What are the the pros and cons of renting in Switzerland?
Switzerland is often described as a ‘country of tenants,' and it is true that most people here rent rather than own their homes. Is this a good or bad thing?
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In fact, despite their comparative wealth, the majority of Switzerland's resident population — 58 percent — rent their homes.
This is an ‘anomaly’ of sorts because in virtually every other European country, including the poorer nations, most people are homeowners.
This is often attributed to the fact that properties are far more expensive in Switzerland than elsewhere, and it is true: in most regions of the country, it costs at least 1 million francs to buy either a single-family house or an apartment.
According to Swiss Review publication, “in Albania and Romania, the home ownership rate is the highest in Europe at over 96 percent. It is also very high in Portugal, Spain and Greece, at around three-quarters".
Interestingly enough, the high rate of ownership in ‘poorer’ countries actually testifies to Switzerland’s wealth.
It shows that "people’s own four walls are more important for financial security in countries with shakier economies", Swiss Review wrote.
However, such a high proportion of home ownership would not be realistic in Switzerland, the article pointed out, because if the country’s entire population lived in single-family houses, "we would have no countryside left".
Is it better to own or to rent?
There are many variables to consider here, both positive and negative ones.
Let’s start with the advantages of renting rather than owning a home.
Financial
As a tenant, you are basically responsible for paying the rent on time, and that’s about it. Unlike homeowners, you don’t have to worry about repair bills or maintenance / renovation costs.
You also don’t have to worry about taxes associated with your property, which can add up to quite a bundle.
They include an annual property tax, capital tax (which is part of a broader wealth tax on all assets), or capital gains tax that owners will have to pay on profit made from selling their home.
You will also not have to pay the rental value tax charged of property owners on a rate of roughly 60 to 70 percent of what the rental value of the home would be if it was leased on the open market.
READ ALSO: Why you can be taxed four times over for owning a home in Switzerland
No need to worry about fluctuating mortgage rates or property values
Depending on market forces and the kind of mortgage property owners have (fixed-rate or not), monthly payments are subject to rate volatility
But, unlike your landlord, you don’t have to worry about how your property appreciates or depreciates — that’s one headache that a tenant doesn’t have.
Practical advantages
If you are a tenant, you don’t have to worry about replacing appliances, fixing leaky toilets, or any other repair or maintenance work, which can get quite pricey, especially if everything breaks / needs changing all at once.
This is one of the definite advantages of renting rather than owning.
More mobility / flexibility
If, for whatever reason, you need to move, all you have to worry about is respecting the lease termination deadline, and making sure your rented dwelling is left in ship-shape condition. (Finding other accommodation in today’s very tight housing market could prove to be difficult, but that’s a different matter entirely).
READ ALSO: Why do so many Swiss prefer to rent rather than buy their own home?
Now, for the disadvantages.
Climbing rents
When the reference mortgage rate valid for determining rents in Switzerland goes up, as it has in June of this year, landlords can pass the additional cost on to their tenants.
In Switzerland, about 1 million households are impacted by this hike.
However, the landlord can ask for higher rents for other reasons as well.
For instance, if a property owner makes investments in your rental home which increase its value, they have the right to raise the rent proportionately.
Another reason for the increase can be inflation.
Also, if your landlord’s costs, such as for property management, taxes, or insurance increase, they can pass these added costs on to you by raising your rent.
However, there are strict rules about how, and when, these hikes can be implemented.
Rules and regulations
If you live in rented accommodations, you have less freedom than you would have in your own dwellings.
For instance, you can’t paint the walls bright orange (unless your landlord consents), or change the basic structure of the apartment by knocking down walls or changing flooring.
You must also follow ‘house rules’ concerning the use of laundry facilities (only washing on designated days and times), proper use of balconies, and other rules of communal living.
The neighbours!
You may be lucky and get along well with your neighbours, but that’s not a given.
Disputes may arise over noise, loud children, barking dogs, meowing cats, and whatever else people living in close proximity to each other see as nuisances.
If these problems are not resolved quickly and amicably, then being a tenant can definitely be a major hassle.
