On 20 December 2024, the Official State Gazette (BOE) published the methodology for the new Spanish Statistics Institute (INE) index used to update rental prices in 2025: the Housing Lease Reference Index (IRAV). This announcement came just 11 days before the deadline for its publication (31 December 2024), as stipulated by the Housing Law.
It is worth recalling that from April 2022 through 2023, annual rent increases were capped at 2%, rising to 3% in 2024.
In this article, we examine how rental price updates will work under the new INE index, which stood at 2.2% in January 2025, as well as how it is calculated and when it comes into effect.
What is the rental update?
According to Article 18 of the Urban Leasing Act (LAU), rent prices may be updated annually during the term of a rental contract, provided this has been expressly agreed upon. Before 2022, rent was typically adjusted in line with the Consumer Price Index (CPI). However, if no specific index was stipulated, the annual variation of the Competitiveness Guarantee Index (IGC) was applied.
To update the rent, the landlord must notify the tenant at least one month in advance and adjustments can only be made once per year.
New INE index for updating rents
From 2025, rental prices will be updated based on the Housing Lease Reference Index (IRAV), the new INE index, as outlined in the Eleventh Additional Provision of the Housing Law. This new index for rental contracts is determined by the lowest value among three factors: the annual variation rate of the Consumer Price Index (CPI), the annual variation rate of underlying inflation and the adjusted average annual variation rate.
This is the formula for calculating the adjusted average annual rate, which includes two parameters:
- Alpha (0.5), proposed by the Directorate General of Economic Policy, related to the expected long-term growth of the index
- Beta (2%), defined jointly by the Directorate General of Housing and Land and the Directorate General of Economic Policy, considering the conditions of the rental market and coinciding with the ECB's inflation target
Why has the CPI been disconnected from the rent update?
The Consumer Price Index (CPI) was traditionally used to adjust rental prices in line with the economic climate. However, between late 2021 and mid-2022, the CPI soared to record levels, peaking at 10.8% in July 2022. This sharp rise was driven by factors such as:
- Rising electricity prices
- Price increases after the pandemic
- Economic impact of the war in Ukraine
In response to this situation, the Spanish government introduced temporary measures to protect tenants, such as capping rent increases at 2%, which was later raised to 3% in 2024. The Housing Law established that a new, more stable reference index would be introduced to prevent disproportionate increases in rental prices. However, this shift created an imbalance in supply, which further drove up prices.
Where can I see the INE rental price index?
The new INE index for updating rental prices in 2025 will be available on the official website. It will be published monthly, at the beginning of each month, with the first publication scheduled for 2 January 2025. From February onwards, the index will be released in the middle of each month, reflecting the value of the previous month. The official calendar is as follows:
How to calculate the rent increase in 2025?
The updated formula will be similar to that used with the CPI or the limits established in previous years. To calculate the new rent, the INE index percentage will be added to the current monthly rental price.
Practical example
If the rent is €1,200 per month and the contract was signed in June 2024, the rent increase will be applied in June 2025. The landlord must notify the tenant in May 2025 and use the INE index published that same month to calculate the increase.
Let’s assume the index stands at 2.2%. To calculate the increase, we multiply 2.2% by €1,200, which amounts to €26.40. This amount is then added to the monthly rent. Therefore, the updated rent would be €1,226.40.
IRAV's evolution in 2025
This is the evolution of the new index to update rent in 2025 prepared by the INE.
IRAV's evolution in 2025 | |
| MONTH | IRAV 2025 (%) |
| January | 2.20% |
| February | |
| March | |
| April | |
| May | |
| June | |
| July | |
| August | |
| September | |
| October | |
| November | |
| December |
When will the new rental rate be effective?
The new index went into effect on 1 January 2025. From that date onwards, all rental contract updates will be made using this new index, considered more stable than the CPI.
Which contracts will be updated with the new INE index?
The index will apply exclusively to rental contracts for primary residences signed after the Housing Law came into effect on 25 May 2023. Contracts signed before this date will be updated according to the terms established in the lease agreement. The index will not apply to temporary rentals, rooms, commercial premises, offices, garages or storage units.