Why Swiss tenants are getting a reprieve from higher rents — for now
Amid all the news about climbing housing costs, there is a glimmer of hope for Switzerland's tenants: they will not be hit with rent increases for the time being.
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If you have a rental contract that is based on the reference interest rate set by the the Federal Housing Authority (BWO), you are in luck: your rent will not go up just yet.
The BWO announced on Wednesday that the reference interest rate — a benchmark used to set rents — will not rise, as many expected. Instead, it will remain, at least for the next three months, at its current level of 1.25 percent.
Der hypothekarische #Referenzzinssatz bei #Mietverhältnissen bleibt bei 1,25 Prozent gültig ab 2. März 2023. Der Referenzzinssatz wird vierteljährlich durch das BWO bekannt gegeben. https://t.co/KgZncEtOPR pic.twitter.com/GN1ZZHmBPR
— BWO - OFL - UFAB (@BWO_OFL) March 1, 2023
The rate plays a role in determining rents in Switzerland, because when it is climbing, mortgages become more expensive for landlords, who then pass the additional cost on to their tenants.
Right now, the reference rate is 1.25 percent, and currently 54 percent of rental contracts in Switzerland are based on that rate.
However, it fluctuates between regions.
In the Zurich area, as well as in central Switzerland, for instance, more than 60 percent of rental contracts are based on a 1.25-percent reference rate, which remained unchanged since March 2020, according to Moneyland consumer platform.
If the interest rate were to climb by 0.25 percentage points, landlords would be able to charge 3 percent more rent,” Moneyland said. "An increase of 0.5 percentage points would allow them to raise rents by 6 percent.
What does this mean for tenants?
"Given that [the rate] has remained unchanged compared to the previous quarter, it does not give right to new claims for increase in rent," the BWO said in a press release.
This means that if you live in dwellings that are subject to reference rates (as mentioned above), your rent can't be raised right now.
The BWO sets interest rates four times a year: On March 1st, June 1st, September 1st, and December 1st. It is therefore not excluded that it will be increased later in the year.
In fact, property experts at UBS Bank are also assuming the benchmark rate will go up this year, “but most likely not before June".
While this is a bit of a welcome (though probably temporary) respite for many tenants, the general situation on Switzerland’s housing market, however, points toward the upward trend:
Why the housing shortage in German-speaking Switzerland is getting worse
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If you have a rental contract that is based on the reference interest rate set by the the Federal Housing Authority (BWO), you are in luck: your rent will not go up just yet.
The BWO announced on Wednesday that the reference interest rate — a benchmark used to set rents — will not rise, as many expected. Instead, it will remain, at least for the next three months, at its current level of 1.25 percent.
Der hypothekarische #Referenzzinssatz bei #Mietverhältnissen bleibt bei 1,25 Prozent gültig ab 2. März 2023. Der Referenzzinssatz wird vierteljährlich durch das BWO bekannt gegeben. https://t.co/KgZncEtOPR pic.twitter.com/GN1ZZHmBPR
— BWO - OFL - UFAB (@BWO_OFL) March 1, 2023
The rate plays a role in determining rents in Switzerland, because when it is climbing, mortgages become more expensive for landlords, who then pass the additional cost on to their tenants.
Right now, the reference rate is 1.25 percent, and currently 54 percent of rental contracts in Switzerland are based on that rate.
However, it fluctuates between regions.
In the Zurich area, as well as in central Switzerland, for instance, more than 60 percent of rental contracts are based on a 1.25-percent reference rate, which remained unchanged since March 2020, according to Moneyland consumer platform.
If the interest rate were to climb by 0.25 percentage points, landlords would be able to charge 3 percent more rent,” Moneyland said. "An increase of 0.5 percentage points would allow them to raise rents by 6 percent.
What does this mean for tenants?
This means that if you live in dwellings that are subject to reference rates (as mentioned above), your rent can't be raised right now.
The BWO sets interest rates four times a year: On March 1st, June 1st, September 1st, and December 1st. It is therefore not excluded that it will be increased later in the year.
In fact, property experts at UBS Bank are also assuming the benchmark rate will go up this year, “but most likely not before June".
While this is a bit of a welcome (though probably temporary) respite for many tenants, the general situation on Switzerland’s housing market, however, points toward the upward trend:
Why the housing shortage in German-speaking Switzerland is getting worse
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