During the rental
The annual rent review: calculation, conditions, and legal framework
Every landlord knows how much the rent is the beating heart of a rental investment. It ensures profitability, pays off the mortgage, and fuels the monthly cash flow. However, many owners forget or improperly apply an essential step: the annual rent adjustment. Regulated by law, this adjustment allows for the rent amount to align with the evolution of the cost of living, using an official index published by INSEE: the Rent Reference Index (IRL).
Its purpose is simple — to maintain an economic balance between landlord and tenant. For the owner, it's a way to preserve the actual profitability of their property against inflation. For the tenant, it’s the guarantee of a controlled and predictable increase.
But beware: the rent adjustment is not improvised. It follows specific rules, a strict legal framework, and requires clear communication with the tenant. A forgetfulness, a calculation error, or a late notification can lead to the loss of several hundred euros per year.
The legal framework and the fundamentals of rent review
Housing classified F or G in the Energy Performance Diagnosis (DPE) are now subject to a rent freeze, prohibiting any increase until any energy renovation has been undertaken.
Mastering the calculation of the annual rent adjustment: method and examples
The official formula to know
The calculation for rent revision is based on a simple formula that must be applied rigorously:
New rent = Current rent × (New IRL / Old IRL)
The "current rent" corresponds to the amount excluding charges in effect before the revision. The "new" IRL is that of the most recent reference quarter published at the date of revision, and the "old" IRL corresponds to that of the same quarter one year prior.
Example: If the lease provides for a revision every October 1st based on the IRL of the 2nd quarter, one must compare the IRL of the 2nd quarter 2025 with that of the 2nd quarter 2024.
Identifying the correct IRL indices
IRL values are available on the official site of INSEE or on specialized rental management platforms.
Each quarter, INSEE publishes a new index:
Q1 (January to March),
Q2 (April to June),
Q3 (July to September),
Q4 (October to December).
The lease always specifies which quarter serves as a reference. This is a critical point, as using the wrong index completely skews the calculation. Keep the lease and the previous IRL values in a tracking spreadsheet (Excel or management software) to avoid any mistakes or disputes from the tenant.
Concrete example of annual revision
Let’s take a simple case:
Current rent (excluding charges): €800
IRL for the 3rd quarter of 2024: 143.00
IRL for the 3rd quarter of 2023: 138.61
Application of the formula: 800 × (143.00 / 138.61) = €825.5
The new rent amount will therefore rise to €825.50 per month, which is an increase of €25.50. The new amount applies from the date specified in the lease, and not retroactively.
Practical tools to simplify calculations
If you manage several properties, manually revising the rent can quickly become tedious. Fortunately, several tools today allow you to automate the process and ensure the accuracy of your calculations. The official simulator available on service-public.fr instantly calculates the new rent amount based on the latest published IRL index.
Automating rent review means saving time, reducing errors, and above all, securing the long-term profitability of your rental investment.
Specific cases and exceptions for rent revision
The freeze on rents for thermal sieves
Since August 1, 2022, the Climate and Resilience law prohibits any rent increase — whether it is an annual rent revision or a new lease — for homes classified F or G in the DPE (energy performance diagnosis). In other words, if your property is a thermal sieve, you cannot revise the rent or increase it between two tenants, as long as no energy improvement has been made.
To unlock this situation, it is necessary to carry out energy renovation work to achieve a better DPE class (at least E) and then transmit the new DPE to the tenant. Beyond the legal constraint, this work also increases the value of your property and its long-term profitability.
The reassessment of rent after improvement work
Some work may lead to an exceptional rent increase, independent of the usual annual revision. This is particularly the case when they provide a real improvement in comfort — such as the installation of an elevator, complete renovation of a kitchen or bathroom, or better thermal insulation — or when they allow for a significant reduction in the tenant's charges.
This revaluation, however, remains strictly regulated by law (Article 17-1 of the law of July 6, 1989). It must be provided for by a specific clause in the lease or be the subject of a written agreement with the tenant, and above all, be justified and proportionate to the cost and impact of the work carried out.
Carefully keep all supporting documents — estimates, invoices, before/after photos — to be able to prove the legitimacy of the increase to the tenant or, in case of dispute, before the conciliation commission.
The clearly undervalued rent: the revision upon lease renewal
When a rent becomes clearly lower than market prices, the landlord can request a reassessment at the time of lease renewal. However, this process must follow a very specific framework. The owner must inform the tenant at least six months before the end of the lease and justify their request using reference rents from comparable properties in the same area.
The increase cannot be applied freely: it is capped at half the difference between the current rent and the market rent. For example, if the rent is set at €700 and equivalent properties rent for around €800, the maximum allowed increase will be €50 per year, until reaching the defined ceiling.
This rent reassessment is never automatic. If the tenant disputes the proposal, the landlord can refer to the Departmental Conciliation Commission (CDC) to try to reach an amicable agreement before any legal proceedings.Notification to the tenant: form and deadlines to be respected
The notification to the tenant: form and deadlines to be respected
When to notify the rent revision?
The timing of the notification is crucial. The annual rent revision can only apply from the date specified in the lease, often the anniversary of its signing.
If the lease was signed on October 1st, the rent revision can be applied every year starting from October 1st, based on the reference index (IRL) of the quarter mentioned in the contract. If the landlord forgets to notify the revision on this date, they have one year to do so. After this period, the right to revision is lost for the past year (article 17-1 of the law of July 6, 1989).
