Rent increase – how it works in practice

A few years of experience on the property market is enough to realise that changes in the rent are inevitable if we want our flat to really make a profit. Landlords should therefore know what conditions and options Polish law gives them - law which, rightly, protects tenants from exploitation. How can you raise the rent fairly, and by how much?

Rent increase - step by step

As you might guess - we cannot change the rent overnight! It would be not only unfair to tenants, but also contrary to the provisions of the Act on the protection of tenants' rights. In practice, raising the rent is a process that takes several months, and it is worth knowing how it works.

The most important step we must take is to give notice terminating the current level of rent and to inform tenants of the coming changes to the agreement. The Act requires the notice to be given in writing; otherwise it may be considered invalid.

The rent increase does not, however, take effect immediately after the notice is given - only once the notice period has expired. Its minimum length is 3 months; it may be longer if the tenant and the owner of the flat have agreed to this in the tenancy agreement. Throughout the notice period the tenants keep paying the rent at the previous rate; the increased rent only applies from the month following this period.

And what happens if the tenant wants to refuse to pay the new rent? Let us explain. Within 2 months of receiving notice terminating the previous rate, they should submit a written refusal, after which the tenancy agreement will be terminated at the end of the applicable notice period.

By how much can we raise the rent?

The amount of rent after the increase is also governed by the Act. Under it, the rent may not exceed 3% of the replacement value of the property. Let us explain what this means.

The replacement value is the product of the usable floor area of the property and the conversion index of the cost of rebuilding a square metre of a flat. Sounds scary, doesn't it? Fortunately, the applicable index can easily be found on the voivodeship office's website - it is set by the voivode, which is why the rates differ between regions of Poland. For properties in Katowice, the rate in the first quarter of 2023 was PLN 5949.00/m2.

To make everything even clearer, let us give a short example: the owner of a flat in the Koszutka district of Katowice plans a rent increase. Their property has a usable area of 50 sq m, and the conversion index, as we mentioned, is PLN 5949.00/m2. Knowing this, we can easily calculate the replacement value of the property - it will be PLN 297,450. Next we must multiply it by the statutory 3%, which gives us a total annual rent of PLN 8923.5. Let us now divide this amount by 12 months - to find the maximum monthly rent. It comes to PLN 743.63. When raising the rent we should not exceed this amount.

There are a few exceptions to the above rules. A rent increase may exceed the statutory level if we meet one of three conditions:

• the income from renting out the flat is not enough to cover its upkeep
• we do not receive a return on capital of up to 1.5% of the cost of purchasing the property
• we make no profit from renting out the property.