New reference index launched for the annual rent update of Spain's residential lease agreements
Published on 13th Jan 2025
The new index will be set as the reference limit replacing the Consumer Price Index (CPI) that has been applicable until now
The National Institute of Statistics (INE) has defined a new reference index for the annual update of rents in residential lease contracts (RIUR).
The INE introduced the new reference index for the annual update of rents in residential lease contracts by resolution on 18 December 2024. It replaces the CPI as the main reference index for updating contracts signed from 25 May 2023. The resolution came into force on 1 January 2025, from which date the RIUR is applicable.
Lease contracts for uses other than dwelling will be governed by the will of the parties in accordance with the provisions of Act 29/1994, of 24 November, on Urban Leases. The RIUR will not be applicable to these contracts unless an express agreement has been established in this regard.
RIUR implementation
The implementation of the RIUR was driven by Act 12/2023, of 24 May, on the right to housing, which introduces the eleventh additional provision and modifies article 18 of the Urban Lease Act, by virtue of which it is established that the INE must define, before 31 December 2024, an index that serves as a reference limit for the annual update of residential lease contracts provided for in article 2.1 of the Urban Lease Act. The aim is to avoid disproportionate rent increases and provide greater stability in the market.
Previously, the Spanish government introduced limits to the rent update in residential lease contracts. Specifically, during the years 2023 and 2024, the update was extraordinarily limited to 2% and 3%, respectively, due to the inflationary crisis caused by various factors such as the war in Ukraine.
For the calculation of the RIUR, the lower value between the annual variation rate of the CPI, the annual variation rate of the underlying CPI and the adjusted annual average variation rate will be taken. This methodology has been developed with the participation of the Ministry of Housing and Urban Agenda and the Ministry of Economy, Trade and Business.
The RIUR will not apply to all habitual residential lease contracts but only to contracts signed after 25 May 2023, coinciding with the entry into force of the Housing Act. Contracts signed before this date will continue to apply the CPI or the Competitiveness Guarantee Index (CGI) as the index for the update, as agreed in each contract.
Osborne Clarke comment
The RIUR will apply as a limit for the annual rent update, regardless of whether the landlord is a large holder or not, and whether the homes are located in a stressed residential market area.
The new INE index for updating the rent in 2025 will be available on its official website. The first publication occurred on 2 January 2025. From February, it will be published in the middle of each month and will reflect the value of the previous month.
The first value of the RIUR, which takes November 2024 as a reference, has been set at 2.2%, which will be the maximum limit for rent updates in January 2025.
