A graduated rent is a rental agreement in which the rent increases at regular intervals. The increase takes the form of pre-agreed increments, which may be based on either a specific percentage or a fixed amount. Graduated rent is typically agreed upon for a longer period, such as several years. Graduated rent allows both parties to plan for the long term.
The landlord can rely on a steady stream of income and has the option to adjust the rent in line with general price trends. The tenant, on the other hand, can calculate costs in advance and is protected from unexpected rent increases by the graduated schedule. However, with a graduated rent agreement, it is important to note that rent increases must not be arbitrary. Clear agreements must be made that base the rent on objective criteria, such as inflation or general market trends.
