If you are renting property, you should know that the Rental Competitiveness Guarantee Index is applied annually, based on the applicable legal framework. In 2022, 2023, and 2024, the government established temporary caps of 2% and 3% on rent increases under extraordinary measures, departing from previous practices.
Rents were traditionally adjusted using the CPI, an economic indicator widely known among the public. However, we are now referring to the IGC, which serves as the applicable benchmark under current law. In this guide, we provide a comprehensive explanation of how it works.
Since 2022, rent updates must follow the index established by the government, rather than relying on the CPI. In this context, the Rent Competitiveness Guarantee Index (IGC) must be used to comply with current regulations.
The IGC is a benchmark index used to determine the adjustment applicable to rent in lease agreements. This reference index is published monthly by the National Statistics Institute (INE), which establishes the percentage used to help maintain economic competitiveness and regulate indexed adjustments.
The IGC in force for the period from November 2023 to November 2024 is –0.18%, according to the official publication issued by the National Statistics Institute (INE) on January 20, 2025.
Additionally, Law 2/2015 on the De-indexation of the Spanish Economy establishes that the INE is responsible for calculating and publishing the IGC on a monthly basis.
Indeed, the IGC affects lease agreements, as it is the index that must be applied when renewing rental contracts, where applicable. All lease renewals are subject to this adjustment; however, the law establishes a cap or maximum limit on these increases.
If the IGC is higher than the CPI, the rent may be increased accordingly, potentially exceeding the CPI-based adjustment. However, it is always advisable to communicate openly with the tenant and address any increase under mutually agreeable terms in order to avoid misunderstandings.
When the lease agreement reaches its one-year anniversary, the landlord has the right to update the rent, provided this possibility was included in the contract. If the referenced index is applied, the increase may not exceed the legal cap established by the government (currently 2%, where applicable).
The monthly rent may be updated and charged to the tenant after providing 30 days’ prior notice. It is important to specify the percentage applied for the increase and, whenever possible, attach the corresponding certification issued by the National Statistics Institute (INE).
Furthermore, the lease agreement must explicitly include the possibility of updating the rent. If this clause was not specified in the contract, the rent cannot be adjusted. This interpretation is consistent with Article 18 of Spain’s Urban Leases Act (LAU).
If the contract states that the rent may be updated but does not specify an interest rate or index, the IGC will apply by default. However, any caps or limits established by the government must always be respected.
Updating the rent using this index is straightforward—simply follow these steps.
Here is a practical example of a rent renewal using the indicated index: if you are renewing a monthly rent of €2,000 and the applicable index is 2%, the updated rent would be calculated as follows: €2,000 + 2% = €2,040.
If you wish to apply the IGC to a lease agreement, the annual adjustment clause must have been explicitly included in the contract. Additionally, if no specific index was originally designated, both parties must reach a written agreement—without exceeding the legal limits in force.
Remember, if the possibility of updating the rent was not established in the contract, no increase may be applied. Ultimately, you must strictly follow the mathematical formula specified in the agreement and provide prior written notice to the tenant.
You may also be interested in: Lease-to-Own Agreement.
Under current regulations in Spain, rent may be increased once per year. When applicable, the IGC must be used in accordance with the law. The procedure is straightforward; however, you must verify the following:
Finally, the new rent amount takes effect one month after it is established, meaning it will apply starting with the next monthly payment.
By establishing clear limits, the IGC promotes stability and predictability in rent updates. Tenants benefit from the reassurance that they will not face excessive or unexpected increases.
Competition within the rental sector plays an important role in preventing disproportionate rent increases compared to other EU countries. This contributes to Spain’s position as an attractive and competitive destination for residents.
During periods of high inflation, the IGC acts as a regulatory cap, preventing rent increases from fully reflecting sharp market fluctuations. While this limitation can restrict landlords’ returns, it also provides tenants with greater stability and peace of mind.
Some landlords argue that the IGC limits their ability to adjust rent in line with actual inflation. This may ultimately impact profitability, particularly during periods of rising living costs.
The IGC is linked to inflation within the Eurozone, but it does not always accurately reflect the specific economic conditions of each Spanish region. In high-demand rental markets, the IGC may not fully align with local market price dynamics.
The IGC is certainly an official index; however, many landlords and tenants may be less familiar with its structure and benefits. As a result, the CPI continues to be more widely used in practice as a benchmark for rent renewals, which can sometimes lead to legal disputes if not properly agreed upon in the contract.
Another relevant question is which index is better: the CPI or the IGC for rent adjustments? There is no universal answer, as it depends on the specific circumstances of each case. Therefore, it is advisable to analyze both indexes carefully before making a decision.
In general terms, the CPI (Consumer Price Index) is considered a more stable and predictable benchmark than the IGC, as the latter is influenced by productivity trends. As is well known, productivity can fluctuate significantly depending on overall economic conditions.
Ultimately, everything depends on the prevailing legal framework and the specific conditions agreed upon by both parties. For example, the tenant may benefit from the referenced index, but legally, the annual increase cannot exceed 2%, even if the CPI rises above that percentage.
In such situations, the landlord cannot adjust the rent arbitrarily based on changes in the real estate market. The applicable index will depend on current legal regulations. If the landlord attempts to apply the Consumer Price Index (CPI) without contractual agreement, the tenant may have valid legal grounds to challenge the adjustment.
In that case, unfortunately for the landlord, they will not be entitled to request an increase or renewal that contradicts the terms established by law or the contract.
If necessary, you can file a legal claim through the courts by submitting a formal payment claim or contractual enforcement action. Additionally, consumer protection agencies may assist through administrative channels.
Of course. The IGC is published monthly on the official website of the National Statistics Institute (INE). You can visit the site and consult the updated index whenever necessary.
Yes, this is possible. However, if a different index is to be applied, both parties must agree, document it in writing, and formally include it in the contract. Ultimately, the index used will depend on what has been mutually agreed upon in the signed agreement.
You may also be interested in: 2025 Rental Agreement Template.
At Domoblock, we are transforming the way people invest in real estate by combining blockchain technology with propertytokenization, making investing more accessible, secure, transparent, and profitable. Explore our real estate investment portfolio, carefully curated and approved by our experts to help maximize your returns.
Invest in key real estate markets around the world.
Carefully Selected Portfolio to Minimize Risk and Maximize Returns
Starting at €200, you can access high-potential real estate opportunities.
Blockchain Technology: Trust and Full Control Over Your Investments
Earn Over 10% in Short-Term Investments
Ideal for investors seeking fast and efficient returns.
Whether you’re just starting your journey as an investor or looking to diversify your portfolio, Domoblock provides an ideal solution to help you grow your finances. It’s a smart and innovative way to begin building your financial future today, with the confidence of working alongside leaders in real estate tokenization!
We also offer a variety real estate investment projects in Madrid, Alicante, Zaragoza, and Valencia. Take a look and explore new opportunities.
If you are considering investing in real estate developments, seeking professional guidance is highly recommended. Contact Domoblock for expert advice. Every investment should be carefully evaluated and supported by industry knowledge. Join the many investors who have trusted our expertise.
Funded:
-
-
Objective:
1.542.350,00 €
.png)
.png)
.png)
.png)
.png)
.png)
.png)
