In November 2025, the Spanish rental housing market found itself in the spotlight: the IRAV index, used for rent adjustments in new contracts, reached an all-time high of 2.29%. This came as a surprise to many tenants who signed contracts after the amended Housing Law came into effect in May 2023. At the same time, inflation in the country remains steady at 3%, which also affects the rental prices for older contracts.
For those preparing for their annual rent adjustment, the situation is not in their favor. Landlords relying on the IRAV index are already notifying tenants of upcoming increases. Tenants whose contracts predate the reform will face an even more substantial rise—their payments will be recalculated based on inflation, meaning their increase will be higher than under the new index.
Two approaches to rent adjustment
Since May 2023, new rental agreements must reference the IRAV index, calculated by the National Institute of Statistics (INE). This indicator is always lower than inflation and is intended to prevent sharp rent hikes. Older contracts still use the consumer price index (IPC), which often results in more significant rent increases.
In November, the IRAV increased by four hundredths compared to October, setting a new record. Since June of this year, the index has not dropped below 2%, with the lowest value recorded in March at 1.98%. Over the past six months, the IRAV has shown steady growth, which is impacting tenants’ wallets across the country.
Financial burden
According to analysts, the average annual rent increase for long-term contracts linked to the IRAV will be around 250 euros, equivalent to about 21 euros per month. In major cities, where rental costs are traditionally higher, the increase may exceed 300 euros per year. In Barcelona, Madrid, Valencia, Bilbao, San Sebastián, and Palma, tenants will feel especially strong pressure on their family budgets.
For those renting under the old rules, the outlook is even bleaker. Their payments will rise in line with inflation—roughly 330 euros per year or 27 euros monthly. In the largest cities, annual increases can reach 400–500 euros, especially in Barcelona, where rental demand is traditionally high.
Notification requirements
Legislation requires landlords to notify tenants in advance of any upcoming rent change. The notice must be sent at least one month before the review date and must specify the percentage increase, including, if necessary, supporting documentation from INE. If the contract does not specify annual indexation, the landlord has no right to increase the rent before the end of the current agreement.
In practice, this means that if a contract expires, for example, on January 19, a rent increase notice must be sent as early as December. Otherwise, the tenant may dispute the increase. It’s important to remember that any changes must be clearly stated in the contract, otherwise they will not have legal force.
How the IRAV is calculated
The IRAV index is calculated based on several economic indicators: inflation, core inflation, and the difference between their annual growth rates. Additionally, a special parameter reflecting long-term expectations for the rental market is taken into account. All this data is adjusted using a coefficient set jointly by the Ministry of Economy and the Ministry of Housing, depending on the current market situation.
As a result, for the annual rent adjustment, the minimum value of three indicators is chosen: the annual inflation rate, the core inflation rate, and the adjusted average rate. This approach helps prevent sharp rent increases and protects tenants from excessive costs.
Legislative updates
The introduction of the IRAV is a direct result of the new version of the Law on the Right to Housing, which requires government authorities to develop a transparent and predictable mechanism for rent review. According to the law, a single index aimed at limiting annual rent increases and preventing unreasonable price spikes was to be approved by the end of 2024.
IRAV is now a mandatory tool for all new rental agreements signed after May 2023. Previous contracts remain subject to the earlier rules, but additional legal changes may be introduced in the future to further protect tenants’ interests.
