Index-linked rent: What landlords and tenants should know

Index rent: What landlords and tenants should know

Landlords have the option of agreeing a so-called index rent with their tenants. In future, the rent will be based on the consumer price index of the Federal Statistical Office - i.e. the general price trend. But what is important when drafting contracts? And when are such clauses invalid?

1. What must be included in the rental agreement?

The agreement of an index-linked rent must be clear, understandable and clearly visible in the rental agreement. It must not be "hidden" at the end under "Miscellaneous" or only consist of a general reference such as "in accordance with Section 557b BGB".

This was decided by the Landgericht Berlin: Such a placement and wording is surprising for tenants (Section 305c (1) BGB) and also not transparent (Section 307 (1) sentence 2 BGB). The consequence: The clause is invalid.

Judgement: LG Berlin, decision of 13.01.2025 - 63 S 138/24

2. Only index or comparative rent - not both

If an index rent is agreed, the possibility of a regular rent increase in accordance with Section 558 BGB (adjustment to the local comparative rent) no longer applies.

According to the law (Section 557b (2) sentence 3 BGB) both types of increase may not be combined - not even by express agreement in the contract.

3. How the index adjustment works

The landlord may adjust the rent once a year - provided that the consumer price index has changed. The following applies:

• The calculation must be in writing and comprehensible.

• The tenant must be informed of the increase in a comprehensible manner.

4. Rent reduction possible if the index falls

Important: If the consumer price index falls, the rent must also be reduced accordingly - a unilateral adjustment in favor of the landlord is not permitted.

The Landgericht Berlin declared an index regulation invalid that only provided for an increase in the event of a rising index, but excluded a reduction.

Judgment: LG Berlin, decision of 20.06.2024 - 67 S 83/24

5. Rent control for index-linked rent: Only for initial rent

In the case of an index-linked rent, the rent brake only applies to the initial rent - subsequent increases due to the index are not affected (Section 557a para. 4 BGB).

This has been confirmed by the Amtsgericht Berlin-Mitte. If the rent was set correctly when moving in, subsequent adjustments can exceed the scope of the rent cap without being ineffective.

Judgement: AG Berlin-Mitte, judgement of 02.11.2022 - 123 C 77/22

6. commercial leases: Price escalation clauses must be fair

Strict rules also apply to index clauses in commercial tenancy law. The Landgericht Wuppertal ruled that a clause that only allows increases but no decreases violates the Price Clause Act (Section 2 (3) No. 1 PrKG) and is therefore invalid.

Even a subsequent court ruling does not protect the landlord - such clauses are not effectively compatible from the outset, not even in individual contracts.

Judgment: LG Wuppertal, judgment of 24.11.2016 - 7 O 139/15

Conclusion: Careful contract drafting is crucial

If you want to agree an index-linked rent - whether for residential or commercial space - you must make sure that the provision is clear, balanced and comprehensible. Otherwise, the clause may be invalid - and the rent increases may be reversed.