Adjustment Method: Index-Linked Rent Adjustment (SAP Library

Adjustment Method: Index-Linked Rent Adjustment

Use

Adjustment of selected condition types based on index levels.

The possible rent adjustments are determined from the increase or reduction of the individual indices. Depending on the contract, the agreed adjustment deadlines, minimum changes and pass on percentage rate are included.

Prerequisites

You set valid index levels in Customizing for Real Estate.

Lease-outs have the intended adjustment type for the adjustment method (setting in Customizing for Real Estate).

The system only adjusts conditions that are permitted for this adjustment procedure (Customizing settings).

Rental units are assigned to an external usage type that makes the adjustment method possible (setting in Customizing for Real Estate).

Integration

Control mechanism for index-based rent adjustments:

Rental unit	Lease-out	Adjustment run
External usage type	Adjustment type Basis for calculating (index series, base year, adjustment frequency, start of the first adjustment, percentage rate of passed-on index clauses as well as specification, as of which amount of index change is to be adjusted) Adjustment block per condition type	Adjustment of conditions on lease-outs and/or rental units? Adjustment of valid conditions only in the future Generate (assign) new condition types on lease-outs and/or rental units during adjustment? Also adjust non-active lease-outs, i.e. lease-outs without system status ACTIVE?

Features

Index level

Index levels can be determined in Real Estate Customizing using the following parameters:

Index data
Index series
Base years

Alternatively, you can determine that the index has to increase or decrease by at least one point or one percent in order for a rent adjustment to be carried out.

Simulation/calculation

The simulation or calculation of the adjustment takes into account the flexible control mechanisms saved on the lease-out as adjustment data:

Adjustment per condition type, whereby different index series can be selected as an option for conditions of the same lease-out.

Determining at which index level of the assigned index series the first adjustment may begin.

Determining a monthly adjustment frequency that automatically sets the earliest possible date for the next rent adjustment in accordance with the date of the last rent adjustment.

Controlling the validity of the adjustment calculated by means of a temporary adjustment delay.

Determining or combining the adjustment arrangements, such as:

Adjustment is only carried out in the event of an index increase.

Rent increase is only carried out in the event of a certain, user-defined index increase rate (absolute or percentage).

Details of a freely definable pass-on percentage rate that determines what share of the calculated increased is passed on to the tenant. ( Overview Table: Taking Account of Percentage Rate of Increase in Rent Adjustments )

Adjustment objects

You can choose how the adjustment is updated:

Only for lease-outs
For lease-outs and relevant rental units

Examples: Different Adjustment Objects

Activate

You have to activate the adjustment run so that calculated adjustments are updated in the respective objects as valid condition items.

When activating, you have to specify per agreement:

Date of tenant approval (for index-linked lease-outs subject to approval)
Date from which the adjustment is valid
Date from which, in the case of retroactive condition changes, subsequent payments can be posted to the tenant account

If a credit note has to be issued due to retroactive condition changes. The system automatically copies the due date of the original transaction.

Optionally, the calculated adjustment amounts can be manually changed for lease-outs subject to approval.