Your French commercial lease (bail commercial, the statutory 3-6-9 lease) provides that the rent will rise by 4.5 % every 1 January, without reference to any index. As landlord, you wonder whether the clause will hold; as tenant, you wonder whether you can have it set aside. The Cour de cassation (the French supreme court for civil and commercial matters) answered in a ruling of its Third Civil Chamber of 22 June 2022. This article explains the decision, the distinction it draws with indexation clauses, and what it changes in the valuation of commercial premises.
The dispute
A commercial lease stipulated that “the rent shall be revised upwards, at a flat rate of 4.5 %, on the first of January each year”. The tenant asked for the clause to be deemed unwritten. His argument: a clause that varies the rent automatically must comply with the rules applicable to sliding-scale clauses, in particular the right to ask for a revision of the rent where the clause produces a variation of more than one quarter against the rent previously fixed (article L. 145-39 of the French Commercial Code), and the rules of the Monetary and Financial Code on permitted indices (article L. 112-1).
The decision
The Cour de cassation dismissed the appeal and approved the Court of Appeal for holding the clause valid. It found that the flat-rate increase provided in the contract is not an indexation clause: it refers to no external index and fixes in advance, at signature, how the rent will move. The rules specific to sliding-scale clauses therefore do not apply to it.
Indexation and flat-rate increase: the distinction
An indexation clause (or sliding-scale clause) varies the rent according to an economic index, in practice the commercial rent index (ILC) or the tertiary activities rent index (ILAT). It is regulated: the index must be directly related to the subject of the contract or the activity of one of the parties (article L. 112-2 of the Monetary and Financial Code), and either party may ask the court to revise the rent when the variation exceeds one quarter (article L. 145-39 of the Commercial Code). Case law also strikes down clauses that operate upwards only.
A flat-rate increase clause provides for a predetermined progression, as a percentage or an amount, independent of any index. It is akin to the stepped lease, in which the parties agree from the outset the rent for each period. The rent is not indexed; it is simply fixed in advance, year after year.
The Cour de cassation thus confirms the parties’ freedom to determine how the rent will move, provided that movement is clearly defined in the contract and not tied to an external index.
What the clause does not do
A flat-rate increase clause does not replace the mechanisms of the commercial lease regime. The three-yearly revision remains available at the request of either party (article L. 145-38 of the Commercial Code), and the rent of the renewed lease is fixed under the rules of articles L. 145-33 and L. 145-34, with the statutory cap and its exceptions. Nor does a flat-rate increase clause fix the market rent: it fixes a contractual rent, which may drift away from it over time.
Consequences for the valuation
The Charte de l’expertise en évaluation immobilière (French property valuation charter, 6th edition, November 2025) defines market rent as the amount for which a property could reasonably be let at the time of the valuation, under a new lease (Title III, § 1.4). It distinguishes headline rent from economic rent (§ 1.5). EVS 1 of the European Valuation Standards 2025 adopts an equivalent definition of market rent. The contractual rent, for its part, is a fact of the lease.
For the valuer, this decision has several practical implications.
Read the lease before calculating. The nature of the rent progression clause (indexation, flat-rate increase, steps, turnover rent) determines the path of future income and the risks attached. A flat-rate clause at 4.5 % a year in a period of low inflation produces, after a few years, a rent well above what the ILC would have given.
Measure the gap between contractual rent and market rent. A rent that rises mechanically may exceed market rent. That gap, if significant, weighs on the tenant’s survival, on the risk of arrears and on the terms of a renewal. It must be identified and, in an income valuation, treated as an over-rent of limited duration.
Assess the predictability of income. For an investor, a contractual progression known in advance is a favourable factor, because it reduces uncertainty. In a capitalisation or discounted cash flow method, it translates into an explicit rent path rather than an indexation assumption.
Check the sustainability of the rent. For commercial premises, the Charter stresses the analysis of the effort ratio, that is the ratio between property costs and the tenant’s turnover (Title III, chapter 9). A rent rising by 4.5 % a year while turnover stagnates degrades that ratio; the valuer must flag it.
Distinguish the value of the leasehold right from the value of the building. For the tenant, a contractual rent above market rent reduces, or even cancels, the value of his leasehold right (droit au bail) (Charter, § 1.18). For the landlord, it raises short-term income but increases medium-term risk.
Key points
A clause that raises the rent by a flat rate each year, without reference to an index, is valid in a French commercial lease: that is what the Cour de cassation held on 22 June 2022. It does not fall under the indexation clause regime and does not open the revision for a variation of more than one quarter. It does not fix market rent either, and it leaves the three-yearly revision and the renewal rules intact. In a valuation, it is a fact to be read carefully: it explains the path of the rent, but it is the market that says what the premises are worth.
Further reading
The Commercial rent and leases page describes the method I apply to fix a renewal or revision rent. On the same theme, you can read Uncapping the commercial rent: the four cases where the landlord can leave the cap and Uncapping the commercial rent: the effect of a tramway and changes in customers.
What next
A lease renewal, a rent review or a rent uncapping is coming up?
Landlord or tenant, have the market rent assessed before you negotiate or apply to the commercial rents judge.
Free quote, by email or by phone. No commitment before the quote is accepted. Fees are never linked to the value of the property (Charte de l’expertise, Title I, §2.1).
