It’s illegal if your lease contains graduated rent if the lease was entered into after 1st of June 2015. If the lease was entered before, it’s legal if some conditions are met.
What is graduated rent?
It means that the rent increases annually by a certain amount of a certain percentage on a certain date. Therefore the rent will always rise on the certain date.
Example: When a tenant moves into a tenancy, the lease is DKK 4.000. In the lease, it is stipulated that the rent increases by DKK 200 on 1/1 each year and will apply for the next three years. Since the first year has passed, the rent is DKK 4.200. The second year the rent is DKK 4.400 and the third year the lease is DKK 4.600.
In the example the rent is increased annually by DKK 200. Graduated rent can also be if the rent is increased by a certain percentage annually on a certain date.
It’s important to separate increases resulting from graduated rent from increases according to the net price index, as this may be decisive for the legality of the graduated rent. It is reflected in an agreed increase, while the net price index follows society’s general development.
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How and where can I see the graduated rent in my lease?
If you want to examine if an agreement on graduated rent is in your lease, you must look in § 11. Examples of wordings in a lease:
“The rent increases on 1/1 every year until 2022.”
“The rent will be increased by DKK 200 at the turn of the year for the next four years.”
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Is graduated rent legal or illegal?
In order to assess whether gradurated rent is legal or illegal, a distinction must be made between leases entered into before 1/7-2015 and leases entered into after 1/7-2015.
This is due to a new rent act that came into force on 1/7-2015. The rules of the new rent act rent differ from the previous rent act, which is why this date will be decisive for the legality of stairway rent. After 1/7-2015, graduated rent can no longer be agreed. However, rent increases according to the net price index are still legal today (see more about the net price index below).
Leases entered into before 1/7-2015
Graduated rent in leases entered before 1/7-2015 is legal, if the following applies:
1) The landlord must make it clear when the graduated rent starts and ends.
Example: The rent increases by DKK 200 annually. The graduated rent runs from 1/1-2020 to 1/1-2023.
Both the start date and the end date must be clearly stated in the lease. If that’s not the case, the graduated rent is illegal. A graduated rent can’t be unlimited.
2) The landlord must make an overview to the tenant of the rent increases during the graduated rent if the it is unmanageable, e.g. if the it increases by a percentage. The tenant must be able to manage his rent throughout the graduated rent period. The landlors must make an overview or otherwise make it easy for the tenant to predict his rent. The amount by which the graduated rent is increases each year must be clear and predictable for the tenant.
These two conditions must be met. Otherwise the graduated rent will be illegal even if the lease was entered before 1/7-2015.
If the conditions is met, the graduated rent will be legal and apply until the lease is terminated or changed or until it ends in accordance to the graduated rent clause.
Changes in a lease with a graduated rent agreement
Leases entered into after 1/7-2015
In leases entered into after 1/7-2015, any agreement on graduated rent will be illegal. The landlord will not be able to demand that the tenant is paying graduated rent. The landlord can demand that the rent has to be adjusted by the net price index, which is legal. The net price index is regulated according to the general development in society, and thus a rent increase according to the net price index will simply follow society’s general price increases. If the lease stipulates that the rent is adjusted according to the net price index, the rent can legally be increased by the percentage by which the net price index has increased compared to the previous year.
You can find the annual net price index here.
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What happens if an illegal agreement about graduated rent has been made?
If an illegal graduated rent been agreed, this part of the lease will no longer apply. The tenant will therefore not be obliged to pay the annual rent increase that follows from the graduated rent. If the tenant has already paid for an illegal increase, the tenant will be able to demand a refund.
When is a rent increasing legal?
There are numbers of legal rent increases. It is legal, if…
- The rent follows the net price index
- The rent increases because it is a agreement between tenant and landlord
- The rent increases because of improvements in the tenancy
- If the landlord’s costs of the tenancy increases
Get legal advice and avoid being deceived
This topic can be very complicated as a tenant. The above is to be seen as a general guidance and not as downright legal advice. We always recommend that you contact us to ensure that you get the proper necessary legal advice that is relevant for your specific case.
You can get help with this topic but also any other matters you may have. Unfortunately, we see many tenants that are being deceived. Often, they miss out on a lot of money – anything from a couple thousands to 30-40,000 kroner. Imagine what else you could spend the money on.
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