| Do rent indexation caps apply in the jurisdiction? | What are the caps? | On which properties do the rent indexation caps apply? | Is there a limitation in the period in which the rent indexation cap applies? |
Jurisdiction and law firm | | | | |
Argentina Beccar Varela | No. Rent indexation was prohibited until 2020 (in practice, rent indexation is not uncommon). | Residential leases are indexed by the average of two indexes: one which calculates the general prices for consumer goods, and another which reflects the increase in salaries. Commercial leases may be indexed by the index the parties may agree upon. | Residential properties. | Not applicable. |
Austria Kunz Wallentin | No. However, see comments. | For legally defined ‘old buildings’ there is a mandatory and statutory rent (Richtwertmiete; Kategoriemiete, ie, only such mandatory and statutory rent may be charged). An indexation clause is permissible, but such a clause can only ensure that in case of a newly adjusted mandatory and statutory rent (which will and can only be adjusted by the government), the new (generally higher) mandatory rent may be charged. Without such adjustment, the landlord cannot raise the rent to the inflation level. With the adjustment the rent may only be raised to the level set out by the government. The mandatory and statutory rent is normally adjusted every two years. Because of Covid-19, the government refrained from such an adjustment in 2020. The current adjustment was executed in 2022. | Legally defined ‘old buildings’. | Not applicable. |
Belgium Altius | No. | In Brussels there are proposals in Parliament to provide for a cap of 2 per cent for (social) housing. In the Flemish Region the indexation is linked to the energy level of the property as described above. | Not applicable. | Not applicable. |
Brazil Machado Meyer | No. | The rent can be adjusted by inflation only after a period of 12 months. | Not applicable. | Not applicable. |
Canada Stikeman Elliott | Yes, most Canadian provinces have enacted ‘rent control’ legislation that limits the frequency and monetary amount of rent increases imposed by landlords. Many provinces issue a yearly guideline which factors the current inflationary environment (for example, in Ontario the annual guideline is pegged to the CPI). During Covid-19 many provinces implemented eviction bans and moratoriums on rent increases, the majority of which have since expired. | Caps vary across provinces and may be further regulated at the municipal level (see below). | Residential. However, there are some general exclusions across provinces; for example, in Ontario, new buildings, additions to existing buildings and most new basement apartments that are occupied for the first time for residential purposes after 15 November 2018 are exempt from rent control (Schedule 36, Restoring Trust, Transparency and Accountability Act 2018). | Most provinces with rent control legislation update their prescribed guidelines for rent increases on an annual basis, however, exceptions exist. |
Czech Republic Giese & Partner | No. | Not applicable. | Not applicable. | Not applicable. |
Denmark Winsløw Law Firm | No. However, the Danish government has suggested a cap on the indexation of rent. As of 15 September 2022 the changes in the law on residential leases are being processed in a fast-track process in the Danish Parliament. | A cap at 4 per cent per year (based on indexation of rent due to the development in NPI in 2022 and 2023) is suggested with effect on 30 September 2022. Exemption only if the landlord proves to have a higher increase in costs on the property (not interests). | The suggested cap is for residential properties only. | The suggested cap is for 2023 and 2024. From 1 January 2025 an alternative index for rent adjustments should be introduced. |
Dubai Hadef & Partners | Yes. There is a Dubai Land Department rental calculator where tenants can calculate their rental increase: https://dubailand.gov.ae/en/eservices/rental-index/rental-index. | The level of rent increase is subject to how much below the average a tenancy is: - up to ten per cent below the average = no increase;
- 11 per cent less than the average = 5 per cent increase;
- 21 per cent less than the average = ten per cent increase;
- 31 per cent less than the average = 15 per cent increase; and
- over 40 per cent below the average = 20 per cent increase
(Dubai Decree No 43 of 2013). | - | - |
England Mills & Reeve | Not on short-term residential leases or any commercial leases. Ground rents on new long residential leases (generally 21 years or longer) above a peppercorn (ie, zero) were abolished earlier in 2022. | Not applicable. | Not applicable. | Not applicable. |
France Dentons | Yes (Law of 16 August 2022). | The variation of the index cannot exceed 3.5 per cent. | (i) Residential leases and (ii) Commercial leases on retail premises and only if the tenant is a ‘small or medium company’ as defined in EU Regulation N°651/2014 of 17 June 2014. | Yes: Retail = period running between Q2 2022 to Q1 2023 (inclusive). Residential = period running between Q3 2022 to Q2 2023 (inclusive). |
Germany Heuking Kühn Lüer Wojtek | No. However, indexation caps are being discussed. | Not applicable. | Not applicable. | Not applicable. |
India Fox Mandal & Associates | No country-wide cap on indexation of rent. Different Indian states have different rent control laws, which specify the standard rent and the permitted increase thereon. | Different Indian states have different caps on the permissible increase in the standard rent which may be determined under the specific rent control act or other allied statutes or fixed by an adjudicatory authority. For instance, in the state of Maharashtra, the Maharashtra Rent Control Act 1999 allows for an increase in standard rent up to 5 per cent.
