Stepped Rent in a Tenancy: What Landlords Should Know About § 557a BGB

What is a stepped rent?

With a stepped rent, the rent is set at differing levels for specific periods already in the tenancy agreement. Instead of increasing the rent individually later on, landlord and tenant agree from the start how high the rent will be in the coming years. The increases then take effect automatically on the agreed dates, without any need for a separate increase declaration or the tenant's consent.

The statutory basis is § 557a BGB. It states that the rent may be agreed in writing at differing levels for specific periods, with the respective rent or the respective increase having to be shown as a sum of money. It is precisely this fixed, pre-quantified stepping that gives the agreement its name.

For both sides this means above all planning certainty. The tenant knows for the entire term which rent is due in which year. The landlord receives reliably rising income without having to initiate a formal procedure each year.

How a stepped rent is validly agreed

For a stepped rent to hold up legally, the requirements of § 557a BGB must be observed precisely. Two points are decisive here:

• Each step as a sum of money: For each period, either the respective total rent or the increase amount must be stated as a specific euro sum. A mere percentage figure such as three percent annually or a reference to the local comparative rent is not sufficient. At the time the contract is concluded, the tenant must already be able to read off which rent awaits them in each year.
• Written form (Schriftform): The stepped rent must be agreed in writing. In practice the agreement is as a rule placed directly in the written tenancy agreement that both sides sign. A verbal arrangement is not sufficient.

A tabular presentation in the contract is customary, for example: from 1 January 2026 a rent of 900 euros, from 1 January 2027 of 930 euros, from 1 January 2028 of 960 euros and so on. It is important that the dates of the individual steps are clearly ascertainable. The clearer the amounts and dates stand in the contract, the more secure the agreement is.

The most important rules under § 557a BGB

Besides form and sum of money, the law places further requirements on the stepped rent:

• Unchanged for at least one year: Each rent step must remain unchanged for at least one year (§ 557a Abs. 2 BGB). More frequent increases, for instance every six months, are not permitted. The amount of the individual steps, by contrast, is not expressly limited by law.
• No additional increase under §§ 558 to 559b BGB: During the term of a stepped rent the usual rent increases are excluded. The landlord therefore cannot additionally adjust the rent to the local comparative rent (§ 558 BGB), nor demand a modernisation increase (§ 559 BGB). The steps are conclusive.
• Operating costs remain adjustable: Advance payments or flat rates for operating costs can be adjusted under § 560 BGB even during a stepped rent if the actual costs change. This point is independent of the steps.
• Exclusion of termination at most four years: The tenant's right of termination can be excluded for at most four years from conclusion of the stepped rent agreement (§ 557a Abs. 3 BGB). A longer binding of the tenant is invalid to that extent.

These rules serve tenant protection and cannot be contracted away to the tenant's disadvantage. Whoever knows and observes them designs the stepped rent on secure ground from the outset.

Rent brake: does it also apply to stepped rent?

Yes. In areas with a tight housing market that a federal state has designated by ordinance, the rent brake (Mietpreisbremse) under § 556d BGB also applies to the stepped rent. This is expressly regulated in § 557a Abs. 4 BGB: §§ 556d to 556g BGB are to be applied to each individual rent step.

In practice this means: not only the first rent, but also every later step may in principle exceed the local comparative rent by at most ten percent, provided no statutory exception applies. For the second and every further step, what matters is not the start of the contract but the point at which the respective step first falls due, and the local comparative rent applicable at that time.

A rent level validly established in an earlier step is preserved under § 557a Abs. 4 BGB. The rent brake therefore cannot be circumvented through the stepping. Whether and to what extent it applies in your region, and which exceptions come into consideration, depends on the respective state ordinance and the circumstances of the individual case.

Stepped rent or index-linked rent: the difference

Alongside the stepped rent, the law recognises the index-linked rent (Indexmiete) under § 557b BGB. Both models govern how the rent changes over time, but follow different principles.

• Stepped rent (Staffelmiete) (§ 557a BGB): The future rents stand in the contract as fixed sums of money. The increase takes effect automatically on the agreed date. The amount is known from the outset over the entire term, independent of the general price trend.
• Index-linked rent (Indexmiete) (§ 557b BGB): The rent is tied to the consumer price index determined by the Federal Statistical Office. It rises or falls with inflation. The landlord must declare each adjustment in text form and state the change in the index as well as the new rent or the increase amount as a sum of money.

The central difference lies in predictability: the stepped rent is plannable and decoupled from the market, the index-linked rent follows the actual price trend. With the index-linked rent too, the rent must remain unchanged for at least one year in each case, and an increase under § 558 BGB is excluded. Which model makes sense for a specific apartment depends on location, rental duration and market expectations.

Advantages and disadvantages for landlords and tenants

The stepped rent has merits for both sides, but also limits. A sober look helps with the decision.

In favour for landlords:

• Plannable rental income, fixed from the outset, over several years.
• No formal increase procedure and no required tenant consent for the agreed steps.
• Independence from the development of the local comparative rent.

To consider for landlords:

• During the term, additional increases under §§ 558 and 559 BGB are excluded. If the market rent level rises more strongly than the steps, there is no way to readjust.
• In areas with a rent brake, the stepped rent too is subject to §§ 556d ff. BGB.

In favour for tenants:

• Full transparency: the rent of the coming years is known from the start.
• Protection against surprise increases based on the local comparative rent.

To consider for tenants:

• The rent rises on the fixed dates even when market rents stagnate.
• The right of termination can be excluded for up to four years.

Common mistakes that render a stepped rent invalid

In practice, stepped-rent clauses usually fail not on the principle but on the drafting. These mistakes occur particularly often:

• No sums of money: The steps are formulated only as percentages or as a reference to an index or to the local comparative rent. § 557a BGB, however, requires specific sums of money.
• Missing written form: The agreement was made only verbally or not signed by both sides.
• Intervals too short: The rent is meant to increase more often than once a year. Each step, however, must remain unchanged for at least one year.
• Excessively long exclusion of termination: The tenant is bound to the contract for more than four years, which is invalid to that extent.
• Unclear dates: The dates of the individual steps are not clearly ascertainable.
• Breach of the rent brake: In a rent-brake area, a step exceeds the permissible level without an exception applying.

A single invalid point does not necessarily affect the whole contract, but it can mean that the planned increase comes to nothing. A carefully formulated clause is therefore the best precaution. This article provides general information and does not replace legal advice in the individual case.