If you live renting in Madrid and you have to renew your contract this year, you should know that the maximum increase allowed is conditioned by the new Housing Law and the official index approved by the National Institute of Statistics (INE).
For contracts signed after May 26, 2023, the landlord can only apply an increase limited to the Housing Lease Reference Index (IRAV), which for September 2025 is exactly 2.19% per year, according to official INE data. Thus, if you pay €1,000 in rent, the maximum increase would be €21.90 per month in the renewal of the contract, and it cannot be higher than this percentage in any case.
How the IRAV figure is calculated
This figure is independent of general inflation and even of what the major price portals indicate, since the Government eliminates from 2023 the direct reference to the CPI and establishes new ceilings to avoid abusive or speculative increases. In previous years, the increase could be 2% in 2023 and 3% in 2024, but for 2025 owners must stick to the officially published monthly IRAV – which is below the CPI increase for that month, at 2.7% – and adjust the new price to this limit.
For contracts prior to May 26, 2023, the increase is still calculated based on the corresponding CPI or the Competitiveness Guarantee Index, as agreed in the original contract. However, if your lease lacks an updating clause, the landlord will not be able to raise the rent. Any proposed increase must be communicated to the tenant at least one month in advance; otherwise, or if the legally permitted index is exceeded, the increase may be considered invalid.