The ABC of renting

The rent is determined according to what has been agreed between the lessor and the tenant.

For new leases, the rent level corresponds to the market level, while for old leases rent levels may have fallen behind the market rental value for apartments. According to the law, rent can be increased on the basis of the agreement only if an applicable provision has been included in the lease agreement. This means that the grounds for increase and the date on which the increase is to take effect must be recorded in the agreement. A fixed-term agreement of less than three years may not include a provision for increase linked to an index or a similar condition.

The use of fixed percentage amounts or euro denomination as the grounds for increase are not recommended for fixed-term agreements of less than three years; however, an increase provision may be included in agreements that are valid until further notice and fixed-term agreements of at least three years.

According to the law, rent may not be freely determined or raised for rental buildings where the need for an apartment is the principle for selecting residents (ARA rental agreement). These lease agreements primarily observe the principle of original cost for determining rent. Determination of rent on the basis of original cost also refers to the fact that all building costs are covered by rental income. This means that if one tenant neglects his or her rent payment, the other tenants will have to pay it. For this reason, the lessor must intervene promptly in cases of neglected rent payments.

In an ARA lease agreement, the lessor must inform the tenant of rent increases in writing. The notification must indicate the grounds for the increase and the new rent amount. At the earliest, the increase in rent shall take effect two months after the lessor’s notification. If the parties have agreed on separately invoiced benefits (compensation based on use, such as a water fee), it is not necessary to inform the tenant of an increase that is based on greater consumption or a change in the number of people living in the apartment.