If you are renting a property, you may have noticed that rental prices keep increasing. For example, according to data from idealista.com, the price per square metre in Barcelona in January 2025 stood at €23.6, representing a 13.5% increase compared to January 2024. In light of these figures and the general rise in prices, tenants are asking an important question: How much can rent increase this year? In this post, we analyse the rise and the factors that may influence it.
What percentage of income do households allocate to rent?
Not only have rental prices increased, but there has also been a general rise in prices, which has resulted in families having to spend 36% of their income on rent, according to Idealista. This is an excessive percentage, posing a serious problem for many families.
In Spain, there are several cities where the effort required to rent exceeds 30% of income, which is the recommended limit according to experts. For example, in Barcelona, this figure reaches 49%, in Madrid and Valencia 41%, and in Alicante 38%. Below 30%, we find cities like Cádiz at 28% and Granada or Vitoria at 27%. The lowest percentages are found in Teruel and Palencia, at 19%.
Barcelona and Segovia are the two cities where the rental effort percentage has increased the most, rising by 5 points. They are followed by Madrid, Málaga, and Santa Cruz de Tenerife, with a 4-point increase.
What factors influence the rise in rental prices?
There are numerous factors that can influence rental prices in Spain. Some of the most relevant include:
– Increase in demand. The difficulties young people face in securing stable and well-paid jobs lead them to choose renting, thereby increasing demand for rental properties.
– Lack of new housing. There is limited construction of affordable housing for purchase, pushing more people into the rental market.
– Trend towards temporary or tourist rentals. The market has seen a long-standing trend where properties are not allocated for long-term residential leases but rather for temporary rentals or the tourist market.
– Legislative changes. In recent years, there have been numerous legislative changes, such as rental updates based on indices other than the CPI or the designation of certain areas as high-demand, leading to rent caps.
– Court system overload. Although measures have been taken to address the backlog in eviction cases due to non-payment, significant delays still exist. As a result, many landlords prefer to leave properties vacant rather than risk a lengthy legal process.
– Preference for urban centres. Many people prefer to live and work in large urban areas, which drives up demand and prices.
How much could rent increase in 2025?
At this point, we need to consider three scenarios based on the contract signing date or whether it is an existing or new contract. Let’s examine the three cases below:
Rental contracts signed before 26 May 2023
These are contracts signed before the Housing Law came into effect, meaning they are subject to CPI adjustments. For example, if the rent is €1,000 per month and was reviewed in January 2025, the applicable CPI would be that of December 2024, which was 2.8%. This would result in a new rent of €1,028.
Rental contracts signed after 26 May 2023
These contracts came into effect after the Housing Law was implemented. They are subject to the so-called Reference Index for Annual Updates of Residential Rental Contracts (IRAV). In January, the index stood at 2.2%. In this case, for a contract with a rent of €1,000, the revised rent would be €1,022.79.
On the Ministry of Housing website, you can find a calculator to determine your new rent.
New tenancy agreements signed in 2025
The trend, as we saw at the beginning of the article, is for prices to continue rising. However, we must remember the limitation regulated by the Housing Law regarding stressed areas. In this regard, we should know:
– What is a stressed area? These are areas where regional governments can set a limit on rent increases because two conditions are met:
º The average cost of rent plus expenses exceeds 30% of household income.
º The rental or purchase price has risen more than 3 points above the CPI.
– Which regions have stressed areas? There are designated stressed areas in Catalonia, the Basque Country, and Navarre.
– What is the rent cap in these cases? If a property is to be rented, the following must be considered:
º If the property has been rented in the past five years, the new contract cannot exceed the last valid rent. Additional expenses or property tax (IBI) cannot be added.
º Rent can only be increased if energy efficiency improvements have been made or if a tenancy agreement is signed for more than ten years.
º The rent must align with the published reference index. This also applies if you are a major landlord.
Common mistakes when setting the rental price
Although there are clear regulations regarding rental prices, other factors influence the process of advertising a rental property and impact its price:
– Not considering the condition of the property. In many cases, the price is set based on the market and similar or nearby properties, without taking into account that the condition of the property affects the price.
– Forgetting maintenance costs. Maintaining a rental property is also crucial, and to ensure it remains in the best condition for rental, appliances and installations must be checked regularly. This entails a cost that should be factored into the rent.
– Not seeking expert advice. Consulting experts in the property sector can make a significant difference, as they can help you determine the right price.
Ultimately, if you are looking to sign a rental agreement or already have one and need to review the rent, you should be aware of current regulations, how rental prices are updated, and what precautions to take, as a landlord, to set a price that encourages rental.
Get in contact with the experts at Proddigia so they can advise you and find the best rental option for your property.
