Rent Increase Calculation: Legal Limits and CPI

Rent increases should be calculated on a fair and legal basis for both tenants and landlords. Our tool helps you determine your new period's rent according to official regulations and CPI (Consumer Price Index) 12-month averages.

Key Terms

Basic concepts to know during the lease renewal period:

• Current Rent: The monthly net rent amount before the contract is renewed.
• CPI (12-Month Average): The upper limit index used for rent increases according to law.
• Legal Cap: A maximum increase rate set by the government during specific periods (e.g., 25% cap).
• New Period Rent: The updated rent amount after the increase rate has been applied.

What Are These Terms?

CPI (12-Month Average)

The average Consumer Price Index over the last 12 months. Legally, rent increase rates cannot exceed this average unless otherwise specified in the contract.

Legal Cap (e.g., 25%)

Under extraordinary market conditions, governments may set a fixed ceiling rate (%) for residential rents. In such cases, the legal ceiling rate applies even if the CPI is higher.

Increase Amount

The net monetary amount added to your old rent. This amount is found by multiplying the current rent by the increase rate.

How Does The Tool Work?

Calculation Method

Our calculator provides transparent results by following these steps:

1. Determine the Rate: Uses the percentage input or the current legal limit.
2. Find the Increment: Applies the formula: Current Rent x (Increase Rate / 100).
3. Sum the New Rent: Adds the increment to the old rent to calculate the new total amount to be paid.

Step-by-Step Guide

1. Enter Current Rent: Input the net monthly rent you are currently paying.
2. Define Increase Rate: Enter the announced CPI average for that month or the legal cap applicable to your category.
3. View Results: Click "Calculate" to see how much more you will pay and what your new rent will be.

Real-World Examples

• Residential Rent: For a tenant paying $1,000, if a 25% legal limit is applied, the increase will be $250, making the new rent $1,250.
• Commercial Rent: Business properties often follow the direct CPI 12-month average without a fixed residential cap. If CPI is 60%, a $2,000 office rent would increase to $3,200.

Pro Tip: Rent increases typically start from the contract's renewal date. Unless specifically stated otherwise in your contract, the CPI 12-month average of the month preceding the renewal month is used as the base.