Will your rent go up with inflation?

Will your rent go up with inflation?

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When a tenant signs his lease, he generally provides for an annual rent review clause. An inflation-dependent review and the latter continues to grow.

Rising consumer prices not only weigh on the bags of French households, but also affect their rent. And this development is particularly significant, indeed, inflation reached 4.5% in one year in March, something that had not been observed since the mid-1980s. The development was more moderate in April, 4.8% according to with the first estimates published this Friday.

The Rent Index (IRL) serves as the basis for reviewing vacant or furnished accommodation rentals. Sets the ceilings for the annual rent increases that landlords may require. The website service-public.fr reminds that it is calculated from the average, in the last 12 months, of the evolution of consumer prices without tobacco and rents. As inflation rises sharply, the IRL inevitably rises.

In a previous article, we explained that landlords generally provide for an annual rent review clause. This rent increase is limited and cannot be faster than the evolution of the rent benchmark. is one of the forms of rent control applicable in France. The increase is annual with a fixed date provided in the lease (or by default the anniversary date of the lease). This rent increase limit applies, during the lease, throughout the territory in all the municipalities of France. Whether it is empty or furnished rental accommodation. The lessor has one year to do so, “when the one-year period expires, the revised application is lost to the landlord,” explains service-public.fr.

Increase of 2.48%.

To calculate the approved rent increase the following calculation must be made: Current rent x new IRL of the contract reference quarter / IRL of the same quarter of the previous year = new rent. In the last update published by INSEE on April 15, the first quarter of 2022, the rent benchmark stood at 133.93. Over the course of a year, it increased by 2.48%, compared to + 1.61% in the previous quarter. The increase was 0.83% in the third quarter of 2021. The last peak of the IRL was observed in the fourth quarter of 2018 (+ 1.74%). Previously, the latest data on the evolution of the index date from 2012 (+ 2.24%) and 2008 (+ 2.95% in the third quarter).

So taking a rent of 700 euros, if there is currently the annual review clause, the rent will increase to 717.35 euros. 700 euros x (reference rents for the 1st quarter of 2022 / reference rents for the 1st quarter of 2021). We remind you that during our last simulation last November, the rent of 700 euros had risen to 705.8 euros. Anil offers you a simulator. All you have to do is enter your rent amount and the rent reference index quarter provided in the lease and the site calculates the rent amount after the revision.

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