In 2021, the Union Government proposed the Model Tenancy Act 2021 which can be adopted by the states with state-specific amendments. This indicative statute provides that the revision of rent will be agreed between the landlord and tenant. | The state-specific rent control acts broadly apply to residential premises and commercial premises with state specific exceptions carved out in case of the latter. The Model Tenancy Act 2021 is prescribed for residential and commercial buildings, except for hotels, lodging houses, dharamshalas (lodging for pilgrims), inns and for industrial-use buildings. | Not applicable. However, as per common practice, the revision of rent is done on a yearly basis. |
Italy Cocuzza & Associati | No. However, see comments. | Usually lease agreements provide for an annual update of the rent based on inflation which is linked to a specific index (ie, Istat, consumer prices for blue- and white-collar households). However, there is a favourable tax regime for residential leases (ie, cedolare secca) adhering to which no adjustment of the rent to the inflation index may be requested to the lessee for the whole duration of the lease. | The tax favourable regime applies only to residential leases. | Not applicable |
Luxembourg Dupont Partners | No. However, see comments. | The maximum amount that a landlord may charge in rent may not exceed five per cent of the amount, the landlord has invested in the property. | The restrictions apply only to accommodation used as the main place of residence rented out to natural persons. | If a real estate qualifies to be a ‘luxury real estate’, rent revision on basis of indexation possible under certain conditions. |
Mexico Cannizzo and Basham, Ringe y Correa | Not a general national cap. However, there is a cap in Mexico City (civil codes are different for each state of Mexico). | Mexico’s Civil Code provides the possibility that the parties may agree on an increase in the amount of the rent, specifically for residential properties, which may not exceed ten per cent of the amount agreed upon as monthly rent. Thus, when in a lease agreement for a residential property, the parties agree on an increase of an amount exceeding ten per cent, the Mexican Supreme Court of Justice has determined that the rent increase will be valid up to the limit established by law (ten per cent), and the excess will be null and void. As for commercial properties, Mexico City’s Civil Code does not expressly establish any rent caps, therefore the increase shall be as determined by the parties in the specific contract. | Residential properties. | No limitation. |
New Zealand MinterEllisonRuddWatts | No, due to the cost of living crisis. There is a statutory limit on the frequency of rent increases for residential properties that was introduced a couple of years ago to try to address New Zealand’s housing affordability crisis. | No more than one rent review in a 12-month period. | Residential properties. | Not applicable. |
Poland Wardynski & Partners | No. | Not applicable. | Not applicable. | Not applicable. |
Portugal Abreu Advogados | No. However, see comments. | A cap at two per cent has been suggested at the beginning of September 2022. | Not applicable. | Not applicable. |
Scotland Brodies | Under the Private Housing (Tenancies) (Scotland) Act 2016, Scottish councils have the power to ask Scottish ministers to designate Rent Pressure Zones (RPZ). These are areas subject to restrictions regarding increase of rent – a rent indexation cap for the localised area included in the RPZ. However, currently there are no RPZs in Scotland. The situation in Scotland is now under review, with an ongoing consultation ‘A New Deal for Tenants’ in place. The government plan to use this consultation to draft a housing bill, to be put before Parliament in 2023, which could involve rent controls. | Rents under private residential tenancies of properties within an RPZ cannot increased by more than the level of the CPI, plus one per cent. The cap also allows landlords to include an amount of rent to reflect any improvements made to the let property, by applying to a Rent Officer to determine how much additional rent they can add. The cap does not apply to initial rents. | To apply to have an area designated as an RPZ, councils must prove that: - rents in the area are rising too much;
- the rent rises are placing tenants under undue hardship; and
- the local council is being pressured to provide housing and financial support as a direct result of the rent increases in the proposed RPZ.
These caps only apply to private residential tenancies, the tenancy agreement introduced in Scotland in 2017. | Regulations that designate an area to be an RPZ cease to have effect five years following the date they come into force. No RPZs have yet been introduced. |
Slovakia Giese & Partner | No. | Not applicable. | Not applicable. | Not applicable. |
Spain Cuatrecasas | Yes. | Two per cent. | Residential properties. | Until 31 December 2022. |
Sweden Born | No. | Not applicable. | Not applicable. | Not applicable. |
Switzerland Bär & Karrer | No. | Residential leases in Switzerland are linked to a reference interest rate (volume-weighted average of all outstanding residential mortgages) and allow the landlord to charge cost increases to the tenant only to a limited extent (40 per cent). As interest rates have decreased over the last decade, rent has also decreased (for existing leases) for some time, also because the inflation was zero per cent from 2012 to 2021. As the reference interest rate reacts slowly, and because inflation for 2022 is expected to be around 2.5 per cent only, but can only be charged to 40 per cent, a cap on rent is not yet a topic in Switzerland. | Not applicable. | Not applicable. |
The Netherlands Lafarre | Yes. | Private rental sector: CPI + one per cent (in 2022, 3.3 per cent). Social housing: CPI (in 2022, 2.3 per cent). | Private rental sector and social housing. | Private rental sector: 1 May 2021 to 1 May 2024. Social housing: annually. |
The United States Arnall Golden Gregory | No country-wide indexation of rent, but certain large cities (eg, New York City) have had ‘rent control’ for years. A pan-US residential rent control is unlikely. | Necessary to assess across multiple municipalities. | Residential properties. | Necessary to assess across multiple municipalities, but in New York City they have been in effect for decades. |