> 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/anleitung/mietverhaltnisse/mietverhaltnis-anlegen/mietanpassung/indexmiete.md).

# Index-linked rent

This page explains how an index-linked rent agreement works and which statutory conditions have to be observed.

## Index-linked rent

### General information

With an index-linked rent, a rent increase can be based on the consumer price index. The adjustment does not happen automatically, however; it has to be declared to the tenant in text form. Immodio supports you as a landlord in implementing this with suitable templates.

While the index-linked rent applies, the rent has to remain **unchanged for at least one year** before an adjustment can be made (Section 557b (2) BGB).

{% hint style="warning" %}
**Written form requirement for index-linked rents:**

In Immodio there is currently **no way** to meet the legally required written form digitally when agreeing an index-linked rent (Section 557b BGB). At the end of the rental agreement process we therefore provide you with an additional agreement that has to be printed out and signed by hand by both parties. If the written form is not observed, the agreed rent adjustment (index-linked rent) is regarded as not validly agreed.
{% endhint %}

### Particularities of an index-linked rent

Agreeing an index-linked rent is particularly useful where the local comparative rent is difficult to determine, or where landlords want to protect their rent against inflation over the long term. The following points should be noted, however:

* For landlords, an index-linked rent has the advantage of protecting the rent against inflation. It should be noted, however, that in the event of **deflation** the tenant has the right to demand a **rent reduction** (Section 557b (3) BGB).
* If the local comparative rent rises more sharply than inflation, rent increases can still only be made in line with the change in the index. In regions with sharply rising rents this can mean that the rent falls below the local level over the long term.
* While the index-linked rent applies, rent increases due to modernisation (Section 559 BGB) or adjustment to the local comparative rent (Section 558 BGB) are excluded.
* If you are planning modernisation work on your property in the near future, agreeing a **fixed-term index-linked rental agreement** is advisable in order to retain flexibility in setting the rent.

### The rent level with an index-linked rent <a href="#mietzins-bei-indexmiete" id="mietzins-bei-indexmiete"></a>

* In areas where **rent control** applies, the starting rent on a new letting may not be more than 10% above the local comparative rent (Section 556d BGB), including for index-linked rental agreements.
* With a rent increase under a valid index-linked rental agreement, the rent is increased on the basis of the consumer price index (Section 557b (4) BGB). The **capping limit** (a rent increase of a maximum of 15% to 20% within three years) does not have to be observed.

{% hint style="danger" %}
**Caution:** After an index-based increase, the rent must also not be unreasonably high. Exceeding the local comparative rent by more than 20% can constitute **excessive rent under Section 5 of the German Economic Offences Act (WiStrG)**. If the rent is **more than 50% above the local comparative rent**, this can fulfil the **criminal offence of rent profiteering under Section 291 of the German Criminal Code (StGB)**. In such cases the rent increase is invalid and can be challenged legally.
{% endhint %}

### Advantages and disadvantages of an index-linked rent

<details>

<summary>Advantages of an index-linked rent</summary>

* **Inflation protection:** The rent follows the development of the consumer price index, which protects landlords against erosion through inflation.
* **Transparency and enforceability:** The rent is adjusted transparently on the basis of an objective index. There is no need to determine the local comparative rent laboriously (particularly in regions without a rent index).
* **Higher rents possible:** Once the contract has been concluded, the rent may rise above the capping limit.

</details>

<details>

<summary>Disadvantages of an index-linked rent</summary>

* **Other rent increases excluded:** Rent increases due to modernisation (Section 559 BGB) (with the exception of modernisation required by law) or to adjust to the local comparative rent (Section 558 BGB) are not permitted during the term of the index-linked rental agreement.
* **Tied to the index:** Even if the local comparative rent rises more sharply than inflation, rent increases may only be made within the scope of the change in the index. In cities with sharply rising rents, the agreed rent can therefore fall below the local level over 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 downwards accordingly; a reduction is provided for by law.

</details>