When drawing up a tenancy agreement, landlords have various options for adjusting the rent over the years. Particularly popular: graduated rent and index-linked rent. Both models offer advantages and disadvantages - and are not equally suitable for every market situation.
Graduated rent: Plannable and clearly regulated
In the case of a graduated rent, the rental agreement already specifies when and how much the rent will increase. This creates planning security for both parties - although subsequent changes are only possible through renegotiation. Graduated rents are well suited to stable markets and newer apartments with little need for modernization.
Index-linked rent: Flexibly linked to inflation
The index-linked rent is based on the consumer price index of the Federal Statistical Office. If inflation rises, the rent may be adjusted accordingly. On the other hand, it is no longer possible to pass on additional modernization costs. In times of high inflation, landlords benefit, but when prices fall, the rent remains stable or even has to be reduced.
Which variant fits better?
For landlords who prefer security and transparent development, the graduated rent makes sense. Those who want to react flexibly to the economic situation and are prepared to accept fluctuations are better off with the index-linked rent. Important: Both models are mutually exclusive and must be clearly agreed in the tenancy agreement.
Conclusion
Whether graduated rent or index-linked rent - both variants are justified. Landlords should base their decision on the rental market, the condition of the property and their personal objectives. Legally compliant wording in the contract is essential.
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