Rent increase/decrease request is a system in which the landlord or tenant requests an increase or decrease in the rent in the future when the current rent becomes inappropriate due to changes in circumstances after the contract has been signed.
The basis is Article 32 of the Land and House Lease Act. The landlord can request an increase, and the tenant can request a decrease. In other words, this is neither a landlord's right nor a tenant's right. This is a system for reviewing contract rents when fixed asset taxes, land and building prices, economic circumstances, neighborhood market prices, etc. change.
In this article, we will summarize the conditions under which requests for increases or decreases in rent are permitted, the relationship with special agreements, practical procedures, and what to do if an agreement cannot be reached.
Basis for requesting rent increase/decrease
Article 32 of the Land and House Lease Act stipulates that if the rent of a building becomes inappropriate due to the following circumstances, the parties concerned can request an increase or decrease in the rent going forward.
- Increase or decrease in taxes and other burdens on land and buildings
- Increase or decrease in land/building prices
- Other changes in economic circumstances
- Comparison with rents of similar buildings in the vicinity
The important thing here is that just wishing things to be more expensive or cheaper is not enough. Documents showing that the current rent has become objectively inappropriate will be required.
Cases where request for increase is likely to be approved
The landlord's request for an increase is based on the following circumstances:
| Case | Example of evidence |
|---|---|
| Surrounding market prices have increased | Examples of recruitment and closing of similar properties in the vicinity |
| Fixed asset tax/city planning tax has increased | Tax payment notice, evaluation change materials |
| Building maintenance costs have increased | Repair estimates and management cost trends |
| Value increased due to equipment renewal | Construction records, equipment renewal materials |
| Long-term rent deferment | Past contracts, rent history |
When requesting an increase, the selection of market materials is important. Even if you collect only high recruitment cases, your persuasive power will be weak. You need to compare properties with similar station distance, building age, area, facilities, and number of floors, and explain the relationship with the asking price.
Cases where request for reduction is likely to be granted
When requesting a reduction on the tenant's part, it is necessary to show that the current rent is too high compared to the surrounding market price and the condition of the building.
| Case | Example of evidence |
|---|---|
| Surrounding market prices have fallen | Rent information for similar properties in the vicinity |
| Buildings and equipment deteriorated | Records and photos of unfinished repairs |
| Decreased convenience | Closed surrounding facilities, changes in traffic environment |
| Partially unusable | Records of water leaks, construction work, and disaster damage |
| Cheaper recruitment is available in the same building | Recruitment materials for the same condominium/apartment |
On the tenant's side, simply because the household is in financial difficulty is weak grounds for reduction under the system. It is necessary to explain that the rent itself has become unreasonable.
Relationship with special agreements
Article 32 of the Land and House Lease Act provides that if there is a special agreement not to increase the rent for a certain period of time, that provision must be followed. In other words, a special agreement that does not ``increase the amount for a certain period of time'' can be valid.
On the other hand, the effectiveness of special agreements that exclude the tenant from requesting a reduction is a problem because they are disadvantageous to the tenant. Even if there is a clause regarding rent revision in the contract, you need to check the clause and individual circumstances.
| Special agreement | Concept |
|---|---|
| No increase for a certain period of time | Can be effective |
| No request for reduction | Can be a problem as a special clause that is disadvantageous to the tenant |
| Consult regularly | Becomes the basis for the obligation to consult |
| Automatically increase the amount by a certain percentage | Check the relationship with actual worthiness |
Procedure flow
Requests for increases or decreases in rent are not a system that immediately goes to court. Usually, we prepare materials, express our intentions, negotiate, and proceed to mediation or litigation if necessary.
1. Gather evidence materials
We will organize market price data, tax burden, repair costs, building condition, contract, and past rental history. If you make a request without providing materials, it will be difficult to convince the other party.
2. Express your intentions in writing
We will notify you in writing of our intention to request an increase or decrease. By using certified mail, you can provide evidence of when and what kind of notification was sent.
