The New Index for Rent Updates in Spain: How It Works

Spain introduces the IRAV index to calculate lawful rent increases.

As of January 2025, Spain has introduced a new official benchmark for rental price updates known as the Índice de Referencia de Alquiler de Vivienda (IRAV), replacing the previously used Consumer Price Index (CPI) for residential leases governed under the Urban Leases Act (Ley de Arrendamientos Urbanos or LAU). The change, formalized through legislative updates, seeks to provide a more stable and tenant-friendly mechanism for adjusting rent prices annually.

The IRAV is derived from a multi-variable formula that includes the national CPI, core inflation rates, and historical averages over several years. This multi-year smoothing model aims to avoid the volatility that CPI-based adjustments often create, especially during inflation spikes. In its first application, the IRAV was capped at approximately 2.2%, significantly below recent inflation peaks, signaling the government's intent to prevent sudden or excessive rent increases for tenants.

Under Article 18 of the LAU, landlords are still permitted to raise rent once annually, but must now reference the IRAV rather than CPI, and must provide written notice to tenants at least 30 days before the increase takes effect. This change enhances transparency and predictability in the rental process, giving tenants greater financial security and enabling them to better plan their housing costs.

For tenants, this reform is a critical step toward curbing rent-driven displacement and reducing the burden of housing instability. For landlords, it introduces a structured, transparent model for keeping rents aligned with broader economic conditions without placing undue hardship on tenants. As rent affordability remains a national concern in Spain, especially in high-pressure markets like Madrid, Barcelona, and Valencia, the IRAV is seen as a policy tool to create a more balanced and sustainable rental ecosystem.
https://www.idealista.com/en/news/property-for-rent-in-spain/2025/01/31/825724-the-new-index-for-rent-updates-in-spain-how-does-it-work