Rent Increases in Spain: LAU Article 18, the IRAV Index and the Short-Lived 2026 2 Per Cent Cap

How much a Spanish landlord can legally raise the rent each year is governed by a single article of the Urban Tenancy Law (LAU), modified by three successive reforms that have progressively tightened the ceiling. Since 26 May 2023, the rules split into two regimes: older contracts follow the CPI ceiling established in 2019, while newer contracts use a dedicated rental index (IRAV) published monthly by the INE. In 2026, a short-lived emergency decree (RDL 8/2026) briefly imposed a 2 per cent cap on all rent updates for 37 days before Congress derogated it, reverting to the IRAV system.

What does LAU Article 18 say about rent updates?

Article 18 of Ley 29/1994 (the LAU) is the sole statutory basis for annual rent updates on Spanish residential tenancies. It provides that during the contract’s vigencia, the rent may only be updated by the landlord or tenant on the annual anniversary of the contract, in the terms expressly agreed by the parties. If the contract contains no express update clause, no increase may be applied at all.

Where the contract names a monetary-update mechanism but does not specify which index applies, the rent updates by reference to the annual variation of the Indice de Garantia de Competitividad (IGC), using the latest published figure at the date of update. In all cases, the resulting increase cannot exceed the annual variation of the Consumer Price Index (IPC), again using the latest published figure at the update date.

The updated rent becomes payable from the month following written notification to the other party, stating the percentage applied and, if the tenant requests it, accompanied by the corresponding INE certification. Notification on the preceding month’s rent receipt is also valid.

How did the 2019 reform change the rent-update mechanism?

Real Decreto-ley 7/2019, of 1 March, reformed Article 18.1 in two critical ways. First, it made an express update clause a prerequisite: without one, no update is permitted. Before the reform, the default mechanism applied even where the parties had not agreed a specific index. Second, it introduced the IGC as the default index where the contract names an update mechanism but not a specific index, with the IPC as the ceiling.

The reform took effect on 5 March 2019 and applies to contracts signed after that date. Contracts signed earlier remain governed by the version of Article 18 in force at the time of signing, under the transitory provision of the decree. The short-lived Real Decreto-ley 21/2018, which had introduced a different default mechanism, was repealed by Congress in January 2019 before it took practical effect.

What did Ley 12/2023 change about rent increases?

Ley 12/2023, de 24 de mayo, por el derecho a la vivienda (in force from 26 May 2023) made four changes directly affecting rent updates:

First, it created a new dedicated rental index. The law’s disposicion final primera added a disposicion adicional undecima to the LAU requiring the INE to define, before 31 December 2024, a reference index for annual rent updates that would serve as the ceiling under Article 18. The INE published the Resolucion of 18 December 2024 (BOE-A-2024-26685) defining the IRAV, with first results released on 2 January 2025.

Second, it imposed a 3 per cent cap on annual rent updates for all existing residential tenancy contracts during 2024 (disposicion final sexta), extending an earlier emergency cap originally set by Real Decreto-ley 6/2022 in response to the economic effects of the Ukraine war. This 3 per cent cap applied regardless of what the contract stated and regardless of the actual IPC figure.

Third, it introduced the stressed residential market zone (zona de mercado residencial tensionado) mechanism. In a declared stressed zone, new tenancies on previously rented homes cannot exceed the prior rent adjusted by the annual update clause, with a maximum additional 10 per cent uplift in specific circumstances under LAU Article 17.6.

Fourth, it made estate agency management fees and contract formalisation costs the landlord’s responsibility, not the tenant’s, for contracts subject to the reform.

What was RDL 8/2026 and why did it last only 37 days?

Real Decreto-ley 8/2026, de 20 de marzo (BOE-A-2026-6545), published in the BOE on 21 March 2026 and in force from 22 March, introduced two emergency measures for the residential rental market in response to the economic consequences of the Iran conflict. The decree’s preamble cited the risk that energy-driven inflation would push rental costs beyond 30 per cent of household income, and criticised the refusal of many autonomous communities to declare stressed zones under Ley 12/2023.

The first measure was an extraordinary prorrogation: tenants of habitual-residence contracts ending before 31 December 2027 could demand an extension of up to two years on the same terms, subject to existing landlord-need recovery exceptions. The second measure capped annual rent updates at 2 per cent for any update falling between 22 March 2026 and 31 December 2027. For gran tenedores (large holders), the 2 per cent cap applied in all cases; for other landlords, it applied in the absence of a negotiated agreement.

Congress voted to derogate the decree on 28 April 2026 (BOE-A-2026-9359), with 177 votes against and 166 in favour. The PP, Vox, Junts and UPN voted against; the PNV abstained. The derogation took effect on 30 April 2026 per the BOE record, leaving the 2 per cent cap and the extraordinary prorrogation in force from 22 March to 30 April 2026. For any rent update falling after the derogation, the Ley 12/2023 IRAV framework applies again. A rent update applied during the 37-day window at 2 per cent was lawful at the time, but updates after 30 April 2026 are governed by the IRAV ceiling.

What is the IRAV and how does it replace CPI?

The IRAV (Indice de Referencia para la Actualizacion de Arrendamientos de Vivienda) is the INE’s dedicated rental-update index, defined in the Resolucion of 18 December 2024. It applies as the ceiling for rent updates on contracts signed after 26 May 2023, when Ley 12/2023 entered force.

The IRAV is calculated as the minimum of three values: the annual CPI rate, the annual core CPI rate (IPC subyacente, which excludes energy and unprocessed food), and an adjusted average annual rate that incorporates parameters set jointly by the Ministry of Housing and the Ministry of Economic Policy. The index is published monthly on the same dates as the CPI, expressed to two decimal places.

For May 2026, the INE reported an IRAV of 2.48 per cent, which is the figure applicable to rent updates in July 2026 (the INE publishes the data around mid-month, referring to the preceding month). The IRAV therefore ran below the general CPI, meaning a landlord with a post-May 2023 contract could raise the rent by at most 2.48 per cent at the annual update, not the higher CPI figure. The Ministry of Housing hosts an official calculator at mivau.gob.es where landlords and tenants can verify the applicable figure by contract date.

The IRAV functions as a maximum ceiling. If the contract’s agreed update mechanism produces a figure below the IRAV, the lower contractual figure applies. The IRAV only bites as a cap when the contractual mechanism would produce a higher result.

How do rent-update rules differ for old and new contracts?

The applicable regime depends on when the tenancy contract was signed:

Contract date	Default index (no specific clause)	Ceiling	Stressed-area extra limits
Before 5 March 2019	IPC (per the pre-reform Article 18)	IPC	Not applicable retroactively
5 March 2019 to 25 May 2023	IGC (if mechanism named but no index)	IPC	Not applicable
After 26 May 2023	IRAV	IRAV	Yes, under Ley 12/2023
22 March to 30 April 2026 (RDL 8/2026 window)	All contracts	2 per cent cap (now derogated)	N/A

Contracts signed before 7 March 2019 that contain an IPC clause continue to update by the IPC, subject to any emergency cap in force. The Ministry of Housing’s official calculator page reports the IPC for these older contracts.

Contracts signed after 26 May 2023 use the IRAV as the ceiling, whether or not the contract names a specific index. The IRAV has applied since January 2025; between 26 May 2023 and December 2024 successive emergency caps governed (a 2 per cent cap during 2023 and a 3 per cent cap during 2024).

What is a stressed residential market zone?

A zona de mercado residencial tensionado is a geographic area declared as such by the competent regional housing authority under Article 18 of Ley 12/2023. The declaration requires objective evidence of insufficient affordable housing supply relative to population need, and produces a mandatory three-year plan to correct the imbalance. The central government’s Secretaria de Estado de Vivienda publishes quarterly resolutions in the BOE listing all declared zones, their validity periods and their gran tenedor definitions.

In a declared stressed zone, two additional limits apply to new tenancy contracts:

First, for a home that was rented as a main residence in the preceding five years, the new rent cannot exceed the previous rent adjusted by the annual update clause of the prior contract. A maximum additional 10 per cent uplift applies only where the landlord can demonstrate specific circumstances set out in LAU Article 17.6, such as the property having been unrented for a justified period.

Second, where the landlord is a gran tenedor (an owner of more than 10 urban residential properties, excluding garages and storage rooms, or over 1,500 m2 of built residential surface), or where the home has not been rented as a main residence in the last five years and the zone declaration justifies it, the rent cannot exceed the limit set by the applicable reference price index system.

