Rents on residential properties were raised by on average 4,7 per cent in July 2013, the largest annual increase since 1994, according to CBS. This is on top of large rent increases seen last year when the government ruled that thousands of houses were not longer to be rent controlled.

Part of the increase, 2,5 per cent, was based on the inflation rate over 2012, but the rest was dependent on the income category of the property’s occupants. People earning over 33.614 euros received a 1,5 per cent increase, while incomes up to 43.000 got an extra 2 per cent and incomes over this incurred 4 per cent.

The average rent increase of 4,7 per cent is thus 2,2 percentage points higher than the inflation rate for 2012. This is the first time since 1996 that the difference between the rent increase and the inflation rate over the preceding year is greater than 2 per cent.

Variable increases

Tenants in the highest income category who are living in dwellings owed by social housing corporations had the highest rent increase.

Four in five residential properties are owned by non-profit organisations, eg. housing corporations. Their rent increase averaged 5 per cent, as opposed to the average 3,7 per cent increase imposed by private landlords.

Liberalised rents, where the rent exceeds a certain limit at the time the contract is concluded, were raised by 3,9 per cent. Non-liberalised rents were higher, at 4,7 per cent. For liberalised contracts, rents are usually increased when a new tenant moves in, making it something worth checking when it comes to finding a house.

Maximum increase not for everyone

Social housing corporations were the most likely landlords to impose the maximum rent increase for properties below the liberalisation limit.

The majority of households who rent from social housing corporations are low income ones; thus, for 80 per cent of low-income tenants, rent increased by the maximum of 4 per cent.

For households on mid-level incomes, just under half were charged the full 4,5 per cent increase, while just over half of all high-income tenants had to pay the maximum increase for their level of 6,5 per cent.

People renting from private landlords were less likely to receive the full increase; less than a third of all high-income and mid-income households had to pay the maximum for their level.

Source: CBS