Anyone renewing a tenancy this summer will see the steepest increase in twenty months. On a rent of €1,000 a month the rise comes to between €25 and €36 — that is €290 to €420 over a year, and up to €600 in Barcelona. What is more, two neighbours with identical flats in the same building will be handed different amounts, and the reason lies neither in the building, nor the city, nor even the landlord, but in the date the contract was signed. Here is which index applies to which contract, what it means in money, how quickly homes are being let, and what a landlord may and may not do inside a property they have rented out.
Content:
- Two indices and the dividing date of 26 May 2023
- What it means in money
- Rents have reached an all-time high
- How fast homes let: 17% of contracts close within a day
- What a landlord may and may not do in a let property
- What this means for an owner-investor
- Frequently asked questions
Two indices and the dividing date of 26 May 2023
Spain operates two different mechanisms for the annual review of rent, and the line between them runs along the date the housing law took effect.
Contracts signed after 26 May 2023 are indexed to IRAV, the state reference index for rent revision calculated by the National Statistics Institute. In July it stood at 2.49% against 2.44% in June — the highest reading since January 2025, when the index became the mandatory benchmark.
Contracts concluded before that date continue to follow the consumer price index or whichever measure the contract itself specifies. The institute published final July inflation figures on 13 August, revising its preliminary estimate upwards to 3.6% year on year, the highest since May 2024.
The gap between the two mechanisms exceeds a percentage point, and it converts directly into money.
What it means in money
| What is indexed | Contract after 26.05.2023 (IRAV 2.49%) | Contract before 26.05.2023 (CPI 3.6%) |
|---|---|---|
| National average | around €290 a year, €24 a month | around €420 a year, €35 a month |
| Barcelona | around €415 a year | around €600 a year |
| Madrid | around €400 a year | over €560 a year |
| Palma | around €400 a year | over €560 a year |
The simplest way to grasp the scale is with a round figure: on a rent of €1,000 a month, applying July's IRAV in full adds €24.90 monthly. Under the consumer price index the same flat would rise by nearly €36 a month.
One procedural detail matters: the increase is not automatic. The landlord is obliged to give notice a month before the new amount applies. Without that notice the previous rate stands until the next review date — a case where a formality is worth real money to both sides.
The 26 May 2023 line created two parallel realities on the market: neighbours in the same block pay under different rules and only find out when they renew, note lawyers working with rental housing in Spain.
Rents have reached an all-time high
Indexation lands on a market already at its peak. In July the average rent in Spain reached €15.3 per square metre — the highest figure on record, up 6.8% over the year.
By city the picture runs as follows: Madrid €23.2 per square metre, Barcelona €20.1, Palma €19.2. The fastest growth is not in the capital: Girona added 19.5% over the year, Toledo 12.2% and Soria 11.2%. Declines were recorded in only two provinces — Álava at minus 2.7% and Gipuzkoa at minus 0.9%.
Forecasts point to continued growth in the coming years, though at a more moderate pace of roughly 3–4% annually. The cause is the same supply shortage every market participant cites: housing is built more slowly than new households form.
How fast homes let: 17% of contracts close within a day
The second figure worth holding in mind when calculating yield is how quickly a property finds a tenant. In the second quarter 17% of all rental deals in the country closed within a single day.
The territorial spread, however, is enormous, and it undermines any notion of one uniform Spanish market:
- Fastest — Ceuta 67%, Teruel 50%, Huesca 44%, Barcelona 36%, Melilla 31%, and Girona, Guadalajara and Tarragona at 30% each.
- Slowest — Madrid and Málaga at 9%, Valencia 14%, Seville 13%.
- In Soria no same-day deals were recorded at all.
By province Teruel leads with 39% and Barcelona follows with 35%, while Cáceres trails at 3%, Ourense at 6% and Soria at 8%.
For an owner this translates into different void periods between tenants: in Barcelona a property goes almost instantly, in Madrid the search takes weeks. For someone relocating the conclusion is the reverse — in Barcelona the decision has to be made on the day of the viewing, or the flat will be taken.
What a landlord may and may not do in a let property
In August two Spanish rulings on video surveillance were handed down that appear to contradict one another but in fact concern different relationships.
The Supreme Court permitted cameras in a building's common areas even against the objection of one resident. A Madrid resident challenged the installation following incidents of vandalism, citing privacy, but the court found the measure proportionate. The conditions are set out clearly:
- The decision is taken by a qualified majority under article 17.3 of the Horizontal Property Act — three fifths of owners representing three fifths of participation shares.
- Only common areas may be filmed, not the interiors of flats and not the street beyond what is needed to protect the entrance.
- Warning signs are mandatory.
- Access to footage is limited to authorised persons: the administrator or a technical specialist.
- Storage is capped at 30 days, except where a recording documents a crime or an infringement.
The data protection authority fined an owner €6,000 over cameras in a flat he was letting room by room. Four cameras covered the hallway, the kitchen, the staircase and the water heater. A tenant discovered that outsiders were watching the footage: she received messages describing what was happening in the flat.
The key finding: a consent clause written into the tenancy agreement does not save the situation. The authority deemed it abusive — consent under the European data protection regulation must be freely given, and the imbalance between the parties in a tenancy means it is not. The owner was ordered to remove the system entirely and confirm it with photographs.
The difference between the two rulings is straightforward: the first concerns property shared by neighbours, where the will of the owners' association applies; the second concerns a home someone occupies as their own.
What this means for an owner-investor
- Calculate the yield using the indexed rate. On renewal you will raise the rent by 2.49% or 3.6% depending on the contract date, not by the market's growth, which reached 6.8% in July.
- Check the municipality's status before buying. In some cities a separate limit applies: the price of a new tenancy is tied to the previous contract or to a reference index.
- Follow the notice procedure. A month's warning is not a formality — without it the increase does not apply.
- Do not count on video surveillance inside a let property. A clause in the contract does not work, and fines start in the thousands of euros.
- Budget for different void periods by region. In Barcelona a property lets within a day, in Madrid the search takes weeks, and that affects returns more than any difference in the rate.
Frequently asked questions
By how much can a landlord raise the rent on renewal?
Not by the market's growth but by the value of the relevant index. For contracts signed after 26 May 2023 that is IRAV, which stood at 2.49% in July. Earlier contracts follow the consumer price index — 3.6% according to the final July figures.
Which index applies to my contract?
The signing date decides everything. After 26 May 2023 it is IRAV; before that date it is the consumer price index or whichever measure the contract specifies.
What if the landlord failed to give notice of the increase?
A month's notice is compulsory. Without it the new amount does not apply, and the previous rate stands until the next review date.
Can you install a camera in a flat you rent out?
No, not even with a clause in the contract. The data protection authority treats such consent as invalid because of the imbalance between the parties, and the fine in the known case came to €6,000. Cameras in a building's common areas are a separate matter, decided by the owners' association.
Where do homes let fastest?
In Barcelona 36% of deals close within a day, in Girona and Tarragona around 30%. In Madrid and Málaga the figure is 9%, meaning the search for a tenant takes noticeably longer.