Overview
An index clause, also known as a value protection clause, can be found in many commercial leases. An index clause is intended to compensate for changes in value due to inflation and deflation, both to the benefit and detriment of the landlord and tenant. For many years, indexation clauses led to only minor changes in rent. For example, the consumer price index for Germany (CPI) rose by only around 1.48% p.a. in the period between October 2015 and September 2021. Since October 2021, the picture has changed significantly: Increases in the CPI of around 9.5% p.a. in the period between October 2021 and October 2022 have in many cases resulted in rent adjustments of the same amount.
The issue of indexation is thus more significant than it has been for a long time.
In our FAQ, we address some of the key issues of index clauses in commercial and residential tenancy law and shed light on whether the currently very high inflation rates can give rise to a tenant’s claim for adjustment of the index clause against the background of the legal institution of disturbance of the business basis (Section 313 BGB).
