Table of contents
What is an index rent?
The index-linked rent is a form of rent that can be agreed in the rental contract for residential or commercial properties. According to § 557b BGB, the index rent stipulates that the rent is linked to the consumer price index. The consumer price index is determined by the German Federal Statistical Office and is based on the cost of living of all private households in Germany.
This cost of living is calculated by taking the average price development of all goods and services purchased by consumers. These include, for example, food, clothing and transport, but also fuels such as petrol and energy prices. If the daily cost of living rises, the basis for calculating the index rent also increases.
The consumer price index is uniform throughout the country and usually rises slowly but steadily on an annual average. The annual averages of the last five years according to the Federal Statistical Office:
You need this information to calculate the change in your monthly rent by index rent:
Tables with current indices can always be found on the website of the Federal Statistical Office destatis.de.
With this formula you can calculate the permissible increase of the index rent:
(current index level : old index level x 100) - 100 = percentage rate of rent increase
The result is the percentage by which your basic rent may be increased. However, the increase is only permitted if the rent has remained the same for at least 12 months. The landlord does not have to increase the rent every 12 months, but can announce the first increase after 5 years, for example. As soon as the landlord has notified you of the rent increase in writing, this rent increase may come into effect for the month after next.
You moved into your flat on 1 September 2018 and an index-linked rent was agreed in the rental contract. The landlord wanted to increase the rent for the first time after two years. He informed you of the planned increase in writing on 15 July 2020. Thus, the increased rent may be valid from September 2020.
Since moving in in September 2018, you have paid a monthly basic rent of 645.50 euros. According to the Federal Statistical Office, the consumer price index in September 2018 was 104.7. You received the information about the rent increase in July. Therefore, the last known consumer price index at that time was the one of June 2020 at 106.6. The permissible rent increase is calculated as follows:
(106.6 : 104.7 x 100) - 100 = 1,81
In this case, the basic rent may therefore be increased by 1.81%, which means an increase in rent of 11.68 euros to a new monthly basic rent of 657.18 euros.
The Federal Statistical Office also provides a calculator with which index changes in past years and months can be recalculated.
If the index rent increase exceeds the permissible amount, you can ward off the rent increase. We help you to enforce your right.
Advantages and disadvantages of an index-linked rent for tenants
Whether an index-linked rent is rather good or rather bad for you as a tenant depends among other things on the situation in the respective rental market. Although a rent increase with an index-linked rent is pre-programmed, no further increases are permitted.
The index-linked rent can be advantageous for the tenant, above all because of its predictability and transparency with regard to the basis of calculation. It also protects against further surprises due to rent increases.
Unlike in many other rental agreements, the index-linked rent unfortunately pre-programmes the rent increase. The landlord can increase the rent without the tenant reacting.
You moved in in September 2015 and the landlord wants to increase the rent according to the index for the first time in September 2020. You live with your family in a large living space of approx. 120 square metres and the basic rent was 1,150 euros when you moved in. The index was 100.4 in September 2015 and 105.8 in September 2020. According to the calculation formula, the landlord may increase the rent by 5.38 percent to 1,211.87 euros.
Tip: If you have an index rent in your rental agreement, calculate the possible rent increase for yourself once a year. This helps you to plan for the possible increase and not be surprised.
Some rental agreements stipulate that the rent may only be increased above a certain index-linked rent. This can also help to make the increase more predictable.
When comparing index-linked rent and graduated rent, neither is better than the other. It depends on the individual case:
As with the graduated rent, the Landlord must comply with certain specifications in the event of an index rent increase. These specifications provide some opportunities for the tenant to avoid or delay a rent increase.
What landlords must adhere to in the case of an index rent increase
Even if the index-linked rent has already been set out in the lease, landlords must also comply with certain rules when increasing rent.
Even the index-linked rental agreement as part of the rental contract must meet certain conditions:
The rental price must generally remain the same for at least 12 months. This applies both after moving in until the first rent increase and between increases.
Before the Landlord can increase the rent, he must notify the Tenant in writing. The new rent may then be demanded from the month after next. The month in which this announcement reaches you is therefore relevant.
If you receive an announcement of an index rent increase on April 15th, the increased rent may not become valid before June 1st at the earliest. If the landlord sends the announcement late on 30 April and it reaches you by post on 2 May, the increased rent is only payable from 1 July.
The Landlord must give notice of the rent increase in text form. In this written declaration of rent increase, the landlord must provide the following information:
If one of the details is missing, the rent increase declaration is invalid and you as a tenant can object to the declaration in writing. You can thus delay the rent increase if necessary, as the landlord must send you a corrected declaration. The increased rent is then only due from the month after next after receipt of the corrected letter.
When increasing the rent, the landlord may only use the consumer price index of the Federal Statistical Office. It is not permitted to use other figures as a basis for calculation. Some landlords refer, for example, to estimates of the European Central Bank (ECB) or the German Institute for Economic Research (DIW), to the rent index or construction price index. The use of inflation rates in individual sub-sectors such as housing, electricity, water or gas is also not permitted.
Index rent and Rent Control: Does it still apply?
A much disputed question is whether landlords can circumvent the Rent Control law (Mietpreisbremse) by means of an index-linked rent. Here, the initial rent at the time of moving in is the decisive factor: If this was already above the local comparable rent when you moved in, you can apply the rent control. If the rent at the time of moving in was within the framework of the conditions for the rent control, the index rent may also exceed the comparative rent over the years. Nevertheless, it is always worth calculating your savings potential with the help of the rent control.
Read about the experiences of other tenants who have successfully lowered their rent with the rent brake or have been able to ward off an increase in rent.
Are you unsure whether your rent is too high? CONNY will help you to enforce your right. Have your index rent checked by our partner lawyers: