If you rent, you should know that the Rental Competitiveness Guarantee Index, must be updated annually, based on certain indices, guided by the CPI. In 2022, 2023, and 2024, the Government set the maximums at 2% and 3% exceptionally, breaking with the usual practice.
Rents are supposed to be adjusted using the CPI as an economic indicator; however, another less-known economic marker can also be used. We are referring to the IGC, and this is precisely what we will elaborate on, providing a complete guide in this post.
Many know that since 2022, to update rent, the ceilings indicated by the Government must be considered, setting aside the CPI. In this regard, we must continue to use the Rental Competitiveness Guarantee Index or IGC to comply with current regulations.
The IGC is a reference marker used to determine the aggregate to be applied to rent in lease agreements. This reference is published monthly by the INE, or National Institute of Statistics, which sets an interest rate to harmonize competitiveness redemption costs.
The IGC in force for the period from November 2023 to November 2024 is -0.18%, according to INE disclosure on 01/20/2025. And Law 2/2015, on the de-indexation of the Spanish treasury, indicates that the INE is responsible for calculating and publishing the IGC monthly.
Indeed, the IGC affects lease agreements because it is an interest rate that must be used when renewing rents. All renewed lease agreements are subject to this variation, although the law indicates the existence of a ceiling or cap on these increases.
If the IGC is higher than the CPI, the rental cost will be increased above the latter. However, it is always advisable to discuss the increase with the tenant and resolve it on the best possible terms to avoid misunderstandings.
This is an interesting question. When a lease agreement completes one year, the landlord gains the right to renew the rent. If you apply this reference, the maximum you can increase it by will be 2%, which is the ceiling set by the Government.
The monthly payment can be renewed and demanded from the resident starting 30 days after they have been notified. It is important to emphasize that the notice must state the applied increase rate and, if possible, include the corresponding INE certification.
However, the rental agreement you sign must reflect the possibility of updating it, and if it hasn't been specified, it can no longer be updated. This is a non-literal quote from the content of Article 18 of the LAU.
Otherwise, if it's indicated that the monthly rent can be updated, but no specific index is mentioned, by default you must use the IGC. Always remember that any caps or limits set by the Government in this regard must be respected.
Updating the rent with this Index is very simple; you just need to follow these instructions:
Here's a practical example of rent renewal using the specified Index: If you are renewing a monthly rent of 2,000 euros per month, and the Index is 2%, the resident will have to start paying according to this formula: 2,000 euros + 2% = 2,040 euros.
If you wish to apply the IGC to a lease agreement, first, the possibility of doing so annually must have been agreed upon. Secondly, and if no specific index to be used has been indicated, an agreement must be reached without exceeding the established cap.
Remember that if the possibility of updating the rent was not agreed upon in the agreement, you will not be able to apply any increase, as it was not foreseen. Ultimately, you only need to apply the mathematical formula indicated in the previous section, after sending written notification to your tenant.
You might be interested in: rent-to-own agreement.
Current regulations in Spain allow for a monthly rent increase once a year, and the IGC must be used for this. The legal procedure is very simple, but you must check that:
Finally, the new rent takes one month to apply, meaning it will take effect from the next monthly payment.
By providing clear limits, the IGC contributes to stability and predictability when updating rent. A tenant will be at ease knowing they won't face excessive increases.
Competitiveness in the rental sector is essential to prevent disproportionate increases compared to other EU countries. This makes Spain a desirable destination for residents.
If periods of high inflation arise, the IGC acts as an appropriate brake. Unlike the CPI, which reflects abrupt fluctuations, the IGC is capped. Fortunately, this can offer greater peace of mind to tenants.
Some landlords believe the IGC restricts their freedom to adjust rent in line with true inflation. This could eventually affect their profitability, especially in a scenario of increasing living costs.
While the IGC is certainly linked to Eurozone inflation, it doesn't accurately reflect the specific circumstances of each Spanish region. The real estate sector eventually has areas of high demand, where the IGC may not be sufficient for market price adjustments.
While it is an official resource, many landlords and tenants are unaware of the IGC's existence and its benefits. For this reason, in practice, the CPI continues to be used as a reference for renewals, which can lead to legal issues.
Another interesting question regarding which is better, the CPI or the CGI for renewing the monthly payment, is something that needs to be reviewed. Generally, it will depend on each specific situation, hence the suggestion to review each one.
Generally speaking, the CPI is a more solid and predictable reference marker than the CGI, because the latter is affected by productivity. As is known, productivity has significant variations depending on the economic situation.
It all depends on the prevailing conditions and the party we are referring to, because the tenant could benefit from the aforementioned Index. The fact is that their monthly payment will never increase by more than 2%, even if the CPI is higher than this rate.
However, the owner will not be able to adjust their monetary reality to the real estate sector because the Index limit does not consider the current scenario. Ultimately, if the landlord wants to use the CPI as a reference, it could be much better, but their counterpart will have valid arguments to prevent this.
Given this premise, unfortunately for the owner, they will not be able to request any increase or renewal, in accordance with what is stipulated by law.
Indeed, you can file a claim through legal channels, by means of a Judicial Claim for amounts after the contract signing. Similarly, and through administrative channels, there are consumer rights protection agencies.
Of course, the CGI is published monthly on the INE website; you can go there and consult it whenever you deem necessary.
Yes, this is possible, but for a different index to be chosen, the parties must discuss it, agree upon it, and put it in writing. Remember that ultimately, the index intended for use will depend on what has been agreed upon in the contract.
You may also be interested in: rental agreement template 2025.
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