It is advisable to conclude an index-linked rental agreement for new lettings.
With an index-linked tenancy agreement, the future rent is based on the official consumer price index for private households. If the cost of living rises and therefore the → Inflationthe basis for calculating the rent increases at the same time. With an index-linked tenancy agreement, the landlord can adjust the rent each year in line with the inflation rate.The formula for calculating the new rent amount for an index-linked rental agreement is as follows:
Percentage index increase = (new index value / old index value x 100) - 100
Calculation example:
The net rent at the start of the contract was €660.
The price index was 107.2 points when the contract was concluded.
One year later, the index stands at 108.6 points.
The increase is calculated as follows:
Percentage index increase = (108.6 / 107.2 x 100) - 100
Percentage index increase = 1.31 %
The landlord can therefore increase the rent by 1.31 %.
1.31% of € 660 equals € 8.65
The new net rent is therefore €668.65.
What are the advantages and disadvantages of index-linked rents for landlords?
The most important Advantages of the index-linked rent for landlords:
- Landlords benefit financially from an index-linked rent, as the consumer price index has been rising continuously for years.
- The index-linked rent increases do not require the tenant's consent. They apply from the month after next after the tenant has received the adjustment notice. Above all, this avoids conflicts, as the rent increase is fixed from the outset.
- In particular, the rent can be increased above the standard local level. Landlords can therefore circumvent the rent freeze to a certain extent with the help of an index-linked tenancy agreement. However, the prerequisite for this is that the initial rent agreed in the tenancy agreement is below the rent freeze. Landlords then benefit from the so-called grandfathering.
- The cost of an index increase is lower, as the local rent index does not have to be analysed and the increase does not have to be justified on the basis of comparative rents.
The most important Disadvantages of the index-linked rent for landlords:
- As the rental price depends on the consumer price index, it is theoretically possible that this could fall (although this is relatively unlikely).
- If the initial rent is far below the standard local comparative rent and the consumer price index rises slowly at the same time, the rent may not be increased sufficiently in the case of an index-linked tenancy agreement.
- In the case of an index-linked tenancy agreement, no further rent increases may be made in addition to the adjustment to the consumer price index. The only exceptions provided for by law are § Section 557b (2) BGB the construction measures for modernisation (§559 BGB), if the landlord takes these measures not responsible has. This presupposes that the construction measures must be ordered by law.
What are the advantages and disadvantages of index-linked rents for tenants?
The most important Advantages of the index-linked rent:
- The index-linked tenancy agreement offers a certain degree of planning security; any rent adjustments are predictable for the tenant.
- In addition to the rent increase according to the consumer price index, the tenant may not fear rent increases due to arbitrary modernisation measures, unless these are prescribed by law.
The most important Disadvantages of the index-linked rent:
- The tenant has to pay the rising costs for energy and heating more or less twice; on the one hand via the increased ancillary costs and on the other via the index-linked rent, because this is dependent on inflation.
- The index-linked rent increase also applies if the quality of living does not improve.
