Rent Increases in Spain: Calculating with IRAV Instead of IPC

When your landlord on Mallorca announces the annual rent increase, it pays to look closely at the index: since January 1, 2025 the IRAV caps the annual update for many contracts, not the consumer price index IPC anymore. Yet many landlords and even property managers still calculate with the IPC, and the difference adds up over the years. This post shows you which index applies to your contract, how to recalculate the increase yourself and how to reject an incorrect demand cleanly. The basics on contract duration, deposits and notice periods are in the guide to rental contracts in Spain.

What is the IRAV?

The IRAV (Índice de Referencia para la Actualización Anual de Vivienda) is the reference index published monthly by Spain's statistics office INE. Since January 1, 2025 it caps the annual rent update of residential contracts signed on or after May 25, 2023. It was introduced by the housing law Ley 12/2023 so that rents no longer rise one-to-one with inflation.

Technically, the INE takes the lowest of three values for each month: the annual rate of the general IPC, the annual rate of core IPC (excluding energy and unprocessed food) and an additionally dampened average rate. As a result the IRAV can never sit above the IPC and often sits below it. The current values are published by the INE in a continuously updated table. The most recently published value is 2.44 percent (June 2026).

Which index applies to your rental contract?

What counts is the date the contract was signed, not the date you moved in. There are three cases:

• Contract from May 25, 2023 onwards: The annual update has been capped by the IRAV since January 1, 2025. If your contract names the IPC, the lower of the two values applies. The legal basis is the Ley 12/2023 por el derecho a la vivienda.
• Contract from before May 25, 2023: The index agreed in the contract applies again, in practice almost always the IPC. The transitional caps of 2 percent (2023) and 3 percent (2024) have expired.
• No update clause in the contract: Then the rent may not be increased at all during the term. Article 18 of the LAU (Ley de Arrendamientos Urbanos) requires an explicit agreement.

Calculating a rent increase with the IRAV: a worked example

The math itself is simple. Say you signed a contract in July 2024 for €1,400 in base rent. On the anniversary in July 2026 your landlord may apply at most the last published IRAV, which is 2.44 percent:

For comparison: had the landlord wrongly applied an IPC of, say, 3.0 percent, the new rent would be €1,442.00. That is €7.84 per month too much, around €94 a year. Since every further increase builds on the already raised rent, the error grows year after year. Given the already high rental prices on Mallorca, that is not small change.

Can the landlord catch up on several missed years at once? No. A forgotten update does not work retroactively. The landlord can only adjust the rent from the month after the written notice; missed years lapse without replacement.

Rejecting an incorrect rent increase in writing

If the announced increase is above the permitted index, object in writing and in a provable way. This approach has proven effective:

1. Request the basis of the calculation: which index, which monthly value, which starting rent?
2. Recalculate it yourself and state the correct value with its source (the INE table) in your reply.
3. Send the objection by burofax with content certification; that is the standard form of evidence in Spain.
4. Keep paying the old rent plus the correctly calculated increase, not simply nothing at all. Withholding payment entirely risks termination for arrears.
5. If the landlord does not budge, the consumer arbitration service of the Balearic Islands or a rental law attorney can help.

Seeing a lawyer is worthwhile above all when several years of wrong indexation are at stake, when the landlord threatens to terminate, or when the end of the contract is approaching at the same time.

Does the IRAV also apply to holiday rentals or commercial premises? No. The IRAV only caps the annual update of residential contracts under the LAU. Seasonal contracts, holiday rentals and commercial leases continue to follow whatever was agreed in the contract.

Conclusion

Since January 2025 there are two worlds: contracts signed from May 25, 2023 onwards are capped by the IRAV (most recently 2.44 percent), older contracts follow their own clause, usually the IPC. Recalculate every announced rent increase yourself, ask for the basis of the calculation and object by burofax if the wrong index was applied. Without an update clause, the rent may not rise at all during the term. And if the dispute stretches over years of wrong indexation, get legal support; the difference often justifies the fee quickly.