04.07.2017 | KPMG Law Insights

The written form requirement for changes in the amount of rent

The written form requirement for changes in the amount of rent – New case law on the written form requirement for changes in the amount of rent in long-term rental and lease agreements

In a recent ruling, the German Federal Court of Justice (BGH) clearly emphasized that a change in the amount of rent always constitutes a material change to the contract and thus, in the case of long-term contracts, is subject to the formal requirement of Section 550 sentence 1 of the German Civil Code (BGB) (ruling of November 25, 2015, XII ZR 114/14). Does this mean that every change in the amount of rent, including changes due to a value adjustment clause or a graduated rent agreement, must be documented in an addendum to the rental agreement in order to comply with the written form requirement?

The written form requirement

Under German law, rental agreements with a fixed term of more than one year are subject to the requirement of written form pursuant to Sections 550 and 126 of the German Civil Code (BGB). Accordingly, the essential elements of the lease agreement (such as contracting parties, subject matter of the lease, rent, term) must be recorded in writing. The background to this is that a purchaser of the property on which the rental property is located enters into the rental agreement by operation of law and assumes the rights and obligations arising from the rental agreement (principle of “purchase does not break rent” – Section 566 (1) of the German Civil Code).

The verdict

In its ruling of November 25, 2015, the Federal Court of Justice (BGH) clearly commented on the question, which had not yet been clarified by the highest courts, of whether a subsequent change in the rent is always material, irrespective of its amount, or whether it is additionally necessary for a materiality threshold to be exceeded in order for this change in the rental agreement to be recorded in a separate addendum. In the opinion of the BGH, a permanent change in the amount of rent is always material to the contract and must therefore always be agreed in writing in accordance with § 550 BGB. As exceptions, the BGH mentions only cases in which changes in the amount of rent for no more than one year or can be revoked at any time by the landlord.
As justification, the BGH states that the rent is not only a per se essential point of the contract, which is of particular interest to potential purchasers of real estate protected by §§ 550, 126 BGB, but that changes in the rent can directly affect the landlord’s possibility to terminate the contract without notice due to the tenant’s default in payment. The non-payment of a comparatively small increase amount can, on the one hand, add up in the case of a long-term rental agreement and, if necessary, lead to a termination under Section 543 (1) of the German Civil Code (Bürgerliches Gesetzbuch). 2 Sentence 1 No. 3 lit. b) BGB lead to sufficient arrears. On the other hand, the delay with an only minor increase amount in conjunction with other payment arrears of the tenant can lead to “the barrel overflows” and an important reason for a termination within the meaning of § 543 para. 2 sentence 1 no. 3 BGB is to be affirmed.
Against the background of the aforementioned reasoning, the BGH also regarded a rent increase of €20.00 per month as a contractual amendment subject to the formal requirement of Sections 550, 126 of the German Civil Code (BGB) and in this respect rejected the contrary opinion of the Court of Appeal (OLG Stuttgart, judgment of September 22, 2014).

Supplements for rent increases due to index adjustments or graduated rent agreements?

Does this now mean that even in the case of rent increases due to index adjustments and on the basis of graduated rent agreements, an addendum to the rental agreement must always be concluded in order to satisfy the written form requirement of §§ 550, 126 BGB? The BGH has commented on this in another decision. In a ruling dated February 5, 2014 (XIII ZR 65/13), the court expressed the view that a rent increase based on a rental agreement value protection clause does not need to comply with the written form requirements of Sections 550 and 126 of the German Civil Code. In justification, the BGH pointed out that in the case of an automatic rent adjustment on a certain date, the corresponding contractual agreement on the rent increase was already included in the original rental agreement. If the rental agreement otherwise complies with the written form requirement, no addendum is required to document the rent increase due to the index clause. This applies even if the index clause provides for a written notification of the landlord to the tenant about the rent change, if this notification is only declaratory in nature – and is not decisive for the reason and amount of the rent change. The question of whether an “automatic amendment” has actually been agreed must therefore be examined in each case where rent increases or reductions have occurred as a result of index changes and the compliance with the written form of a long-running rental or lease relationship is to be examined, such as in an acquisition due diligence.
The same principles can be applied to graduated rent agreements: A rent increase based on a graduated rent agreement does not require an addendum in order to comply with the written form requirement of §§ 550,126 BGB if the agreement regarding the graduated rent is included in the original rental agreement and the increase automatically takes place on a certain key date. The original lease agreement must satisfy the written form requirement in this respect.
We will keep you informed about the further development of case law on the – still exciting – topic of the written form requirement in long-term rental and lease agreements. Please do not hesitate to contact us if you have any questions.

Explore #more

13.06.2024 | Press releases

Handelsblatt and Best Lawyers honor KPMG Law Experts

Best Lawyers has once again identified the best commercial lawyers in Germany for 2024 exclusively for Handelsblatt. A total of 28 lawyers were honored by…

27.05.2024 | KPMG Law Insights

Agreement on ecodesign regulation: products to become more sustainable

After lengthy negotiations, the Council and Parliament of the European Union reached a provisional agreement on the Ecodesign Regulation on the night of December 5,…

22.05.2024 | KPMG Law Insights

The AI Act is coming: EU wants to get a grip on AI risks

For many people, artificial intelligence (AI) is the great hope for business, healthcare and science. But there are also plenty of critics who fear the…

17.05.2024 | KPMG Law Insights

Podcast series “KPMG Law on air”: When the family business is to be sold

Around 38,000 family businesses are currently handed over each year. In most cases, the change of ownership takes place within the family. But more and…

03.05.2024 | KPMG Law Insights

Doubts about inability to work? What employers can do

The certificate of incapacity for work (AU certificate) serves as proof of incapacity for work due to illness. However, only if the certificate meets certain…

27.03.2024 | KPMG Law Insights

EU Buildings Directive: life cycle greenhouse potential becomes relevant

On March 12, 2024, the EU Parliament approved the amendment to the EU Buildings Directive. The directive obliges member states and, indirectly, building owners and…

19.03.2024 | Business Performance & Resilience, KPMG Law Insights

CSDDD: Provisional agreement on the EU Supply Chain Directive

The EU member states agreed on the CSDDD, the EU Supply Chain Directive, on March 15, 2024. Germany abstained from the vote. Negotiators from the…

21.02.2024 | KPMG Law Insights, KPMG Law Insights

The Digital Services Act – what does it mean for companies?

The Digital Services Act (DSA) is a key component of the EU’s digital strategy and came into force on November 16, 2022. As a regulation,…

15.02.2024 | KPMG Law Insights

Data compliance management: How to implement it in practice

Part 3 of the article series “Professional tips for data compliance management”   The third part of this series of articles deals with data compliance

14.02.2024 | Business Performance & Resilience, PR Publications

Guest article in ZURe: Monitoring the implementation of the LkSG

The current issue of ZURe (p. 20 ff.) contains a guest article by KPMG Law Partner Thomas Uhlig (Head of General Business and Commercial Law),…


Dr. Rainer Algermissen

Head of Construction and Real Estate Law

Fuhlentwiete 5
20355 Hamburg

tel: +49 40 3609945331

© 2024 KPMG Law Rechtsanwaltsgesellschaft mbH, associated with KPMG AG Wirtschaftsprüfungsgesellschaft, a public limited company under German law and a member of the global KPMG organisation of independent member firms affiliated with KPMG International Limited, a Private English Company Limited by Guarantee. All rights reserved. For more details on the structure of KPMG’s global organisation, please visit

 KPMG International does not provide services to clients. No member firm is authorised to bind or contract KPMG International or any other member firm to any third party, just as KPMG International is not authorised to bind or contract any other member firm.