Rent Increase Limits in Madrid

Rent updates in Madrid are governed by the Ley de Arrendamientos Urbanos (LAU) (effective 1 January 1995) and the national Housing Law (Ley 12/2023). As of 2026, the transition from CPI-based updates to a specialized rental index is complete.

Evolution of Rent Update Caps

The national Housing Law introduced a tiered transition for annual rent adjustments to decouple them from general inflation:

• 2023: 2% cap
• 2024: 3% cap
• 2025-2026 onwards: Implementation of the IRAV index.

[!IMPORTANT] For 2026, the annual rent update is linked to the IRAV (Índice de Referencia para la Actualización Anual de los Contratos de Arrendamiento de Vivienda). The current reference value for 2026 is approximately 2.14%.

Implementation Rules

1. One-Year Anniversary: Rent can only be increased once the contract has survived twelve (12) full months.
2. Written Notice: The landlord must notify the tenant in writing (usually via burofax or email if specified) at least 30 days before the next payment is due.
3. Missing Notice: If the landlord fails to provide the 30-day notice, the rent increase cannot be applied until the notice period has been satisfied.

New Contracts vs. Renewals in Madrid

Unlike Catalonia, the Community of Madrid has not declared any Stressed Market Areas (Zonas Tensionadas).

• Existing Contracts: Subject to the IRAV cap (~2.14%) for annual updates.
• New Contracts: Landlords are free to set the initial rent based on market demand.