> 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/index-rent.md). # Index rent In the case of index rent, the rent increase can be justified based on the consumer price index (CPI). However, the adjustment does not occur automatically and must be explained to the tenant in text form. Immodio supports you as a landlord in implementation with corresponding \[templates]\( With index-linked rent, the rent increase can be justified based on the Consumer Price Index (CPI). However, the adjustment does not occur automatically, but must be explained to the tenant in text form. Immodio supports you as a landlord in the implementation with corresponding [templates](https://help.immodio.app/en-start/guides-group/templates). W During the term of the indexed rent, the rent must remain **unchanged for at least one year** before an adjustment can take place (§ 557b para. 2 BGB). {% hint style="warning" %} **Requirement of written form for indexed rent:** Currently, there is **no possibility** in Immodio to fulfill the legally required written form for agreeing on an index rent (§ 557b 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 (index rent) is considered not legally effective.legally agreed. {% endhint %} ### Special Features of the Index Rent The agreement of an index rent is particularly sensible when the local comparative rent is difficult to determine or when landlords want to protect their rent from inflation in the long term. However, the following should be noted: * For landlords, the index rent offers the advantage of securing the rent against inflation. However, it should be noted that in the event of **deflation**, the tenant has the right to demand a **rent reduction** (§ 557b para. 3 BGB). * If the local comparative rent (OVM) rises more sharply than inflation, rent increases can still only take place according to the change in the index. In regions with rapidly rising rents, this can result in the rent falling below the local customary level in the long term. * During the term of the indexed rent, rent increases due to modernization measures (§ 559 BGB) or an adjustment to the local comparative rent (§ 558 BGB) are excluded. * If you are planning modernization work on your property in the near future, it is advisable to arrange a **fixed-term indexed lease** to maintain flexibility in setting the rent. ### Rent under an indexed lease * In areas where the [**rent control limit**](https://help.immodio.app/en-start/guides-group/tenancies/create-a-tenancy-agreement/rent#mietpreisbremse-556d-bis-556g-bgb) applies, the initial rent for new rentals may not exceed 10% above the local comparative rent (§ 556d BGB) – even in the case of indexed leases. * In the case of a rent increase with a valid index-based tenancy agreement, the rent is increased based on the consumer price index (§ 557b para. 4 BGB). The \[**cap limit**] () (rent increase max. 15% - 20% within three years) does not have to be observed. {% hint style="danger" %} **Attention:** The rent, after the increase according to the index, must not be unreasonably high. Exceeding the local comparative rent (OVM) by more than 20% can constitute a **rent overcharge according to §5 Economic Criminal Act (WiStrG)**. If the rent is even **more than 50% above the OVM**, this can fulfill the **criminal offense of usurious rent according to §291 Criminal Code (StGB)**. In such cases, the rent increaseis ineffective and can be legally challenged. {% endhint %} ### Advantages and Disadvantages of Index Rent
Advantages of Index Rent * **Inflation protection:** The rent adjusts according to the development of the consumer price index (CPI), which protects landlords from devaluation due to inflation. * **Transparency and enforceability:** Transparent adjustment of the rent based on an objective index. No elaborate determination of the local comparative rent required (especially in regions without a rent index). * **Higher rents possible:** After concluding the contract, the rent may rise above the cap limit.
Disadvantages of index rent * **Exclusion of further rent increases:** Rent increases due to modernization measures (§ 559 BGB) (exception: modernization measures due to a legal obligation) or to adjust to the local comparative rent (§ 558 BGB) are not permitted during the term of the index lease agreement. * **Link to index:** Even if the local comparable rent rises more sharply than inflation, rent increases may only occur within the scope of the index change. In cities with rapidly rising rental prices, the agreed rent can thereby remain below the local customary level in the long term, which can lead to a loss of income. * **Deflation risk:** If the consumer price index falls, the landlord can adjust the rent downward accordingly – a reduction is legally provided for.