3. Negotiate between the parties
We will discuss the proposed amount, application start date, staged revisions, combination with equipment repairs, etc. If we reach an agreement, we will draw up a memorandum or change agreement.
4. File for civil mediation
If an agreement cannot be reached, disputes over rent increases or decreases must, in principle, go through mediation. During mediation, a mediator will work with you to sort out market price materials and circumstances.
5. Confirm with lawsuit
If a settlement cannot be reached through mediation, we will proceed to a lawsuit to confirm the amount of the increase or decrease in rent. A real estate appraisal may be required, which can be time-consuming and expensive.
Rent and difference settlement until agreed upon
If no agreement is reached regarding the request for an increase, the tenant is required to pay the amount that he/she deems appropriate until a court decision is made that warrants the increase. However, if the increase is deemed justified by the court and there is a deficiency, you will be required to pay it with interest.
In the case of a request for a reduction, the landlord can request an amount that it deems appropriate, and if the reduction is deemed justified in court, the excess amount received will be returned with interest.
As you can see from this mechanism, when requesting an increase or decrease, it is not a case of "whatever you say wins." When the appropriate amount is finally determined, it is a system that settles the excess and deficiency.
Materials that landlords and tenants should prepare
| Position | Preparation materials |
|---|---|
| Landlord | Tax burden trends, repair costs, surrounding market prices, equipment renewal history, rent history |
| Lessee | Surrounding market prices, records of building deterioration, recruitment within the same property, records of unusable parts |
| Both parties | Contracts, important matters explanations, past memorandums, payment records |
Documentation is both a negotiating weapon and a common language to avoid emotional confrontations. The more numbers and facts you have, the easier it will be to find common ground.
Practical pitfalls
When requesting a rent increase or decrease, rather than insisting on a full increase or decrease, we may agree to a combination of gradual revisions and facility improvements.
| Tips | Suitable cases |
|---|---|
| Partially revised | There is a market difference, but the offered amount is large |
| Gradual revision | One-time increase in burden is large |
| Revised when updating | I want to organize the timing |
| Equipment renewal and set | Clarify the value commensurate with the rent |
| Maintaining status quo + setting renegotiation date | Evidence is still weak |
Rent revisions are adjustments made as the contractual relationship continues. If a strong approach results in eviction or litigation, costs will be incurred for both the landlord and tenant.
I also want to read
- When is a rent increase allowed? Justifiable reasons, what to do after notification, how the landlord should proceed
- What if the rent increases due to renewal? Conditions that can be refused by the tenant and negotiation procedures
- How have security deposits and restoration to original condition changed with the revision of the Civil Code? Explanation of the impact on landlords
INA&Associates' philosophy
Requesting an increase or decrease in rent is not only a legal system, but also an occasion to adjust the relationship of trust between the landlord and tenant. Unfounded price increases or unilateral requests for reductions are undesirable on either side.
We place emphasis on searching for a rent that is acceptable over the long term, while looking at market prices, tax burdens, repairs, building value, and the benefits of continued occupancy at the same table. Making decisions that take into account not only short-term price differences but also vacancy risks and relationships will lead to stable rental management.
FAQ
Q. Can I request an increase or decrease in the rent as many times as I want?
If your circumstances change, you can apply again. However, if it has been a while since the last agreement, you will need to indicate a new change in circumstances.
Q. Is certified mail required?
Although it is not always legally required, it is useful in practice to document the timing and content of declarations of intent.
Q. Do I have to pay the new rent while requesting an increase?
Until an agreement is reached or a judgment is finalized, it is sufficient for the tenant to pay the amount they deem appropriate. However, if you are later granted an increase, you may be required to pay the shortfall amount plus interest.
Q. Can I arbitrarily reduce the rent while requesting a reduction?
Unilateral reductions run the risk of being treated as delinquent. You should first make a request in writing and then confirm the appropriate amount through negotiation or mediation.
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