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PROPERTY

Swiss rental crisis: Zurich apartment owner demands 27,000-franc deposit

It's a dog-eat-dog world for people trying to rent an apartment in Zurich with a supply shortage meaning landlords wield an extraordinary amount of power.

Swiss rental crisis: Zurich apartment owner demands 27,000-franc deposit
File photo: AFP

One family in the city found that out the hard way recently when they decide to move out from their 70-square metre apartment because it was no longer big enough.

They eventually found a three-bedroom basement apartment on the outskirts of Zurich. “At just under 3,000 francs a month it is right at the top of our price limit. But my three kids – the youngest in kindergarten and the oldest in the first year of high school – have to share a room at the moment. Slowly they are getting to the age where that just doesn’t work,” the mother of the family told Swiss tabloid Blick.

Read also: Here's why Swiss rents are so painfully high right now

The family went ahead and lodged an expression of interest in the apartment, providing the usual mountain of paperwork required by Swiss property owners. The mother of the three children does not work, but her husband, originally from Cuba, works full time and provided details of his income to the landlord along with employment references, as is standard.

Also provided were details of a rental income coming in from a holiday property owned in Ticino.

But these details were not sufficient: the owner then asked if the family were willing to hand over their income tax forms so that their wealth could be assessed.

All of the paperwork was green-lighted but there was a final turn of the screw: the apartment owner asked if the family were prepared to stump up a deposit of nine months’ rent almost 27,000 francs, despite the fact that asking for a deposit totalling more than three months’ rent in Switzerland is illegal.

The illegal deposit would also need to transferred to a private account, rather than the legally stipulated rental deposit account (Mietkautionskonto/Compte de garantie de loyer/ conto deposito di garanzia). Otherwise, the family’s application “could not go ahead,” the landlord said.

The family then withdrew their application, saying they were not prepared to go ahead.

Contacted by Blick, the owner justified the huge deposit by saying he was also a father and had wanted to the family a chance to get their hands on the apartment. “I could have just sent them a neutral rejection letter,” he said.

He also readily admitted that he had asked for the deposit to be paid directly to him rather than setting up a legal deposit account because he knew that asking for nine months’ rent was illegal.

Read also: Zurich rents are the most expensive in Switzerland

Ruedi Spöndlin, a legal expert with the Swiss tenants' association MV, told Blick that while he had heard of other examples of landlords asking for deposits to be transferred to a private account, this was the first time he had heard of a nine-month deposit.

The tenancy expert added that, in theory, if the family had paid the hefty deposit, they could then have signed the contract and demanded the money be repaid to them. The sum could even have been considered “rent in advance”, he explained.

It is not known whether anyone else has subsequently coughed up the deposit in question.

The great rental squeeze

With demand for rental apartments far outstripping supply in cities like Geneva and Zurich, finding a place to live can be a painful experience.

Add to that the increasingly volume of paperwork required (this can include, for example, an extract from the debt collection register) and the fact that property owners often use the departure of former tenants to boost rental prices, and the property search can become traumatic.

Another sensitive issue is related to a lack of transparency over how property owners charge for supplementary costs related to items such as heating, hot water or cable television. When these are paid in advance (akonto/par acompte/ acconto), tenants are invoiced once a year and are either repaid if they have paid too much or must make up the shortfall if they have not paid enough.

The Swiss government advises tenants to examine these invoices very carefully.

For members

PROPERTY

Can foreigners apply for (and get) a mortgage in Switzerland?

If you are a foreign national and want to buy property in Switzerland, you may be wondering whether you are eligible for mortgage. The answer depends on several factors.

Can foreigners apply for (and get) a mortgage in Switzerland?

The most important condition for being able to obtain a Swiss mortgage is your residency status. So the question should be not whether you qualify for a mortgage but, rather, if you can purchase property in Switzerland in the first place.

Logically, if you are allowed to buy a house or an apartment in Switzerland, then you can apply for a mortgage as well.

Who can and can’t buy a house / get a mortgage?

A citizen of an EU / EFTA state can freely purchase real estate (home or land) in Switzerland. This applies to both primary residence and holiday homes.

The same is true for third-country citizens, say US or UK nationals, who have a valid permanent residency B or C status — there are no restrictions placed on them either.

However, rules are in place for people from outside Europe who don’t have either of the two above-mentioned residency permits.
They will need a permission to purchase housing in Switzerland — a measure intended to prevent Swiss properties from falling into foreign hands.  

Additionally, they can only buy a house which will be used as the primary residence — this means that they can’t buy it as an investment and rent it out.

And if you are a cross-border worker in Switzerland (G permit), you can buy a second home in the vicinity of your  place of employment without authorisation. However, you are not allowed to rent out this property for as as long as you work in the region as a cross-border commuter.  

Conditions are even stricter if you a foreigner living abroad — rules for such purchases are set out in a law called Lex Koller and are quite complex.

Unless you are looking to buy holiday homes in Appenzell Ausserrhoden, Bern, Freiburg, Glarus, Grisons, Jura, Lucerne, Neuchâtel, Nidwalden, Obwalden, St. Gallen, Schaffhausen, Schwyz, Ticino, Uri, Vaud and Valais, you will need a special permission as well.

READ MORE: ‘Lex Koller’: What are Switzerland’s rules for foreigners buying property?
 

Where can you ask for authorisation to buy a house?

If you are among those who need a special permission to own a house, you should apply for permission to cantonal authorities in the municipality where the property located.

Page 13 of this PDF document indicates contact addresses for each canton.  Officials will indicate what paperwork you need to submit for consideration of your case.

What about mortgages?

Needless to say, if your application is rejected, you will not be given a mortgage either.

If it is approved, then you can apply in pretty much the same way as Swiss citizens do, though you will be asked to provide additional documents, such as your work / residency permit, for example, along with the canton’s authorisation.

From then on, it is up to you and your financial abilities to choose the mortgage that suits you best from among several types available in Switzerland, such as SARON and LIBOR mortages, which are detailed here:

EXPLAINED: What is Switzerland’s ‘SARON’ mortgage?
 

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