Article 18 of the Spanish Urban Leases Act (LAU) outlines, among other provisions, the procedure for updating a property's rent. Although the LAU states that, in the absence of a specified index, the Competitiveness Guarantee Index (IGC in Spanish) will apply, the most commonly used benchmark for rent adjustments is the Consumer Price Index (CPI).
In this article, we explain how the CPI is calculated, how it is applied, and the impact that the recent increase, 1.9% in May, has had on rental prices.
What is the CPI, and how is it calculated?
The Consumer Price Index (CPI) is an indicator that measures changes in the cost of living and the purchasing power of a country’s citizens. A positive CPI indicates a rise in prices, while a negative CPI suggests they have fallen.
The CPI is calculated by the Spanish Statistics Institute (INE), using a representative selection of commonly purchased goods and services, known as the "shopping basket", as a reference. These prices are then compared with those from previous months to track inflation trends.
How is rental income updated with the CPI?
According to Article 18 of the LAU (Spanish Law on Urban Development), the rent may be updated annually during the term of the contract, but only if this has been expressly agreed. Suppose the contract includes an update clause but does not specify a reference index or method. In that case, the annual variation of the Competitiveness Guarantee Index (IGC) will be applied on the date of each update, using the most recent index published at the time of renewal.
If no agreement on an annual update exists, the rent will remain unchanged for the duration of the lease agreement.
That said, the most commonly used indicator in rental contracts is the Consumer Price Index (CPI), which can be applied for annual rent reviews. In such cases, the CPI figure published two months before the review date is used, as the official data is generally released on the 15th of each month, and landlords must give at least one month’s notice before the updated rent takes effect.
How CPI evolved in 2023, 2024 and 2025
According to INE data, this is how the CPI evolved:
| MONTH | CPI 2023* (%) | CPI 2024* (%) | CPI 2025 (%) |
| January | 5.90% | 3.40% | 3.00% |
| February | 6.00% | 2.80% | 3.00% |
| March | 3.30% | 3.20% | 2.30% |
| April | 4.10% | 3.30% | 2.20% |
| May | 3.20% | 3.60% | 1.90% |
| June | 1.90% | 3.40% | |
| July | 2.30% | 2.80% | |
| August | 2.60% | 2.20% | |
| September | 3.50% | 1.50% | |
| October | 3.50% | 1.80% | |
| November | 3.20% | 2.40% | |
| December | 3.10% | 2.80% |
*In 2022 and 2023, the government established a 2% cap on rent increases for annual contract renewals. In 2024, the cap was 3%. If the CPI fell below 3%, the increase was applied at the inflation rate.
How to calculate the rent increase using the CPI?
To calculate the rent increase using the CPI, you must follow these steps:
- Take the current rent as a reference
- Convert the CPI percentage to a decimal (e.g., 3% becomes 0.03)
- Multiply the current rent by the decimal
- Add the increase to the current rent
Case study
Leaving aside the new INE index for rent updates, let’s look at an example using the May 2025 CPI, which stands at 1.9%. If the tenant was paying €1,200 per month, the rent increase would be 1.9% of €1,200, that is, €22.80. This means the updated rent would be €1,222.80 until the next annual review.
To calculate the revised rent, you can use the official INE online tool. Simply enter the current monthly rent and the CPI figure from two months before the contract’s anniversary date (as rent is typically paid in the first week of the month, while the INE publishes final CPI data on the 15th). Once you have the new figure, remember to notify the tenant at least one month before the new amount comes into effect.
The CPI rent update, according to the contract
Rent updates vary depending on the date the lease is updated. However, all rental contracts updated between 1 April 2022 and 31 December 2024 were dissociated from the CPI. In 2022 and 2023, rent could increase by a maximum of 2%, and in 2024, the cap was set at 3%. If the CPI was lower than these caps in any given year, the rent was updated using the lower CPI value.
In contrast, commercial leases continue to be updated based on the index agreed between the landlord and tenant, often the CPI.
2025 rent updates
Since 1 January 2025, rental contracts signed after the Housing Law came into force (May 2023) are updated according to the new index established by the Spanish Statistics Institute (INE). This index is defined as the lowest value among the annual rate of change of the CPI, the annual rate of underlying inflation and the adjusted average annual rate of change. In May 2025, this index stood at 1.9%.
For rental agreements signed before the Housing Law came into effect, rent updates are governed by whatever the parties agreed in the contract. In most cases, this is the Consumer Price Index (CPI).
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