What is rent indexation?
Each year, on the anniversary date of the tenancy enactment, the rent may be adjusted to the cost of living. Until December 1993, indexation was still based on fluctuations in the consumer price index. Since 1994, the health index has been used.
Calculation of rent indexation:
The calculation of the annual rent indexation is based on the evolution of the health index and the basic rent. The calculation rules vary according to the date of the signature of the tenancy and the start date of the tenancy.
The formula for calculating the new rent:
The formula for calculating the indexed rent is as follows: New Rent = Base Rent Price * Last index / starting index
How to determine the basic rent?
Determination of the basic rent for tenancies that came into force after January 1, 1984:
In the case of a tenancy that started after January 1, 1984, the basic rent is the amount of the rent corresponding to the most recent of the following three events:
• the rent indicated in the written tenancy contract,
• the last rent revised by mutual agreement between the lessor and the tenant at the end of a triennium,
• the rent decided by the judge.
It does not take into account rental costs and charges left to the tenant by the tenancy.
Determination of the base rent for tenancies entered into force before January 1, 1984:
In this case (tenancy having started before January 1, 1984), the basic rent corresponds to:
• the rent fixed by a court decision following an action brought before February 28, 1991.
• in the absence of a judicial decision, the basic rent which was used to calculate the indexed rent in 1990 without dispute,
• in case of dispute with this calculation at the last rent paid during the year 1983.
How to determine the starting index?
The starting index is that of the month preceding the month during which the tenancy contract was signed.
How to determine the new index?
The "new index" is the health index for the month preceding that of the anniversary of the entry into force of the contract. You can find the value of the indices on this link.
What do the index bases correspond to?
The index bases:
There are several index basis: the 1988 index base, the 1996 index database, the 2004 index base and the 2013 index base. Each given month has a different index in each base. Here, for example, the values of the health indexes for March 2014 for each of the basis are as follows:
Which index base to use?
The calculation of indexation of rents relating to tenancies concluded before February 1, 1994 must be done in the base 1988 = 100.
For other tenancies, it doesn't matter, the important thing is that the same base is used for the base index and for the new index as shown in the example below.
Example: A rent must be indexed on November 1, 2012. The tenancy started a year earlier with a rent of 100.
The result is the same as the reference base, that of 2004 or 2013.
The rent for the current month is calculated prorata temporis
The indexation of rent takes effect on the anniversary date of the start of the lease. If the date falls during the month, the rent for the anniversary month of the lease will be calculated prorata temporis on the basis of the old and the new rent.
How to calculate the indexation?
Indexed rent = (base rent price * last index) / starting index
- The basic rent includes the sum of the lines of the tenancy indicated as being indexable. In principle, these are "rent" type lines. You can determine for yourself which lines are considered as such.
- The starting index is that of the month preceding the month in which the contract was signed (for all contracts which entered into force after 1983).
- The new index is always the health index for the month preceding that of the anniversary of the entry into force of the tenancy (therefore NOT the one preceding the anniversary of the signing of the tenancy, unless these two data are identical).
The new rent = (Reference year 2013 = 100): € 750.00 (base rent price ) * € 109.00 (last index) / € 108.48 (starting index) = € 753.6.
How to index a tenancy?
As soon as the signature date is entered, the system automatically returns the value of the starting index, so after entering the rent price the values of “Base rent price” and “Current rental price” will be set up to date.
And on the anniversary of the tenancy the button 'Apply the current index ' appears and does not disappear until you click on it.
The system automatically generates an email proposal to send to the tenant and a price difference invoice if the call for rent for the current month has already been generated.
After sending the email notification to the tenant, the system updates the tenancy index.
How to index tenancies in batches?
To perform a batch indexing of tenancies, first, you select the list of tenancies to index, then click on the “Action” button and “Batch indexing”
and you can choose if you will notify the tenants by email following this change or not.