Index rents linked to inflation are actually supposed to rule out exorbitant rent increases.
(Photo: IMAGO/Sabine Gudath)
Berlin, Dusseldorf Bad news for tenants: Despite the significantly downward revision of inflation rates, recent inflation-related rent increases remain valid. The German Tenants’ Association informed the Handelsblatt on request.
If the rent increases were announced before the revision of the inflation rates on February 22, the then official higher inflation data are used as the basis for rent increases – even if inflation later turned out to be lower.
The new, lower values only apply to rent increases after this date or rent increases that have not yet been delivered. “It must always be based on the current base year at the time the rent increase is received,” says the tenants’ association. Tenants’ hopes of paying less rent have been dashed.
In the wake of the Ukraine war, inflation had skyrocketed from 1.0 percent in January 2021 to as much as 10.4 percent in October 2022. This also had an effect on index rental contracts, some of which were raised sharply.
Just over a week ago, however, the Federal Statistical Office presented its regular five-year revision of the basket of goods. With these adjustments, changes in consumer behavior are to be reflected and new products, such as streaming services or vegan foods, are to be taken into account. And this revision was significantly larger than in previous years.
The Federal Statistical Office revised the previous record value from last October down from 10.4 to 8.8 percent. A rent increase based on the October data would actually be far too high.
>> Read here: Inflation and index rent: Tenants and landlords should know this by now
According to the Tenants’ Association, however, the tenant only has a right to a reduction in his index rental agreement if the actually relevant monthly index turns out to be incorrect or has been published incorrectly by the Federal Statistical Office.
A regular revision of the Federal Statistical Office like the current one does not lead to “any change,” said Melanie Weber-Moritz, federal director of the tenants’ association, to the Handelsblatt. She refers to a corresponding ruling by the Federal Court of Justice from 2021, according to which the current base year that applied at the time the rent increase was received is always decisive (file number VIII ZR 42/20). “First of all, the case law has to be accepted,” said Weber-Moritz.
Index leases are controversial in the coalition
Index rents linked to inflation should actually create a balance of interests between landlords and tenants and at the same time rule out exorbitant rent increases. But because of the high inflation rates, there has recently been exactly that: exorbitant rent increases.
The newly calculated inflation rate should fuel the debate about the controversial index leases. So far, Federal Minister of Justice Marco Buschmann (FDP) sees no immediate need for regulation. The German Tenants’ Association criticizes this. There are “unfortunately no signs” of the Federal Minister of Justice to deal with the topic of “maximum rent increases for index rental contracts”.
There is also anger within the coalition. The building policy spokesman for the SPD parliamentary group, Bernhard Daldrup, said: “Subsequent corrections by the Federal Statistical Office must always be credited to the tenants and reimbursed.”
>> Read here: Countries are demanding price containment for index rents
With a view to the newly calculated inflation rate, he explained: “All this shows the absurdity of the index rents.” Here the FDP and the Federal Minister of Justice are required. Index rents would have dramatic consequences for tenants. Daldrup demanded: “There is an urgent need for an upper limit similar to the conventional cap for rent increases.”
The chairwoman of the Greens, Canan Bayram, who is responsible for tenancy law, referred to the BGH judgment and said: “The law could be changed if there is a majority for it.” The coalition agreement does not provide for that. “We are discussing changes to the law within the coalition,” said the Greens politician.
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