READ ALSO: What annoys Swiss people most about their neighbours
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In fact, despite their comparative wealth, the majority of Switzerland's resident population — 58 percent — rent their homes.
This is an ‘anomaly’ of sorts because in virtually every other European country, including the poorer nations, most people are homeowners.
This is often attributed to the fact that properties are far more expensive in Switzerland than elsewhere, and it is true: in most regions of the country, it costs at least 1 million francs to buy either a single-family house or an apartment.
According to Swiss Review publication, “in Albania and Romania, the home ownership rate is the highest in Europe at over 96 percent. It is also very high in Portugal, Spain and Greece, at around three-quarters".
Interestingly enough, the high rate of ownership in ‘poorer’ countries actually testifies to Switzerland’s wealth.
It shows that "people’s own four walls are more important for financial security in countries with shakier economies", Swiss Review wrote.
However, such a high proportion of home ownership would not be realistic in Switzerland, the article pointed out, because if the country’s entire population lived in single-family houses, "we would have no countryside left".
Is it better to own or to rent?
There are many variables to consider here, both positive and negative ones.
Let’s start with the advantages of renting rather than owning a home.
Financial
As a tenant, you are basically responsible for paying the rent on time, and that’s about it. Unlike homeowners, you don’t have to worry about repair bills or maintenance / renovation costs.
You also don’t have to worry about taxes associated with your property, which can add up to quite a bundle.
They include an annual property tax, capital tax (which is part of a broader wealth tax on all assets), or capital gains tax that owners will have to pay on profit made from selling their home.
You will also not have to pay the rental value tax charged of property owners on a rate of roughly 60 to 70 percent of what the rental value of the home would be if it was leased on the open market.
READ ALSO: Why you can be taxed four times over for owning a home in Switzerland
No need to worry about fluctuating mortgage rates or property values
Depending on market forces and the kind of mortgage property owners have (fixed-rate or not), monthly payments are subject to rate volatility
But, unlike your landlord, you don’t have to worry about how your property appreciates or depreciates — that’s one headache that a tenant doesn’t have.
Practical advantages
If you are a tenant, you don’t have to worry about replacing appliances, fixing leaky toilets, or any other repair or maintenance work, which can get quite pricey, especially if everything breaks / needs changing all at once.
This is one of the definite advantages of renting rather than owning.
More mobility / flexibility
If, for whatever reason, you need to move, all you have to worry about is respecting the lease termination deadline, and making sure your rented dwelling is left in ship-shape condition. (Finding other accommodation in today’s very tight housing market could prove to be difficult, but that’s a different matter entirely).
READ ALSO: Why do so many Swiss prefer to rent rather than buy their own home?
Now, for the disadvantages.
Climbing rents
When the reference mortgage rate valid for determining rents in Switzerland goes up, as it has in June of this year, landlords can pass the additional cost on to their tenants.
In Switzerland, about 1 million households are impacted by this hike.
However, the landlord can ask for higher rents for other reasons as well.
For instance, if a property owner makes investments in your rental home which increase its value, they have the right to raise the rent proportionately.
Another reason for the increase can be inflation.
Also, if your landlord’s costs, such as for property management, taxes, or insurance increase, they can pass these added costs on to you by raising your rent.
However, there are strict rules about how, and when, these hikes can be implemented.
Rules and regulations
If you live in rented accommodations, you have less freedom than you would have in your own dwellings.
For instance, you can’t paint the walls bright orange (unless your landlord consents), or change the basic structure of the apartment by knocking down walls or changing flooring.
You must also follow ‘house rules’ concerning the use of laundry facilities (only washing on designated days and times), proper use of balconies, and other rules of communal living.
The neighbours!
You may be lucky and get along well with your neighbours, but that’s not a given.
Disputes may arise over noise, loud children, barking dogs, meowing cats, and whatever else people living in close proximity to each other see as nuisances.
If these problems are not resolved quickly and amicably, then being a tenant can definitely be a major hassle.
READ ALSO: What annoys Swiss people most about their neighbours
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