At the turn of the year, many businesses across the country experience adjustments to their commercial rents. These changes are typically due to indexation clauses included in most lease agreements. A key element in this process is the so-called October Index. Lisse-Lotte Bolin, head of Fylgia’s Real Estate Group, together with associate lawyer Aron Linnell Zyto, explain what the October Index is and how it may impact your rent from 1 January 2025.

1. Base Rent and Additional Charges

The rent a tenant pays usually consists of a base rent, along with possible additional charges for utilities such as electricity, heating, and property tax. Value Added Tax (VAT), however, is not considered rent in legal terms. For leases with a term of at least three years, landlords and tenants can agree that rent will be adjusted in line with changes to an index. This is why most commercial leases run for three-year periods.

2. Rent Indexation

The base rent (and sometimes additional charges) can then be adjusted annually according to the Consumer Price Index or the Property Management Index. In commercial leases, it is common to use the Consumer Price Index for October, hence the term October Index.

The Consumer Price Index measures the general price level and serves as an indicator of average price development in the country. It can be negotiated whether the entire base rent or only a portion of it should be adjusted according to the index. Parties may also agree that additional charges for electricity, heating, etc., are subject to indexation.

3. Increase in Consumer Prices

Due to significant rises in consumer prices over recent years, index increases have grown considerably. The increase between the October 2022 and October 2023 indices was 6.5%. The October 2024 index (415.51), released in November 2024, indicates a continued rise, albeit more modest at 1.57% compared to the previous year. This figure will affect rents from 1 January 2025.

If you have any questions about indexation in your lease agreement or other matters related to current or future commercial leases, please do not hesitate to contact us.