EDITING |
In this article, we will address the indices to be applied in the update of residential lease contracts. The index for updating rental prices came into effect in January 2025. This index, called the Reference Index for Residential Leases (IRAV), will only apply to contracts signed from May 25, 2023, the date on which the new state housing law that implemented this system came into effect.
The reference index for the annual update of rental contracts (IRAV) experienced a decrease in January, reaching 2.19%, which represents its lowest level in the last three months, according to data from the National Institute of Statistics (INE). In December, this index was at 2.28%, and in November it was 2.20%. This indicator establishes the maximum increase allowed for the update of rental prices. Currently, it only applies to contracts signed from May 25, 2023, the date on which the new state housing law that implemented this system came into effect. For rental contracts signed before May 25, 2025, the limit established by the Urban Leasing Law (LAU) will apply.
The INE publishes this index (IRAV) monthly with two decimal places, based on the Consumer Price Index (CPI), underlying inflation, and annual variations in both rates. Additionally, other parameters and coefficients established by the Government are considered, taking into account the rental market situation.
The methodology used to calculate this indicator allows for the inclusion of additional variables such as the annual variation rate of the CPI or the adjusted underlying inflation if these present lower values. However, this circumstance has not occurred currently, as the INE has confirmed that the CPI variation in January was 2.9%.
For the year 2024, the update of rents was exceptionally conditioned to a limitation of 3% due to the widespread price increase caused by the conflict in Ukraine. From mid-2022 to 2023, this increase was restricted to 2%.
The rent update is a right recognized to the landlord to adjust the rental price during the contractual term; this update is reviewed upon completing the annual periods from the date of granting the rental contract. However, this possibility can only be demanded during the month of contract renewal, and this clause must be clearly specified in the lease agreement. Otherwise, the tenant has the right to reject such an adjustment. Although this option is mentioned, other references such as the competitiveness guarantee index may be considered; however, these are only applicable if they result in values lower than the official limit established.
