Graduated rent: what the contract must say and how much it may rise

What is graduated rent?

Graduated rent is an agreement in the tenancy agreement under which the rent differs in amount for certain periods (Sec. 557a (1) BGB). It is clear from the outset when the rent will rise and to what amount. A tenancy agreement with such a provision is called a graduated rent agreement (Staffelmietvertrag).

Alongside index-linked rent, it is the only way to set out future increases in the contract in advance (Sec. 557 (2) BGB). All other increases follow the rules in the guide Rent increase.

What a graduated rent looks like (example with fictitious amounts, net basic rent):

Period	Monthly basic rent	Increase
1 January 2027 to 31 December 2027	€800	starting rent
1 January 2028 to 31 December 2028	€830	+€30
1 January 2029 to 31 December 2029	€860	+€30
1 January 2030 to 31 December 2030	€890	+€30
from 1 January 2031	€920	+€30

Payable automatically: The new step applies on the agreed date, without notice, reasons or consent. If you continue to pay the old rent, arrears arise.

Also possible later: A graduated rent can also be agreed during an ongoing tenancy, for example in a supplementary agreement. That is why the law links the exclusion of notice to the conclusion of the graduated rent agreement, not to the start of the tenancy (Sec. 557a (3) BGB).

When is graduated rent valid?

The law sets four requirements (Sec. 557a (1) and (2) BGB):

1. Written form: The graduated rent must be agreed in writing. In writing means: on paper signed by hand by both parties, on the same document or on identical copies (Sec. 126 (1) and (2) BGB), or electronically with a qualified electronic signature of both parties (Sec. 126 (3), Sec. 126a BGB). A simple email is not enough.
2. Amount of money: For each step, either the new rent or the increase must be stated in euros.
3. One year apart: The rent must remain unchanged for at least one year each time. Longer intervals, for example every 2 years, are permitted.
4. Specific periods: The contract must show from when each step applies.

Permitted and not permitted: typical clauses compared (examples for explanation, not model wordings)

Wording in the contract	Valid?	Why
"From 1 January 2028, the rent is €830, from 1 January 2029 €860."	yes	each rent as a euro amount with a date
"The rent increases by €30 on 1 January 2028 and by a further €30 on 1 January 2029."	yes	the increase as a euro amount is sufficient
"The rent rises by 3% each year."	no	no amount of money
"The rent rises by €0.40 per m² each year."	no	you would have to calculate the amount yourself
"Start of tenancy 15 March 2027, first increase on 1 March 2028."	no	unchanged for less than one year

When is graduated rent invalid?

If one of the requirements is missing, the landlord cannot rely on the step concerned. How far the invalidity extends depends on the defect:

• First step too early: According to case law of the lower courts, the entire graduated rent agreement may then be invalid, so that the starting rent continues to apply.
• Only part defective: If, for example, the first years are stated in euros and later years only in percent, the part in euros remains valid.
• Already paid: Anyone who has paid an invalid step has not, according to a widely held view, automatically agreed to a higher rent. Whether you can reclaim what you overpaid depends on the individual case.

If the graduated rent is invalid, the landlord can only increase the rent by the normal route, for example with consent up to the local comparative rent (Sec. 557 (3), 558 BGB).

How high may graduated rent be?

The law does not limit the amount of the steps, neither in percent nor in euros.

• No cap: The limit of 20% in 3 years, 15% in areas covered by a state ordinance, only applies to increases up to the comparative rent under Sec. 558 (3) BGB. Precisely these increases are excluded while a graduated rent applies (Sec. 557a (2) sentence 2 BGB).
• Rent index no ceiling: Without the rent brake, a step may also be above the local comparative rent.
• Rent brake: Where it applies, each step may be no more than 10% above the comparative rent (Sec. 557a (4), Sec. 556d (1) BGB). See the next section.
• Excessive rent: If the rent exceeds the usual charges by more than 20% and this is based on exploiting a low supply of comparable flats, it is an administrative offence (Sec. 5 WiStG 1954). However, you have to prove this requirement, which is difficult in practice.

What percentage is usual for graduated rent? The law does not set a usual level. What matters is what you pay in total over the term and how the steps relate to the comparative rent.

Calculating graduated rent: worked example

With the example graduated rent from above, €800 starting rent and €30 more per year:

Year	Basic rent per month	Basic rent per year
1	€800	€9,600
2	€830	€9,960
3	€860	€10,320
4	€890	€10,680
5	€920	€11,040
Total 5 years		€51,600

Without graduated rent, you would have paid €48,000 in 5 years; with graduated rent, €3,600 more. After three increases, the rent is 11.25% above the starting rent, after four 15%. An increase up to the comparative rent could amount to no more than 20% or 15% in 3 years, only up to the comparative rent and only with your consent or a court judgment.

Graduated rent and the rent brake

With graduated rent, the rent brake applies not only to the starting rent but to each individual step (Sec. 557a (4) sentence 1 BGB). If your flat is in an area that the state government has designated by ordinance as a tight housing market, each step may exceed the local comparative rent by no more than 10% (Sec. 556d (1) BGB).

