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Why you may be entitled to a rent reduction in Switzerland

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Why you may be entitled to a rent reduction in Switzerland
Only a third of renters take advantage of this possible reduction. File photo: Depositph
17:01 CET+01:00
A huge number of renters in Switzerland are missing out a chance to obtain a rent reduction that they are legally entitled to.

The possible rent reduction comes about because rents in Switzerland are usually pegged to mortgage rates.

This means renters are entitled to request a rent reduction when the so-called 'reference interest rate' (hypothekarische Referenzzinssatz/taux d'intérêt de référence) comes down.

The general principle is that when landlords are enjoying lower interest rates, some of those savings should be passed onto renters in the form of lower rents.

The reference interest rate is clearly stated on most rental contracts (although different rules apply for contracts with a minimum duration of five years).

The latest rate is published here every three months and renters can check the current rate against the figure on the contract. If the reference interest rate has come down since they signed their contract, they can apply for a reduction to their rent.

Read also: Eight things you need to know before renting in Switzerland

The reference rate has remained steady at 1.5 percent since June 2017, but if you have lived in your current rental property since before that time, you may be entitled to a rent reduction.

While this reduction is not guaranteed, you could potentially end up saving hundreds of francs a year.

And with talk of a possible further interest rate in the not-too-distant future, it pays to keep an eye on the reference figure even if you signed your latest rental contract more recently.

But a recent study by Swiss property consultants IAZI shows that only about a third of Swiss renters actually take advantage of a drop in the reference interest rate to apply for lower rents. And that is even more surprising given the current high rents in the country,

Why don't more people apply for a rent deduction?

So why aren't people applying for this reduction in rent?

“Part of the problem is that people simply don't know about it,” the president of the Swiss rental association MV, Natalie Imboden, told The Local recently.

“Another issue is that some people don't apply because they are worried it will jeopardise good relations with their landlord,” she said.

“In the worst case, they fear they will be kicked out if they ask for their rent to be lowered,” she explained.

But the MV president said that renters were legally entitled to request a reduction and had no reason to fear any consequences.

Meanwhile, last but not least, Imboden said many renters chose not to apply because of the effort involved.

“The fact is that renters have to take the initiative themselves, and this discourages people,” she told The Local.

However, Imboden was keen to stress that the process is generally straightforward, requiring just a few steps, although she noted that, as is often the case in Switzerland, there can be cantonal and municipal differences.

How to apply for a rent reduction

What follows is a rough guide to applying for a rent reduction from your landlord.

Check your reference interest rate

As mentioned above, the first step when it comes to applying for a rental reduction is to check the reference interest rate on your rental contract against the current rate. If the rate on your contract is higher that the current rate, you should consider asking for a reduction.

To get a rough idea of how much you might save in future, you can use an online calculator like the one provided by the comparison website Comparis (in English), or the more high-powered calculator provided by MV (in German).  Asloca, the renters' rights association in the French-speaking part of Switzerland also has a calculator (in French).

It's important to be aware that all of the above calculators only provide a rough idea of what you may be entitled as every situation is different.

Keep in mind too, that any potential rent reductions are likely to be partially offset by inflation and higher running costs on the part of landlords – although in many cases the impact of these rises should be minimal.

Send a letter requesting a rent reduction to your landlord

The next step is to send a letter via registered mail to your landlord requesting a rent reduction on the basis of a drop in the reference interest rate.

There is an English template for this letter on the Comparis website. The site also offers templates in German, French and Italian.

Be aware that you need to send this letter to your landlord before the beginning of the next notice period on your lease. For example, if your contract states you can terminate your rental agreement on March 31st, you need to need to send your rent reduction application by December 31st. This will ensure your rent reduction comes into effect on April 1st.

You will not receive back payment for extra rent you paid before you applied for rent reduction, so it doesn't pay to sit around and wait.

What do I do if my reduction request is rejected?

The landlord must respond to your request within 30 days.

If your landlord rejects your request for a rent reduction and you don't believe the decision is fair or justified, you can request a mediation hearing. Again, you must start these proceedings within 30 days.

It is important to carefully check the answer you receive from your landlord. As the MV warns, some landlords automatically put total running costs at 1 percent of total rent, although the legal maximum is 0.5 percent. 

The MV also warns that some landlords attempt to avoid lowering rents on a property by arguing the rent you pay is in line with other similar properties in the area where you live. In such cases, you should appeal to a mediation board as it is actually very difficult for landlords to provide sufficient evidence to mediators that this is the case.

Where can I get help?

If you need advice, you can contact a lawyer or one of Switzerland's renters' rights organisations. These provide advice at a reduced fee to the public while members obtain further benefits.

In th German-speaking part of the country, MV provides these services. In the French-speaking part of the country you can contact Asloca and in Italian-speaking Switzerland, you can get in touch with Associazione Svizzera Inquilini.

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