In a decisive step towards the regulation of the rental market in Spain, the National Statistics Institute (INE) has published the resolution defining the new Rent Reference Index for the annual updating of housing rental contracts. This measure, which comes into force on 1 January 2025, responds to the provisions of Law 12/2023, of 24 May, on the right to housing, whose main purpose is to avoid disproportionate increases in rental rents and to protect the balance between landlords and tenants.
Legal Context and Objective
Law 12/2023 incorporates an additional provision to Law 29/1994 on Urban Leases, which entrusts the INE with the definition of an index limiting the annual updating of rents. According to Article 18 of this law, rent must be adjusted to the percentage variation of the Consumer Price Index (CPI), but the new regulation introduces a more precise mechanism that moderates these fluctuations.
The objective is twofold: to protect tenants against excessive rent increases and, at the same time, to ensure that landlords can make reasonable updates within a framework of economic stability.
Monthly publication of the Benchmark Index
The INE will publish this index on a monthly basis, expressed to two decimal places, and based on the most recent data available. This ensures transparency and continuous updating, facilitating its implementation in lease contracts.
How to define the Benchmark?
The benchmark shall be the lower of the following values:
- The annual rate of change of the Consumer Price Index (CPI).
- The annual rate of change of the Underlying Consumer Price Index (Underlying CPI).
- A new adjusted average annual rate of change (TVAMA), calculated using a formula that includes specific parameters:
- α (0.5): A coefficient that moderates the differences in the growth rates of the CPI and the Underlying CPI.
- β (2): A limit related to expected inflation over the medium term, aligned with the European Central Bank’s target.
The formula ensures that the index reflects economic developments and rental market conditions in a balanced way.
Impact on the rental market
The new index acts as a mutually beneficial regulatory mechanism:
- For tenants, it limits rent increases to reasonable values, providing economic stability.
- For landlords, it provides an objective and clear tool to update rents within a stable regulatory framework.
New Calculator for Rent Increases from the Ministry of Housing:
The Ministry of Housing has made available an online calculator for citizens to calculate rent increases in accordance with current regulations: Rental price calculator, based on the Rental Benchmark Index.
Remember to use only official sources to avoid errors or fraud.
Application of indices according to the date of the contract:
- Contracts signed before 25 May 2023: The consumer price index (CPI) will be applied, as was traditionally the case.
- Contracts signed on or after 25 May 2023: The new Housing Rent Adjustment Index (HRAI) will be used.
Access to IRAV:
The IRAV is available on the official website of the National Statistics Institute (INE). Direct access: IRAV en el INE.
This regulation marks a turning point in the management of rental contracts. The introduction of the reference index reinforces the professionalisation of the sector, ensuring that contracts are updated fairly and in accordance with current regulations. It is important to note that it only applies to rental contracts signed after the entry into force of the Housing Act, i.e. on 25 May 2023. Previous contracts will continue to apply the CPI to update the rent.
At Bgestió, as experts in property management, we are committed to adopting and implementing these provisions to offer our clients peace of mind, transparency and efficiency in the management of their contracts within a regulated and professionalised environment.
Photo by Annika Wischnewsky on Unsplash