Which date counts: For the second and each further step, what matters is the comparative rent on the day on which the first rent of that step falls due (Sec. 557a (4) sentence 2 BGB). If the comparative rent falls later, a rent level already validly reached is retained (Sec. 557a (4) sentence 3 BGB).

Worked example (flat of 70 m², area covered by the rent brake, all values fictitious):

Step from	Agreed rent	Comparative rent per m²	Maximum permitted (comparative rent + 10%)	Owed
1 January 2026	€840	€11.00	€847.00	€840.00
1 January 2027	€900	€11.40	€877.80	€877.80
1 January 2028	€960	€11.50	€885.50	€885.50

The second and third steps are only valid up to the limit. You do not owe the rest (Sec. 556g (1) BGB).

Exceptions: The exceptions to the rent brake also apply to graduated rent (Sec. 557a (4) BGB refers to Sec. 556d to 556g BGB):

• flats first used and let after 1 October 2014, and the first letting after comprehensive modernisation (Sec. 556f BGB),
• a higher previous rent or a modernisation in the last 3 years before the start of the tenancy (Sec. 556e BGB).

The landlord can only rely on these exceptions if they informed you of them without being asked before the contract was concluded; if they provide the information later, only two years afterwards (Sec. 556g (1a) BGB).

Old contracts: The rent brake does not apply to graduated rent agreements concluded before the flat came under an ordinance. And it no longer applies to steps whose first rent falls due when the ordinance no longer applies (Art. 229 Sec. 35 EGBGB). The state ordinances must expire at the end of 31 December 2029 at the latest (Sec. 556d (2) BGB).

Do not forget the complaint: You only get back rent you overpaid if you have complained to the landlord about the breach (Rüge). If you complain more than 30 months after the start of the tenancy, you only get back the rent that fell due after the complaint was received (Sec. 556g (2) BGB). The complaint requires text form (Sec. 556g (4) BGB).

Which rent increases are possible alongside graduated rent?

As long as the graduated rent applies, increases under Sec. 558 to 559b BGB are excluded (Sec. 557a (2) sentence 2 BGB). For the rest:

Type of increase	Possible alongside graduated rent?	Basis
Increase up to the local comparative rent	no	Sec. 557a (2), 558 BGB
Modernisation increase, e.g. after insulation or a new bathroom	no	Sec. 557a (2), 559 to 559b BGB
Increase after installation of a heating system eligible for funding (Sec. 555b no. 1a BGB)	not excluded according to the wording	Sec. 559e BGB
Adjustment of advance payments for operating costs after a statement	yes	Sec. 560 (4) BGB
Increase of a flat rate for operating costs, if the contract provides for it	yes	Sec. 560 (1) BGB
Voluntary agreement on a higher rent	yes, only with your consent	Sec. 557 (1) BGB

Heating and graduated rent: Sec. 557a (2) BGB names Sec. 558 to 559b BGB; the special rule for the installation of a heating system in Sec. 559e BGB is not in this list. The federal government wants to change this: under its bill, the increase under Sec. 559e BGB is also to be excluded while a graduated rent applies (Bundestag printed paper 21/6807 of 1 July 2026, Art. 1 no. 8). This change is not yet in force (as of 11/2026).

No special right of termination: The special right of termination after a rent increase only applies to increases under Sec. 558 or Sec. 559 BGB (Sec. 561 BGB). A new step therefore does not give you the right to give extraordinary notice. How the deadlines run for the other types of increase is set out in the guide Rent increase deadlines.

Change of owner: If the landlord sells the flat, the buyer takes over the tenancy agreement, with all steps (Sec. 566 (1) BGB). The buyer cannot change the graduated rent unilaterally.

Giving notice with graduated rent: how do you get out of the contract?

The graduated rent only governs the amount of rent, not the duration of the tenancy. Whether and when you can give notice depends on what the contract says about termination.

Without an exclusion of notice: You give notice as with any open-ended tenancy agreement, with 3 months, by the third working day of a month at the latest, with effect from the end of the month after next (Sec. 573c (1) BGB). Details and a calendar can be found in the guide Notice period for a rented flat.

With an exclusion of notice: Alongside a graduated rent, your right to give notice may be excluded for no more than 4 years from conclusion of the graduated rent agreement. Notice is then permitted at the earliest with effect from the end of this period (Sec. 557a (3) BGB). You can already give notice beforehand, so that the tenancy ends on the first possible date after the 4 years.

Exclusion longer than 4 years: A provision that binds you for longer to your disadvantage is invalid (Sec. 557a (5) BGB). If a longer exclusion is in a standard form contract, according to case law it lapses entirely, and you can give notice with the normal period. The graduated rent itself remains unaffected.

Getting out earlier: You only have a right to leave the contract earlier with a replacement tenant if the contract provides for it or the landlord agrees. The safe option is a written termination agreement with a fixed moving-out date.

