Rent Determination Action

A rent determination action asks the court to set the rent for the new lease period. It is mainly used in long-term leases to close the gap between the contractual rent and market rents.

Setting the Rent (TCO Article 344)

• First five years: If the parties agreed an increase, it may not exceed the twelve-month average CPI change in the previous lease year. Absent agreement, the court sets an equitable rent not exceeding that rate, considering the condition of the premises.
• After five years: Regardless of any agreement, in leases longer than five years or renewed after five years, and at the end of every five years thereafter, the court sets an equitable rent considering the CPI change, the condition of the premises and comparable rents. The rent so set is then increased within the CPI cap in subsequent years.
• Foreign currency rents: Cannot be changed for five years, subject to the hardship rule; after five years, changes in the value of the currency are also considered.

The 25 percent cap applied to residential leases between 2022 and 2024 ended on 1 July 2024.

Filing Deadline and Effect (TCO Article 345)

• The action can be filed at any time.
• If filed at least thirty days before the new period, or if the landlord gave written notice of an increase within that time and filed by the end of the new period, the rent set applies from the start of the new period.
• If the lease contains a rent increase clause, the rent set in an action filed by the end of the new period also applies from its start.
• Otherwise, the rent set applies from the following period.

Mediation Before Suit

Applying to a mediator before filing is mandatory in rent determination disputes; see Mandatory Mediation.

In Practice

Courts usually establish comparable rents through a court expert and often apply an “equity reduction” reflecting the tenant’s long occupation. Timely filing directly affects the date from which the new rent applies. See Commercial Lease.