Upgrade Agreement
What does it mean?
An upgrade agreement is a contract between tenant and landlord in connection with new construction where the tenant is given the opportunity to choose upgrades and additions beyond the standard design. Common upgrades include better kitchen cabinetry, tiling, flooring materials, appliances, and smart home features. The upgrades are financed through a permanent rent increase added to the base rent.
Upgrade agreements are not specifically regulated in the Tenancy Act but follow general contract law principles. The rent increase for upgrades should be reasonable in relation to the investment cost, and the tenant should receive clear information about how much the rent will be affected. It is important to remember that upgrades normally cannot be taken along when moving out — they become part of the apartment. The tenant should carefully consider whether the extra rent is justified in the long term.
Key Points
- Offered in new construction for upgrades beyond standard
- Financed through a permanent rent increase
- Common upgrades: kitchen, bathroom, floors, appliances, smart home
- Upgrades cannot be taken when moving out
- Rent increase should be reasonable relative to the investment
Practical Tip
Calculate the total additional cost over time before ordering upgrades. A small monthly rent increase can become a significant sum over many years. Compare with making similar upgrades with the landlord's approval after moving in — it can sometimes be cheaper.