# Yearly rent increase in India: how much is normal, and how to calculate it

> What rent increase is normal in Indian rent agreements, how 5% and 10% yearly increases add up over 3 or 5 years, and how to write the increase clause.

Source: https://tenowa.app/guides/rent-increase/ · Updated 2026-10-02

Most rent agreements in India include an increase, often called an **escalation clause**. Getting it right at the start avoids an awkward conversation every year.

## How much is normal

- **5% a year** is the most common for homes.
- **10% a year** is common in high-demand areas and for shops and offices.
- **15% every 3 years** is a typical pattern for longer commercial leases.

## 11-month agreements

An 11-month agreement usually has **no increase inside it**. The increase comes when the agreement is renewed, and the new rent goes into the new agreement.

## Increases add up on the new rent

Each increase is worked out on the rent after the last increase, not on the starting rent. A ₹20,000 rent with 5% a year:

| Year | Monthly rent |
|---|---|
| 1 | ₹20,000 |
| 2 | ₹21,000 |
| 3 | ₹22,050 |
| 4 | ₹23,153 |
| 5 | ₹24,310 |

Over 3 years this agreement brings in ₹7,56,600 in rent, not ₹7,20,000.

## Writing the increase clause

A clear clause states:

1. **The percentage**, for example 5%.
2. **How often**, for example every 12 months.
3. **From when**: from the anniversary of the start date, not the calendar year.
4. **Whether the increase is on the latest rent**, which is the usual practice.

Under the Model Tenancy Act, 2021, a landlord should give the tenant **three months' written notice** before a revised rent takes effect, where the state has adopted the Act. Check your state's rules.

## How Tenowa handles it

Record the agreement length, the increase (5% a year, 10% every three years, whatever you agreed), the lock-in and the notice period. Tenowa raises the rent from each anniversary in the ledger, and shows the next increase coming, with the new amount.

## Common questions

### Is a 10% yearly increase legal?
Rent and increases are what the agreement says. Some states regulate rent for older or controlled tenancies; most new agreements are free to set the increase.

### Can the landlord increase rent in the middle of the agreement?
Not unless the agreement allows it. The increase clause is the only increase during the term.

### How do I calculate rent after several increases?
Multiply the rent by (1 + the increase) once for each increase. For 5%: ₹20,000 × 1.05 × 1.05 = ₹22,050 after two increases.

*This is general information, not legal advice.*