Report [Download]

However, if we look further back, we observe an even greater price increase, going from 10.4 euros per square meter in May 2019, to the current 14.4 euros, which represents a rise in the price of rent in Las Palmas of 38.46% in the last 5 years.

“In the last 5 years the price of rent in Las Palmas has risen by 38.46%.”

In order to try to curb this rapid increase in the price of rents, the Government approved, through Royal Decree-Law 6/2022 of March 29, an extraordinary limit on annual rent updates. In the following article we explain you how to update the rent of a rental contract in Fuerteventura from 2024 onwards after the entry into force of the new regulations.

Updating of rental income by CPI

It should be noted that if the lease has not been updated on an annual basis, the rent cannot be updated. In order to do so, it must be clearly specified in the lease.

On the other hand, if the renewal of the rent has been agreed but no specific method has been specified as to how this is to be done, the benchmark to be used is the Competitiveness Guarantee Index (GCI).

Despite these considerations, the most common method to update the rent of a rental contract in Fuerteventura is the Consumer Price Index (CPI), something that is usually defined in the wording of the contracts.

“The Consumer Price Index (CPI) is an indicator that measures the change in the price of living and the purchasing power of a country’s citizens.”

A positive CPI implies that consumer prices have risen, while a negative CPI implies that prices have fallen. This indicator is calculated by the National Statistics Institute (INE) taking as a reference the products of the most consumed shopping basket and comparing them with the prices of these same products during the previous months.

How to update the rent with the CPI?

If you are the owner or tenant of a rental contract in Fuerteventura that is updated by CPI, you should consult the value published by the INE two months before the renewal. On the 15th of each month the INE updates the Consumer Price Index. It should be noted that the lessor must communicate this increase to the lessee one month in advance.

Example: Updating rent with CPI

Let’s imagine that we have to update our rental contract in Fuerteventura in July 2024. For this purpose, we will take as a reference the CPI of two months earlier, i.e., in our case, the CPI of May 2024, whose value was 3.6%. If we have rented our apartment in Fuerteventura for 800 euros per month, its new price after the renovation will be 828.80 euros.

On the website of the National Institute of Statistics you can simulate the update of the rent of a rental contract instantly.

Rent update in 2024

Following the entry into force of Royal Decree-Law 6/2022 of March 29, all leases to be updated between April 1, 2022 and December 31, 2024 will be decoupled from the CPI and will increase by a maximum of 3%. This value is the limit established by the Government in Final Provision 6 of the new Housing Law.

Note: If the CPI value is less than 3% at the time of updating the rent, it will be updated by that value.

Example: Updating the Rent in 2024

Let’s imagine that, once again, we have to update a rental income in Fuerteventura in July 2024 and we have to take advantage of the 3% limit established by the Government. In this case, the increase will be a maximum of 3%, so that after the renewal we will pay 824 euros, 4.8 euros less than if we were guided by the CPI.

Updating of rental income in 2025

But what about leases after 2025? Although it is not yet known what the new index for updating rental prices will be, the Government has already announced that it will be more stable and lower than the current CPI.

Who is affected by the 3% limit?

The 3% limit affects all leasing contracts for permanent housing, excluding leasing contracts for commercial premises, offices, industrial buildings and tourist homes.

How to manage my rent?

Keeping up to date with all the regulations related to renting a home can be complicated. Income tax update, deductible expenses in the income tax return, aids….. are just some of the issues you should be aware of that directly affect the economics of landlords and tenants.

In Destiny Home we have a rental management department from which we take care of all the formalities related to the rental of your home.

  • Tenant search
  • Rent setting
  • Maximizing returns
  • Drafting and updating of contracts
  • Cleaning Services
  • Attention to incidents

If you have a property in Fuerteventura and you would like to start making it profitable through long or short term rentals , in Destiny Home you will find the support you need. Contact us and we will explain everything about our rental management services so that you can start receiving regular income from your property without having to worry about anything.

Contact rental management