There are four types of rental agreements

It precedes almost every move: the signing of the contract. So that you know what you are getting into, you should know exactly what kind of document you are signing.

Graduated, index-linked, fixed-term or open-ended - anyone moving into a new apartment may be confronted with different types of tenancy agreements. Despite all the excitement about your new home, you should never sign a tenancy agreement without checking it. What lies behind the individual contract models:

1. the open-ended tenancy agreement

This is by far the most common type of tenancy agreement. The contract runs until one party effectively terminates it. No end date is agreed. "The tenant can terminate without cause with three months' notice," explains Stefan Schmalfeldt from the tenants' association in Hamburg. "Landlords, on the other hand, need a reason for termination, such as personal use," says Schmalfeldt. Your notice period is then three to nine months, depending on how long you have lived there.

For tenants, the open-ended tenancy agreement is a safe bet. They can stay in the apartment for the long term, but can also get out of the contract quickly if they want to. "But there is one catch," says Stefan Schmalfeldt. "The contract may contain a temporary exclusion of termination." Up to four years are permitted. If tenants sign this, they cannot get out of the contract during this time without the landlord's consent.

2 The fixed-term tenancy agreement, also known as a temporary tenancy agreement

In the case of a fixed-term tenancy agreement, the end date is already fixed when the agreement is signed. "If the landlord knows that he will need the apartment in a few years' time, wants to rent it out as a company apartment or is planning major renovations or demolition, he can set a time limit on the rental agreement," explains Julia Wagner from Haus & Grund Deutschland.

The landlord must state the reason for the time limit in writing. "If the reason is not in writing, the time limit does not apply and the tenancy agreement continues to run as a normal open-ended contract," says lawyer Beate Heilmann, Chairwoman of the Tenancy Law and Real Estate Working Group of the German Bar Association (DAV).

"Tenants who opt for a fixed-term contract must take into account that they cannot give notice during this period," says Stefan Schmalfeldt. "This can be problematic if they find a nice apartment in the meantime that is rented out for an indefinite period."

If the end of the fixed-term tenancy agreement is approaching, it is advisable to ask the landlord whether the reason for the fixed term still applies or whether the contract can continue indefinitely, says Schmalfeldt.

3. the graduated rental agreement

"Graduated tenancy agreements are often offered by landlords who want to have less work involved in letting," says Beate Heilmann. This is because the rent increases are fixed from the outset in a graduated rental agreement and are automatic. "The landlord does not have to claim them from the tenant." There must be at least one year between each graduated rent increase.

For the tenant, the graduated rental agreement has the advantage that they know exactly which rent increases they will have to pay and when. But it can be expensive. "Landlords often start with high rents for new tenancies, which then increase regularly."

The problem: the graduated rents may generally be higher than the local comparative rent and above the rent cap. However, if a rent cap applies in the area, the limit is 10 percent above the comparative rent. If no rent cap applies, the rent in areas with a housing shortage may not be increased by more than 20 percent within three years.

The graduated rent is ineffective if the specific amount of the graduated rent increase or the rent to be paid is not specified. This is the case, for example, if the contract only states that the rent will increase by three percent annually.

In the case of an open-ended graduated rental agreement, the tenant can terminate the apartment with the statutory notice period of three months. However, an exclusion of termination is often agreed in the rental agreement in connection with a graduated rental agreement. This may be for a maximum of four years.

Beate Heilmann points out a special feature of graduated rental agreements: "The landlord may not increase the rent due to modernization." Exception: Modernization requirements imposed by law or the authorities.

4. the index-linked rental agreement

In this case, the rent is linked to the consumer price index, which is calculated annually by the Federal Statistical Office. "In recent years, the index has been very low and rent increases have been correspondingly moderate," says Julia Wagner. "Now that consumer prices have risen sharply due to inflation, the increase is significantly higher." As a general rule, the rent does not automatically rise in line with the index; the landlord must explicitly request the increase.

"If the initial rent was already very high, this can definitely put tenants in a bind now," says Beate Heilmann. It is no consolation that the index-linked rent can even fall if the interest rate drops below zero. "That is not to be expected in the near future."

Nevertheless, holders of index-linked rental agreements do not have to fear rent increases after modernization. "According to the amended Building Energy Act, they are even exempt from rent increases, which can be used to allocate the costs of heating modernization," says Beate Heilmann.