Two ways to fix future increases
German tenancy law offers two models that let tenants and landlords settle later rent increases in the lease itself (§ 557(2) BGB): graduated rent (Staffelmiete) under § 557a BGB and index rent (Indexmiete) under § 557b BGB. Both exclude an increase to the local comparative rent while they run. But they differ fundamentally in one important respect: with graduated rent, the amounts are fixed from the start; with index rent, they depend on inflation.
Graduated rent: fixed steps in euros
With graduated rent, the rent is agreed in writing at different amounts for specific periods. Each step must be stated as a rent or an increase in euros, and the rent must remain unchanged for at least one year each time (§ 557a(1) and (2) BGB). An example: €800 in the first year, €825 in the second, €850 in the third and €875 in the fourth year.
The advantage for tenants: they know from the start what is coming. The disadvantage: the steps apply even if prices barely rise or market rents fall. In addition, the tenant's right to terminate can be excluded for at most four years under a graduated rent (§ 557a(3) BGB).
Index rent: inflation decides
With an index rent, the rent changes in the same proportion as the consumer price index. The landlord must declare each adjustment in text form, and the rent must also remain unchanged for at least one year (§ 557b(2) and (3) BGB). Nobody knows at the start how large the increases will be.
A worked example with real index values
Suppose a lease started in January 2021 with a net rent of €800. The comparison shows how differently the two models develop in a period of high inflation. For the index rent, we assume an adjustment each January using the January value.
| Date | CPI (2020 = 100) | Index rent | Graduated rent (+€25 per year) |
|---|---|---|---|
| January 2021 | 101.0 | €800.00 | €800.00 |
| January 2022 | 105.2 | €833.27 | €825.00 |
| January 2023 | 114.3 | €905.35 | €850.00 |
| January 2024 | 117.6 | €931.49 | €875.00 |
In this period, the index rent ended up a good €56 per month above the graduated rent. In years of low inflation, for example from 2015 to 2020, the picture would have been reversed: back then, the annual average CPI rose by less than 2% every year.
Rent brake: an important difference
In areas with a rent brake, the models differ significantly. With graduated rent, §§ 556d to 556g BGB apply to every single step (§ 557a(4) BGB). Each new step may therefore be at most 10% above the local comparative rent at the time it falls due, unless an exception applies. With index rent, by contrast, the rent brake only applies to the initial rent (§ 557b(4) BGB). More on this in our article Index rent and the rent brake.
Which model suits whom?
- Planning certainty: anyone who wants to know exactly what the flat will cost in three years is better served by graduated rent.
- Inflation risk: with index rent, tenants bear the risk of rising prices. If your budget is already tight, factor that in.
- Automatic effect: steps apply by themselves. An index increase, on the other hand, requires a declaration from the landlord each time.
- Reduction: only the index rent can fall when prices fall.
In the end, it is usually the landlord who decides which model goes into the lease. If you have the choice, it is worth looking at inflation trends with the inflation calculator. Calculate your specific index increase with the index rent calculator. This article is not legal advice.