How to notify the tenant of the increase?
The law does not impose a specific form, but it is highly recommended to use written communication for proof purposes. You can send a simple or registered letter, a formal email (with written proof of sending and receiving), or use a rental management platform that automates the notification and calculation. Your letter should include the following elements: the current rent amount, the IRL index used and its value, the new calculated rent, the date of effect of the revision, and the reference to the lease (revision clause).
Example of a simple formula:
In accordance with the revision clause provided in the lease signed on October 1, 2022, the rent is revised effective October 1, 2025, based on the IRL of the 2nd quarter of 2025 published by INSEE (index 143.00 compared to 138.61 a year earlier).
The rent amount thus changes from 800 € to 825.50 € effective October 1, 2025.
The consequences of an unexecuted revision
Many landlords are unaware: the annual rent revision is never retroactive. In practice, if you forget to notify the revision on the specified date, you cannot claim the arrears from the past months; the increase will only apply from the effective date of notification.
For example, if the revision was supposed to take effect on October 1, 2024 but you only announce it on February 1, 2025, the new rent will only be valid from February 1, 2025.
To avoid any loss of income, schedule an automatic reminder about one month before the due date specified in the lease.Manage disagreements and maintain a good rental relationship
Manage disagreements and maintain a good rental relationship
Common landlord mistakes to avoid
Rent review, although legal and regulated, can sometimes create unnecessary tensions with the tenant — often due to administrative blunders or a lack of communication.
Here are the most frequent mistakes:
Forgetting to indicate the review clause in the lease: without this clause, no increase can be applied, even if the IRL changes.
Using an incorrect IRL index: confusing quarters or years leads to an inaccurate calculation, easily contestable.
Applying the revision retroactively: strictly prohibited, this exposes the landlord to repayment of overcharges.
Not explaining the calculation: a poorly informed tenant may perceive the revision as arbitrary.
Always accompany the notification with a clear and educational explanation. This reinforces transparency and trust.
What to do in case of a dispute with the tenant?
If the tenant contests the increase, the first step is to encourage dialogue.
Often, a simple exchange is enough to clarify the calculation or resolve a misunderstanding.
If the disagreement persists:
Try amicable mediation: contact the Departmental Commission for Conciliation (CDC). Free and quick, it helps resolve most rental disputes.
Keep all evidence (lease, correspondence, IRL indices, written exchanges).
As a last resort, take the judicial court of the location of the housing.
A revision applied without legal basis (wrong index, absence of a clause, exceeding the rent control ceiling) can be annulled by the judge.
The win-win approach: transparency and anticipation
The key to serene rental management lies in fluid communication and shared anticipation. The tenant values stability and predictability: a justified increase explained by the IRL and announced in advance is always received better than a dry notification. On your side, you secure your income while maintaining a lasting relationship.
Property management is not just a matter of numbers — it is a relationship of trust to maintain. A satisfied tenant is more willing to pay, will take care of the property, and will stay longer, which improves your rental profitability in the long term.
Trends and future perspectives of rent revision
A Legislation in Constant Evolution
The framework for rent revision is not fixed: it evolves regularly to adapt to economic, social, and environmental challenges.
In recent years, several reforms have profoundly changed the rules of the game:
Rent Control in major metropolitan areas (Paris, Lille, Lyon, Bordeaux, Montpellier…), limiting increases to the enhanced reference rent.
Freeze on Rents for poorly insulated housing (labels F and G), a measure expected to extend to other energy classes in the coming years.
Temporary Capping of the IRL by the government, to contain the impact of inflation on tenants.
The state increasingly seeks to reconcile the protection of tenants' purchasing power and the maintenance of rental investment, a delicate balance that will continue to evolve.
The Future of the IRL in the Face of Inflation and Energy Transition
The Rent Reference Index (IRL) remains the central calculation tool, but its role could be rethought. In a context of persistent inflation and energy transition, several options are under study: adapting the IRL to regional or energy criteria, creating a "green IRL" that integrates the energy performance of housing as a modulation factor, and stabilizing the annual variation of the IRL to protect households without discouraging landlords.
The Digitalization of Rental Management: A Silent Revolution
The management of rents and their revision is digitalizing at great speed.
Many tools already allow for the automatic calculation of the IRL review, to notify the tenant by secure email, and to generate receipts without errors or omissions. This automation reduces the risk of mistakes and simplifies legal compliance.
Online rental management platforms and proprietary software now integrate the annual review as an automatic task, avoiding omissions and ensuring transparency.
Conclusion: a calm review for sustainable property management
The annual rent review is not just a simple administrative adjustment: it is an essential lever for rental profitability and a marker of good asset management. When applied correctly, it allows the owner to preserve the real value of their real estate investment against inflation, while maintaining a fair balance with the tenant.
For this, three pillars must guide your practice:
The legal rigor: rely on a well-drafted lease, a clear clause, and an up-to-date IRL index.
Transparency and communication: inform the tenant pedagogically to avoid any misunderstanding.
Anticipation and method: schedule the review on a fixed date, check for any possible caps, and document each modification in writing.
Far from being a constraint, this regular process becomes a healthy management reflex: it ensures the stability of your revenues, protects your cash flow, and sustainably enhances your real estate asset.
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