IRAV rental price index explained

Raymundo Larraín Nesbitt, February, 24. 2025

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Introduction

Spain’s new Housing Law of 2023, introduced a new index to which all residential rental contracts must be indexed going forward. It replaces the popular Consumer Price Index (or CPI, for short) which was used by almost all rental contracts in Spain.

IRAV stands in Spanish for ‘Índice de Referencia de Arrendamientos de Vivienda’ (or Rental Price Index, in English).

What is the IRAV?

It’s a new rental price index elaborated by Spain’s National Institute for Statistics (INE). Following the approval of the new Housing law, all landlords and tenants must use the IRAV to update their rental contracts every year in line with inflation. The IRAV will be updated and published monthly.

To which contracts does the IRAV apply?

The rental price update index applies only to contracts signed on, or AFTER, the new Housing Law came into force on the 26th of May 2023.

What happens with rental contracts that do not include a rental update clause?

As a general rule, landlords may not update the rental payment, which must remain the same during the contract’s duration until its termination.

What happens to rental contracts signed before the Housing Law was passed?

They carry on the same. If they had already included a rental update clause, they continue to use the price index to which they were benchmarked, such as the Consumer Price Index.

However, it should be noted the Spanish government capped the increase of the CPI which currently stands at 2% until further notice.

Does the IRAV apply to all rental contracts?

No, as mentioned in the article’s introduction, it only applies to residential contracts.

Meaning other types of contracts are excluded from its application, such as:

Holiday rentals
Commercial rentals (offices)
Parking spaces
Storage rooms
Etc

Give us a practical example of how IRAV works

Let’s imagine we signed a posh housing rental in Claudio Coello in Madrid in December 2023 for €3,000/month. After 12 months are up, every December, our monthly rental payment will reset in line with the published IRAV.

Our landlord’s lawyer will serve us a registered letter informing us our rental has now been updated as of the 1^st of December 2024 in line with the published IRAV. For the month of December 2024, the published IRAV was 2.28%.

So, the updated monthly rental will be €3,068.40, which will apply over the next 12 months until it is reset again next December.

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