> For the complete documentation index, see [llms.txt](https://help.immodio.app/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://help.immodio.app/en-start/guides-group/tenancies/create-a-tenancy-agreement/rent-adjustment/graduated-rent.md).
# Graduated rent
In the Immodio tenancy agreement, an **escalating rent for a period of up to ten years** can be agreed upon. If the escalation regulation is to apply beyond this period, it must be individually arranged between the rental parties – for example, via an addendum to the tenancy agreement.
In the Immodio tenancy agreement, a **tiered rent for a period of up to ten years** can be agreed upon. If the tiered agreement is to apply beyond this period, it must be arranged individually between the rental parties – for example through an addendum to the tenancy agreement.
In a graduated lease agreement, the rent is **already determined at the time of signing the contract** for specific periods and in defined increment amounts. This provides both landlords and tenants with planning security, as future rent adjustments are agreed upon transparently and bindingly.
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**Requirement of written form for graduated rent**
Currently, there is **no possibility** in Immodio to fulfill the legally required written form for agreeing on a graduated rent (Section 557a BGB) digitally. Therefore, at the end of the tenancy agreement process, we provide you with an additional agreement that must be printed out and signed by both parties by hand. If the written form is not observed, the agreed rent adjustment (graduated rent) is considered not legally effective.legally agreed.
{% endhint %}
### Special Features of the Graduated Rent
Unlike classic rental agreements, in which rent increases must correspond to the local comparative rent and be formally justified, rent adjustments in a step-rent contract occur **automatically** at the agreed time. It applies that:
* The rent must remain **unchanged for at least 12 months** (§ 557a para. 1 BGB).
* During the term, **no further increases** due to modernization or adjustments to the comparative rent may be made (§ 557a para. 2 BGB).
* An exception has applied since **January 1, 2024**: According to § 559e para. 3 BGB, landlords can **pass on parts of the costs for replacing a heating system** to the rent. Grants and a flat rate of 15% must be deducted. The increase may be **at most €0.50/m²**.
### Rent in the case of graduated rent
* In areas where the [**rent control**](https://help.immodio.app/en-start/guides-group/tenancies/create-a-tenancy-agreement/rent#mietpreisbremse-556d-bis-556g-bgb) applies, the initial rent for a new lease may not exceed 10% above the local comparative rent (§ 556d BGB) – also in the case of index-linked rental agreements.
* For graduated rent contracts, there is generally no [**cap limit**](https://help.immodio.app/en-start/knowledge-group/glossary#kaution). The local comparative rent (OVM) is usually not decisive for the graduated steps, so rent increases of **over 15% or 20%** are possible within three years.
* How you can legally agree on graduated rents in Immodio can be found [here](https://help.immodio.app/en-start/guides-group/tenancies/create-a-tenancy-agreement/rent-adjustment/graduated-rent/rent-increase-graduated-rent).
### Advantages and Disadvantages of Graduated Rent
Advantages of Graduated Rent
* **Planning security:** As a landlord, you can agree on a unilateral waiver of termination (max. 4 years) in a graduated rent contract.
* **Time savings:** The need to initiate separate rent increase procedures is eliminated. As the landlord, you do not have to justify or announce the rent increase. The tenant is obligated to pay the graduated rent agreed upon in the lease contract.
* **Regular rent increases:** Unlike regular rental agreements, where rent increases are only possible every 15 months, graduated rents can increase annually (every 12 months).
* **No Cap Limit:** The rent can increase by more than 20% over a period of three years without being based on the customary local comparative rent (taking into account the [**rent control brake**](https://help.immodio.app/en-start/guides-group/tenancies/create-a-tenancy-agreement/rent#mietpreisbremse-556d-bis-556g-bgb)).
* **Higher Rental Income:** By eliminating the cap limit and having fixed increases, landlords can achieve a higher return as long as the [**rent control brake**](https://help.immodio.app/en-start/guides-group/tenancies/create-a-tenancy-agreement/rent#mietpreisbremse-556d-bis-556g-bgb) is observed.
Ndisadvantages of step rent
* **Limited Flexibility:** Once agreed rental steps cannot be adjusted during the tenancy.
* **Risk of misjudgments:** Market changes or unexpected developments can result in the set rents not being in line with the market in the long term, leading to lower returns.
* **No pass-through of modernization costs:** Costs for modernizations such as legal measures (e.g., heating replacement according to GEG) must be borne by the landlord.
* **Rent control:** In regions with [**rent control**](https://help.immodio.app/en-start/guides-group/tenancies/create-a-tenancy-agreement/rent#mietpreisbremse-556d-bis-556g-bgb), the rent through gradations must not exceed more than 10% above the local comparative rent.
* **Risk with Additional Claims:** If the tenant fails to pay the higher rent and is not notified, this could be considered tacit consent. A claim for back payment can then lapse.
* **Deterrence of Potential Tenants:** Regular rent increases and the waiver of a termination option can be unattractive to tenants, especially in less desirable locations.
