Indexation Clauses in Residential Lease Agreements: What Austrian Landlords Need to Know

Recent rulings of the Austrian Supreme Court (OGH) have brought renewed attention to the legal limits of Wertsicherungsklauseln (indexation clauses) in lease agreements with consumers. These decisions clarify what landlords may—and may not—include when adjusting rent for inflation.

Legal Framework

Indexation clauses are subject to strict scrutiny under Austrian consumer protection law:

§ 6 (1) Z 5 KSchG: Prohibits price increase clauses that are not objectively justified or lack clarity.
§ 6 (2) Z 4 KSchG: Prohibits early price increases (within 2 months of contract) unless individually negotiated.
§ 879 (3) ABGB: Bans grossly disadvantageous terms in standard contracts.

Key Findings from the OGH

1. Early Rent Increases Are Not Permitted

In case 8 Ob 6/24a, the Supreme Court confirmed that rent increases within the first two months after signing are unlawful unless individually negotiated.

"The tenant has a legitimate interest that the agreed rent remains binding for the initial months."
— OGH 8 Ob 6/24a

2. Use of Construction Cost Index Is Unjustified

In 10 Ob 23/24s, the OGH ruled that tying rent to the Baukostenindex (construction cost index) is impermissible in consumer leases. The court found that such indices do not sufficiently reflect the actual cost structure of professional landlords.

"Linking rent to only one of several relevant landlord cost factors—namely maintenance—inevitably distorts the original equivalence."
— OGH 10 Ob 23/24s

3. Consumer Price Index (VPI) Is Acceptable

The CPI is widely recognized as an appropriate benchmark. It reflects the general price trend and is used in statutory rent adjustments.

"The CPI is a legitimate measure to reflect general inflation and is suitable to maintain the value of the agreed rent."
— OGH 10 Ob 23/24s

4. Substitute Indices Must Be Clearly Defined

Clauses that vaguely refer to a replacement index (e.g., "the index most similar to the original") are unlawful. In 2 Ob 36/23t, the court stressed that consumers must be able to identify the applicable adjustment mechanism in advance.

5. Automatic Adjustments Based on Legal Reference Values Can Be Problematic

In 8 Ob 37/23h, a clause linking rent to changes in the statutory Richtwert was considered invalid where an increase could take effect within the first two months of the contract—again violating § 6 (2) Z 4 KSchG.

What Landlords Should Do

To comply with Austrian consumer protection law:

✅ Use the Consumer Price Index (VPI) as the reference for rent adjustment.
❌ Avoid using construction cost indices like the Baukostenindex.
❌ Do not allow rent increases within two months after signing unless the clause was individually negotiated.
✅ Clearly define substitute indices, avoiding vague references.
❌ Do not rely on automatic adjustments based solely on legal reference values (e.g., Richtwert) unless they are fully transparent and respect timing rules.

About Sabadello Legal

Sabadello Legal provides strategic and practical support to landlords in all aspects of Austrian tenancy law. We advise on the legally compliant drafting and review of lease agreements, enforcement of claims against defaulting tenants, and the termination of leases—even in complex cases.

Our real estate law team represents commercial and residential landlords across Austria. With extensive experience in advising operators of shopping centres, retail parks, office properties, and residential complexes, we assist our clients in negotiations, ongoing tenancy management, and legal disputes.

RA Mag. Andreas Sabadello
📞 +43 1 9971037
✉️ office@sabadello.legal