Tenants given right to seek rent reductions
Switzerland’s rental housing reference rate has dropped by a quarter of a percent giver renters the right to seek reductions in rents of almost three percent, the Federal Housing Office (FHO) said on Monday.
The quarterly reference rate — a key indicator determining whether rents for flats rise or fall — fell to 1.75 percent from two percent in March, the office said.
The rate was determined according to the average interest rate of 1.86 percent as of March 31st 2015, down from 1.89 percent three months earlier.
The new reference rate, which passes into force on Tuesday, and will remain at this level provided interest rates fall within a range of 1.63 to 1.87 percent, the FHO said.
The drop in the rate was widely expected following drops in mortgage rates earlier this year to historic lows.
Tenants now have the right in principle to request a reduction in rents of 2.91 percent, the office said.
However, other factors may allow landlords to raise rates, such as increases in costs for building maintenance.
The Swiss tenants’ association (SMV, known in French as ASLOCA), is advising renters to act on the lowest housing reference rate ever recorded.
The association said it is imperative for tenants to formally request a reduction in rent because it does not come automatically.
The group has long maintained that rent rates have not matched the fall in mortgage rates which have been almost cut in half since 2008.
Expats arriving in Switzerland often face steeper rents than longtime residents who benefit from rent controls.
When an apartment changes hands, the property owner can boost the rent to whatever level the market will support.
As a result, in areas such as Geneva and Zurich where vacancy rates are low, newcomers can expect to pay well above the average for lodgings.