Rent increase in Germany - Part 1: Indexmiete

Rent increases are a common part of rental agreements in Germany, and they typically follow one of two models: Indexmiete (index rent) or Staffelmiete (graduated rent). In this article, we break down Indexmiete, a rent adjustment method tied to the cost of living index (Verbraucherpreisindex).

Unlike other rent increase models, Indexmiete fluctuates based on inflation, reflecting changes in consumer prices such as housing, transportation, and food. While this approach offers transparency and predictability, it also means tenants may see rent increases due to external economic factors. Understanding how it works can help tenants assess potential long-term costs and make informed decisions when signing a lease.

At Relosophy, we recommend using the Index Calculator from the Property Owner Association in Munich to track rent fluctuations and anticipate future costs. Stay tuned for Part 2, where we’ll explore Staffelmiete and how it compares to Indexmiete.

Any rent contract in Germany has the possibility to increase the rent over time. This can be done two ways: either through the Indexmiete or the Staffelmiete.
Seldom, there are however property managers who do not opt, in full awareness, for any type of increase, although they are highlighted in any rent contract type.
Here is an overview of the rent increases and key facts about them. We start with the first one: the Indexmiete.

What is the Indexmiete?

The indexmiete is one out of two possibilities, included in any rent contract, to increase the rent. It is based on the consumer costs of living (Verbraucherpreisindex), currently using 2020 as a reference point. The index can increase or decrease each year, based on a multitude of factors:25,9% Housing, water, electricity, gas and other fuels

• 13,8& Transportation
• 11,9% Food and non-alcoholic beverages
• 10,4% Leisure, entertainment and culture
• 6,8% Furniture, lighting, gadgets and household devices
• 5,5% Health
• 4,7% Restaurants and accommodations
• 4,2% Clothing and footwear
• 3,5% Alcoholic beverages and tobacco
• 2,3% Postal services and telecommunication
• 0,9% Education
• 9,9% Other goods and services

This type of rent increase (Mieterhöhung) is stipulated in any rent contract, as a legal requirement. If you are informed in advance that the property manager opts for the index rent increase, you can inform yourself on potential costs and risks using an online calculator (Indexrechner).

At Relosophy we prefer to work with the index calculator from the Property Owner Association in Munich. The reason for this is that it has a graphic showing you the fluctuation over the selected time period, as well as the possibility to calculate up to the previous month of the current calendar year.

Advantages

• The increase is not dramatic immediately, hence it is not felt right away. 
• The majority of property managers do not apply the increase yearly, rather every 2-3 years.
• The increase is objective, non-controversial, transparent, available anytime and cannot be disputed.

Disadvantage

• Currently it is not advantageous for the tenants. The index can be influenced heavily by internal and external politics, which has been de facto for the past years since the 2020 reference point was adopted. However, in comparison to the Staffelmiete, it is financially advantageous for leases over 3 years, and emotionally stable.
• It cannot be speculated how much.

This article is written by real estate experts licensed in Germany and members of the IVD German Real Estate Association. It is not legal advice and should not be used as such. For any legal concerns on the subject presented in the article, expert legal advice is recommendable, with a lawyer, property owner or tenant association.