First of all, allows us to congratulate you on securing a rent accommodation in Germany. We are sure it feels like a big win. You overcame obstacles such as cultural differences, language barrier, different time zones, having a friend do it for you, having a skeptical landlord taking in someone they never met in person or will be on probation period for the next 6 months, or simply finding something available fitting your family size and budget.
In this article we are explaining briefly the two types of rent increase and how each works. It is important to tackle this aspect as we have seen both tenants and landlords confused so many times by it. Landlords don’t know which one to choose, tenants don’t understand why the rent increases and “why so much?”. Let’s get into it.
- Index increase (Indexmiete)
Here is an English summary from a standard German rent contract:
The parties agree that the development of the rental amount will be determined by the consumer price index for Germany. If this rises or falls from the beginning of the lease, each party may demand a change in the price of the rent, corresponding to the percentage change in the index. However, despite increased costs due to structural measures or increased operating costs, the rent must remain unchanged for at least one year. The same applies to any new index change after an increase or reduction in the rent. During the validity of this agreement, an increase up to the local standard comparative rent (Section 558 of the German Civil Code) is excluded. An increase due to structural measures (Section 559 of the German Civil Code) can be required only if the landlord has carried them out due to circumstances for which he is not responsible.
Good to know:
- The index rent increase can be calculated using the following formula:
[(New index- Old index)/Old index]*100 = Index increase in percentage.
- The user price index numbers (Verbraucherpreisindex) can be found here: destatis.de. The landlord may inform the tenant of the increase in a written form (post, email) as soon as the federal government announces the index numbers.
- The index rent can also work in favour of tenant, since the index can also go down, thus causing a rent price reduction.
- Staggered rent (Staffelmiete)
Here is an English translation from a standard German rent contract:
The rent must remain unchanged for at least 1 year. During the term of the staggered rent, a rent increase up to the local comparative rent (section 558 of the German Civil Code) and due to structural measures (section 559 of the German Civil Code) is excluded.
The staggered rent is a modality of increasing the rent gradually, by introducing a fixed amount, specified in the rent contract and acknowledged by the tenant upon signing the document.
Good to know:
- If the landlord opted for a staggered rent, the initial rent must remain unchanged for the first 15 months.
- On big cities (such as Munich, Berlin, Hamburg, Köln, Frankfurt, Stuttgart), the rent can be increased by maximum 15% within the next 3 years, from the beginning of the rent relationship.
Elena moved in a new apartment in Munich on August 1st, 2020. She pays a rent of EUR 950 cold (die Kaltmiete).
The landlord can begin increasing the rent from October 2021, up to max. EUR 1,092.5 (EUR 950 + 15%) and leave it unchanged until October 2023.
The landlord has opted however for a lighter increase, and chose to put 7% from October 2021 (new cold rent EUR 1,016.5) and then 8% from December 2023 (new cold rent EUR 1092.5).
If you want to find out more about rent contracts, please leave us a message and we’ll try to cover more in the future.