Will the rent payable remain the same as long as the lease lasts?
Most commercial leases lasting 10 years or more contain indexation clauses. The term can either be fixed for at least 10 years, or the tenant may be entitled to the automatic extension of a shorter fixed-term lease up to a total term of 10 years or more. Indexation clauses in commercial leases with a term of less than 10 years are invalid under statutory law, but remain valid until a court declares the indexation clause to be void.
Turnover related rents are sometimes agreed in leases of retail property and hotels.
Rent review usually takes place if the consumer price index reaches a certain threshold. Annual rent adjustment is another possibility.
The so-called rent cap in Berlin, which has been in force since 23 February 2020 and under which a five-year rent freeze came into effect, has been declared invalid and incompatible with the German Basic Law (Grundgesetz) by the Federal Constitutional Court (Bundesverfassungsgericht) in its decision dated 25 March 2021. It should be noted, however, that the invalidity was due to formal constitutional violations with regard to legislative competence. Whether the idea of a rent cap is substantively constitutional remained unanswered by the Federal Constitutional Court.
In its decision dated 12 January 2022, the Federal Supreme Court has allowed a rent adjustment taking into account the effects of the Covid 19- pandemic, considering the individual circumstances of each case.