Notice by the landlord: Even while a graduated rent applies, the landlord can only give notice on an open-ended tenancy with a legitimate interest, for example because of own use (Sec. 573 BGB). The fact that they have committed to increases for several years with the graduated rent does not automatically mean that they waive notice. More in the guide Notice for own use.

How long may graduated rent run and what happens afterwards?

Sec. 557a BGB does not set a maximum term. A graduated rent can therefore be agreed over 5, 10 or more years, as long as each step applies for at least one year. For contracts concluded before 1 September 2001, a maximum term of 10 years applied.

After the last step, the rent last agreed continues to apply. The landlord cannot set new steps unilaterally; they can only offer you a new agreement. Otherwise, the normal rules now apply: the landlord can request consent to an increase up to the local comparative rent if, at the time the increase is to take effect, the rent has been unchanged for 15 months. The request may be made one year after the last increase at the earliest (Sec. 558 (1) BGB).

Graduated rent, then index-linked rent: Some contracts provide that index-linked rent applies after the last step. Whether such a combination is valid depends on the wording.

Step forgotten: back payment and limitation

You owe the higher rent from the agreed date, even without a reminder. If both sides have overlooked the step, the landlord can claim it later, but not without limit.

The claim to rent becomes time-barred in 3 years (Sec. 195 BGB). The period begins at the end of the year in which the rent fell due and the landlord knew of it or should have known of it without gross negligence (Sec. 199 (1) BGB). Everything important about calculating the period is in the guide Limitation periods.

Example (as of November 2026): Since 1 July 2022, a step with €40 more has applied. You continue to pay the old rent.

Year	Not paid	Time-barred at the end of
2022 (July to December)	€240	31 December 2025
2023	€480	31 December 2026
2024	€480	31 December 2027
2025	€480	31 December 2028
2026 (January to November)	€440	31 December 2029

In November 2026, the landlord can still claim €1,880; the €240 from 2022 is time-barred. If they do nothing by the end of 2026 that suspends limitation, for example an action or a court order for payment (Mahnbescheid), the €480 from 2023 also becomes time-barred.

In exceptional cases, a back claim may be excluded entirely, for example if the landlord's conduct gave the impression that they were waiving the increase.

Advantages and disadvantages: should I accept graduated rent?

Whether graduated rent is good or bad depends on the steps, the local rental market and how long you plan to live there.

	For tenants	For landlords
Predictability	you know from the outset what you will pay each year	fixed rental income without an increase procedure
Further increases	no increase up to the comparative rent, no modernisation increase under Sec. 559 BGB	no increase up to the comparative rent, modernisations under Sec. 559 BGB cannot be passed on
Upper limit	no cap, protection only via the rent brake and Sec. 5 WiStG	the graduated rent may be above the rent index where the rent brake does not apply
Market development	you pay the steps even if rents in your area stagnate	if rents rise more steeply, the agreed steps still apply
Commitment	exclusion of notice of up to 4 years possible	the tenant can be bound for up to 4 years

Checklist before you sign

1. Is the starting rent within the range of the rent index, or does the rent brake apply and is it complied with?
2. How high is the rent after 3 and after 5 years? Calculate the total as in the example above.
3. Is each step stated in the contract as a euro amount with a date, and is there at least one year between the steps?
4. Is there an exclusion of notice, and does it end no later than 4 years after conclusion of the graduated rent agreement?
5. What happens after the last step? Does it provide for index-linked rent or another rule?

If you want to be sure before you sign, a lawyer checks the tenancy agreement with the contract review at a fixed price of €259 including VAT.

Graduated rent or index-linked rent?

Both set out future increases in the contract, but in different ways. The comparative rent is the statutory standard case.

Feature	Graduated rent	Index-linked rent	Comparative rent
How does the rent rise?	by fixed euro amounts from the contract	in line with the consumer price index	on request up to the local comparative rent
How often?	each step at least one year	rent unchanged for at least one year each time	request one year after the last increase at the earliest, rent unchanged for 15 months
Upper limit	none, except the rent brake	none (cap planned)	cap of 20% in 3 years, 15% with a state ordinance
Rent brake	for each step	starting rent only	applies to the rent at the start of the contract
Your consent	not needed	not needed, a declaration in text form is sufficient	needed
Predictability for you	high	low, depends on inflation	medium

How index-linked rent is calculated and what is to change in 2026 is set out in the guide Index-linked rent. An overview of all topics can be found under Tenancy law.

Graduated rent too high or unclear: how to proceed

1. Read the contract: Note each step with its date and amount.
2. Check the form: signed, euro amounts, at least one year per step?
3. Check the rent brake: If an ordinance applies in your municipality, compare each step with the comparative rent at the start of the step, for example using the rent index (Mietspiegel).
4. Complain: If a step is too high, complain to the landlord in text form so that you can reclaim money.
5. Keep paying until it is clarified: If you reduce the rent too much on your own initiative, you risk rent arrears.