The stressed-zone declaration is valid for three years and may be renewed annually under the same procedure. As of the Q1 2026 resolution (BOE-A-2026-9175, published 23 April 2026), the only declared stressed zones are in the Basque Country: Astigarraga, Bilbao, Usurbil, Vitoria-Gasteiz, Pasaia, Zestoa and Mondragon. No Andalusian municipality has been declared a stressed zone, meaning the Costa del Sol rental market operates without the additional price and prorrogation restrictions that apply in those Basque municipalities.

Who counts as a gran tenedor?

Ley 12/2023 defines a gran tenedor as a natural or legal person holding title to more than 10 urban properties (excluding garages and storage rooms) or more than 1,500 m2 of built residential surface. In a declared stressed zone, the competent authority may lower this threshold to five or more residential properties, as the Basque Country declarations have done.

The gran tenedor classification carries two obligations in stressed zones. First, the landlord must provide usage and occupancy information on their properties in the zone when requested by the housing authority, within three months. Second, the landlord must accept an extraordinary one-year prorrogation at the end of the contract if the tenant demonstrates social and economic vulnerability through a municipal or regional social services certificate issued within the last year.

How is a rent increase actually notified?

Under LAU Article 18.2, the updated rent becomes payable from the month following written notification to the other party. The notification must state the percentage applied. If the tenant requests it, the landlord must provide the corresponding INE certification of the index figure used.

Notification on the preceding month’s rent receipt is expressly permitted as a valid method. The law does not specify a minimum advance-notice period, but the increase only takes effect from the month after notification, so a landlord notifying in June can only charge the increased rent from July.

If the tenant disagrees with the calculation, they should object expressly before the increased rent becomes payable. Accepting and paying the increased rent without objection does not waive the right to challenge it later, but prompt objection is the safer course.

Worked example: a 2.48 per cent increase on EUR 1,200

Consider a tenancy signed on 1 March 2024 at EUR 1,200 per month with an annual update clause. The first update fell on 1 March 2025. Because the contract was signed after 26 May 2023, the IRAV applies as the ceiling, not the IPC.

If the update falls in July 2026, the applicable IRAV figure is 2.48 per cent (the latest published figure, for May 2026, per the INE). The maximum increase is:

EUR 1,200 x 0.0248 = EUR 29.76

The new rent is EUR 1,229.76 per month from the month after notification. Even if the general CPI were higher at the same date, the IRAV ceiling of 2.48 per cent prevails for this post-Ley 12/2023 contract. If the update had fallen between 22 March and 30 April 2026 (the RDL 8/2026 window), the cap would have been 2 per cent, yielding EUR 24; but since the decree was derogated on 30 April 2026, any update after that date uses the IRAV.

For a contract signed before 7 March 2019 with an IPC clause, the same update would use the IPC figure directly (subject to any emergency cap in force), potentially allowing a different increase.

What are the penalties for an illegal rent increase?

A rent increase that exceeds the legal ceiling or is applied without an express update clause is unenforceable. The tenant can refuse to pay the excess and challenge it. If the landlord applies the increase anyway and the tenant pays under protest, the tenant can recover the overpaid amount.

In practice, the most common resolution path is a written objection citing the applicable index and ceiling, followed by a complaint to the regional housing authority or consumer arbitration if the landlord does not rectify. Court action is available but slow; the express eviction and rent-claim procedure works in both directions.

For landlords who are gran tenedores in stressed zones, failure to provide requested information to the housing authority can trigger administrative sanctions under Ley 12/2023.

How does this interact with the LAU tenancy framework?

The rent-update rules sit within the broader LAU framework for residential tenancies, which our Spanish tenancy law guide covers in full. The key interaction points are: the five-year minimum contract term (proroga obligatoria) under Article 9, the three-year tacit renewal under Article 10, and the extraordinary prorrogation rights in stressed zones under the Ley 12/2023 amendments.

The non-resident rental income tax guide explains how rental income is taxed, while the rental tax deductions guide covers what expenses a non-resident landlord can set against rental income. The renting out your property as a non-resident guide ties the legal and tax obligations together for non-resident landlords. For the rental contract types themselves, the resident rental income tax reduction and the broader tenancy law framework, these cluster pages complete the picture.

This guide is general information, not legal or tax advice. Rules change and individual circumstances differ. Verify current requirements with an independent lawyer (abogado) or tax advisor (gestor/asesor fiscal) before acting.