Bill restricting rent increases receives first legislative approval

Lawmakers have approved on first reading a more restrictive policy for landlords to raise rents.

The proposed law does not affect the current prohibition that rents may not be raised when payment is in a foreign currency, such as dollars.

The proposal would reduce from 15 to 10 percent the annual increase for homeowners who pay in colons when the inflation rate is 10 percent or less.

Home rental agreements are, by law, for three years, so landlords can raise the rent at the end of the first year and the end of the second year. A modest 200,000-colon monthly rent would be 264,500 colons at the end of the second year of the contract if the increase were 15 percent.

The summary of the bill said that landlords were taking

advantage of the 15 percent rule, and that tenants need security.

The summary also pointed out that the 18-year-old restriction on raising rents excessively has been approved by the Sala IV constitutional court.

The measure is No. 18.067.

When the inflation rate is greater than 10 percent in a year, the  Ministerio de Vivienda y Asentamientos Humanos is responsible for setting an approved rental increase maximum, according to the text of the law.

The minister of the Presidencia, Sergio Alfaro, said that the revised rule would generate conditions of greater social equity. Lawmaker have said that renters do not have a strong position to negotiate rents.

Lawmakers also noted that the annual rate of inflation has been less than 10 percent in recent years.

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