Value Protection in Lease Agreements and the Consumer Protection Act: (Another) Ruling
People who rent an apartment generally do not pay the same rent indefinitely. Many lease agreements contain so-called rent indexation clauses: provisions designed to link the rent to general price trends—usually measured by the consumer price index. The goal from the landlord’s perspective is understandable: the value of the lease should not be eroded by inflation over the years. However, such clauses are legally valid only if they are clear, understandable, and in accordance with the Consumer Protection Act. If this is not the case, tenants can reclaim any rent increases they have paid—sometimes dating back many years. In recent years, the Supreme Court has issued a number of rulings on this matter, which ultimately led the legislature to amend the law and provide some “relief” for landlords.
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In any case, however, the value adjustment must be based on objective and independent criteria. GIBEL ZIRM Attorneys at Law filed a lawsuit on behalf of clients seeking full reimbursement of all rent increases since the beginning of the lease. This was done on the grounds that the agreed-upon value adjustment clause was not in accordance with the Consumer Protection Act and, in particular, that it was at the landlord’s discretion to determine when to implement the increase.
The lease agreement included a value protection clause that tied the rent to the 2010 Consumer Price Index. The most recently published index figure at the time the agreement was signed was to serve as the baseline; adjustments were to be made at the time each annual statement was prepared.
The Court of First Instance found that the rent adjustment clause violated the statutory requirements of the Consumer Protection Act simply because no clear time frame for the adjustment had been defined, and because the clause referred only to increases in rent, but not to possible decreases.
The Vienna Regional Court for Civil Matters confirmed this assessment: Linking the rent adjustment to the date of the annual statement does not satisfy the requirement for transparency, because it is not clear to which statements this clause is supposed to refer. Furthermore, the landlord could determine for himself when to submit the statement—and thus also when an increase or decrease takes effect.
Supreme Court (8 Ob 128/25v): The Supreme Court dismissed the landlord’s appeal and stated in its reasoning that the value protection clause violates the principle of symmetry under the Consumer Protection Act: If the landlord is free to choose the timing of the settlement—and thus the rent adjustment—within a one-year period, it is entirely up to the landlord to decide whether and when an increase that benefits him or a decrease that burdens him takes effect. Since the landlord was also unable to provide any objective justification for linking the index adjustment to the settlement date, he failed to identify any relevant legal issue that would have required consideration by the Supreme Court.
A positive outcome for our clients: GIBEL ZIRM Attorneys at Law has consistently and successfully represented the client through all levels of the court system from the very beginning—from the district court to the Supreme Court. The landlord was ordered to fully reimburse all payments made on the basis of the invalid clause, plus interest and all litigation costs across all three levels of court.
This decision once again highlights how important it is to seek expert advice when drafting a lease agreement—our experts are here to help you!
