- Even with an index-linked lease, the Rent Control applies. The widespread belief that it no longer counts is wrong.
- The index rent ties the basic rent to the consumer price index of the Federal Statistical Office, so it rises in step with the general cost of living.
- The rent may change at most once a year, and the landlord must announce every increase in advance in text form and explain the calculation clearly.
- The Rent Control protects your initial rent. If your rent at move-in was set too high, you can reclaim what you overpaid.
Myth busted: the Rent Control applies to index rent too
An index-linked lease does not switch off the Rent Control. It protects your initial rent: if your rent at move-in was higher than the Rent Control allows, you can invoke it and reclaim the rent you overpaid.
Was your initial rent too high?
With an index-linked lease, the Rent Control protects your rent at the start of the contract. Check for free with CONNY whether your initial rent was above the permitted limit.
What is an index rent?
With an index-linked lease, the rental contract stipulates that the rent follows the consumer price index of the Federal Statistical Office (§ 557b BGB). When the general cost of living rises, the landlord may raise the basic rent accordingly. Operating and utility costs are not affected.
The size of the increase comes from the percentage change of the index between two points in time. If the consumer price index rises from 116 to 122 points, an increase of about 5.2 percent, a basic rent of 1,000 euros may go up to around 1,052 euros. The rent may change at most once a year.
Pros and cons for tenants
Whether an index rent is good or bad for you depends largely on your local rental market. An increase is pre-programmed, but in return other types of increase are ruled out.
Advantages
- No further increases: Additional increases due to modernisation or to bring the rent in line with the local comparative rent are ruled out. The only exception is a modernisation the landlord is legally obliged to carry out.
- Easy to check: The index of the Federal Statistical Office is public, so you can recalculate every increase yourself.
- Can stay comparatively low: If the index rises more slowly than the local comparative rent, an index rent can work out cheaper for you.
- Reductions are possible: If the index falls, you can demand a reduction too. This is rare, but it is your right.
Disadvantages
- An increase is pre-programmed and needs no consent. The landlord only has to inform you in good time.
- Uncertain timing: The landlord does not have to raise the rent every year. The first increase may come only after several years.
- It can be steep: The longer since the last increase, the larger the accumulated jump in the index.
Tip
Work out the possible increase for yourself once a year. That way you can plan ahead and avoid surprises. Some contracts also state that the rent may only rise above a certain index level.
Index rent compared to graduated rent
Neither graduated rent nor index rent is generally better, it depends on the individual case. The key difference concerns the Rent Control: with graduated rent it applies to every agreed step, with index rent only to the initial rent at the start of the lease. Both require at least 12 months of unchanged rent and rule out increases for other reasons.
What landlords must observe
Even though the index rent is set out in the contract, the landlord must follow clear rules for every rent increase.
Contractual conditions
- The agreement must be in writing.
- It must clearly state that the consumer price index of the Federal Statistical Office is the basis of calculation.
- A rent reduction may not be excluded. If the index falls, you are entitled to one.
- The rent may only change one year after the start of the lease or after the last increase.
Time limits
The rent must stay the same for at least 12 months, both after move-in and between two increases. The landlord must announce the increase in advance. The new rent becomes payable from the month after next following receipt of the announcement.
Example
If an announcement reaches you on 15 April, the increased rent applies from 1 June at the earliest. If the letter arrives only on 2 May, the new rent is due from 1 July.
Form and content of the announcement
The announcement must be made in text form and must state at least:
- the change in the price index the increase is based on
- the new rent, or the amount by which the rent will rise
If one of these is missing, the declaration is invalid. You can object in writing and delay the increase until a correct letter is issued.
Only the official index counts
Only the consumer price index of the Federal Statistical Office is allowed. If the landlord relies on estimates from the ECB or the DIW, on a construction or rent index, or on the inflation of single sectors such as electricity, water or gas, that is not permitted.
Index rent and the Rent Control: does it still apply?
Yes. Even with an index-linked lease the Rent Control applies, contrary to a widespread misconception. It takes effect on the initial rent at the start of the contract: if your rent at move-in was above the permitted limit (local comparative rent plus 10 percent), you can invoke the Rent Control and reclaim what you overpaid. The Rent Control has since been extended until the end of 2029.
The difference from graduated rent
Unlike graduated rent, where every single step must comply with the Rent Control, the cap on an index lease applies only to the initial rent. That is exactly why it is worth taking a close look at your starting rent.
You can check whether your initial rent was permitted most quickly with the CONNY rent-control calculator. If it turns out that your initial rent was set too high, CONNY helps you notify your landlord in time and reclaim the rent you overpaid, at no cost risk.
Was your starting rent permitted?
Even with an index-linked lease, your initial rent may have been set too high. Check your savings potential for free and reclaim overpaid rent with CONNY, at no cost risk.