Switzerland sees new rent hike but will yours go up?
Tenants in Switzerland just can’t catch a break: their rents will go up in December for the second time since June.
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Though the announcement on Friday morning of a new rent hike was not exactly a surprise, it is bad news for tenants whose rents have just been raised.
What is happening?
On Friday, the Federal Housing Office (BWO) announced that it is raising, with immediate effect, the reference mortgage rate to 1.75 percent.
Der hypothekarische #Referenzzinssatz bei #Mietverhältnissen beträgt neu 1,75 Prozent gültig ab 2. Dezember 2023. Der Referenzzinssatz wird vierteljährlich durch das BWO bekannt gegeben. https://t.co/KgZncEtOPR pic.twitter.com/g453OLbfQp
— BWO - OFL - UFAB (@BWO_OFL) December 1, 2023
This rate, calculated four times a year according to an average of mortgage rates charged by Swiss banks, plays a role in determining rents in Switzerland, because when it climbs, mortgages become more expensive for landlords, who then can pass the additional cost on to their tenants.
This is the second hike this year: in June, the BWO increased the rate from the previous 1.25 to 1.50 percent — a move that pushed rents up by 3 percent for many of Switzerland’s tenants.
"Compared to the previous quarter, the reference interest rate therefore increased by 0.25 percent," the Federal Council said in a press release on Friday.
"As a result, and in accordance with lease law, landlords can in principle increase the rent by around 3 percent, provided that the current rent is based on the old reference rate of 1.5 percent in effect since June 2nd, 2023."
Does this mean your rent is likely to go up?
It depends on where you live and some other factors as well.
Currently, 54 percent of rental contracts in Switzerland are based on the reference rate.
Regionally, however, even a larger number of rentals are affected.
In the Zurich area, as well as in central Switzerland, for instance, more than 60 percent of rental contracts are based on a reference rate.
In the Bern region, as well as in northwestern parts of the country, that proportion is just over 53 percent, while in the western and southern cantons (which include Geneva and Vaud), less than half of rental contracts are tied to the reference rate.
What will happen now?
If you fall under the category of tenants described above — that is, your rent is based on the 1.50-percent rate — expect to receive a letter from your landlord or management company acting on their behalf, informing you of the 3-percent increase.
If your rent had not been raised recently and is still based on the old 1.25-percent rate that had been in effect before June, your landlord can legally increase the rent by more than 3 percent.
Know, however, that the landlord can ask for higher rent 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: when consumer prices go up, landlords are allowed to pass on part of the costs of inflation by raising rents.
Last but not least, 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.
When will your rent be increased?
There are strict rules about how, and when, these hikes can be implemented.
If your landlord does decide to raise your rent, timing is important.
Just because the reference interest rate went up today, doesn’t mean your rent will be increased right away.
In fact, the landlord can only up the rent once a year — either on the specific date mentioned in the lease, or the next possible termination / notice date.
The notice period in Switzerland is typically three months, which means landlords will be able to charge the higher rate from April 1st, 2024.
Also, the landlord must notify you of the rent increase using a form authorised by your canton.
In it, they must justify the raise, providing specific reasons, as outlined above.
Anything other than this official format — word of mouth, SMS or WhatsUp message, for instance — is not valid.
What can you do?
Swiss Tenants Association (ASLOCA) immediately reacted to the hike news, encouraging tenants who believe their increase is unjustified to contest it.
“They have very little time to do so, and must contest the increase within 30 days of receiving the notice rent increase,” according to ASLOCA’s president Carlo Sommaruga. “If this deadline is exceeded, the new rent is considered accepted, and this new rent will serve as a basis for future rent adjustments."
ASLOCA therefore encourages tenants to quickly check their rent when notified of an increase by using a special calculator.
If you find the increase is not legitimate, you can inform the BWO by a registered letter within 30 days of signing the lease or receiving the notice of the increase.
Their address is: Hallwylstrasse 4, 3003 Bern
What is the government doing about the incessant rent increases?
It has recently proposed measures that would have "a moderating effect on rents and increase the transparency of prices on the rental market,” the Federal Council said,
In concrete terms, this means that general cost increases can no longer be passed on to tenants. Instead, landlords would have to prove by how much their costs have gone up to justify the rent hikes.
It would also become easier for tenants to dispute increases they deem unjustified by showing, for example, that their rents are higher than those in similar housing in the area.
READ ALSO: How does Swiss government plan to curb rent increases?
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Though the announcement on Friday morning of a new rent hike was not exactly a surprise, it is bad news for tenants whose rents have just been raised.
What is happening?
On Friday, the Federal Housing Office (BWO) announced that it is raising, with immediate effect, the reference mortgage rate to 1.75 percent.
Der hypothekarische #Referenzzinssatz bei #Mietverhältnissen beträgt neu 1,75 Prozent gültig ab 2. Dezember 2023. Der Referenzzinssatz wird vierteljährlich durch das BWO bekannt gegeben. https://t.co/KgZncEtOPR pic.twitter.com/g453OLbfQp
— BWO - OFL - UFAB (@BWO_OFL) December 1, 2023
This rate, calculated four times a year according to an average of mortgage rates charged by Swiss banks, plays a role in determining rents in Switzerland, because when it climbs, mortgages become more expensive for landlords, who then can pass the additional cost on to their tenants.
This is the second hike this year: in June, the BWO increased the rate from the previous 1.25 to 1.50 percent — a move that pushed rents up by 3 percent for many of Switzerland’s tenants.
"Compared to the previous quarter, the reference interest rate therefore increased by 0.25 percent," the Federal Council said in a press release on Friday.
"As a result, and in accordance with lease law, landlords can in principle increase the rent by around 3 percent, provided that the current rent is based on the old reference rate of 1.5 percent in effect since June 2nd, 2023."
Does this mean your rent is likely to go up?
It depends on where you live and some other factors as well.
Currently, 54 percent of rental contracts in Switzerland are based on the reference rate.
Regionally, however, even a larger number of rentals are affected.
In the Zurich area, as well as in central Switzerland, for instance, more than 60 percent of rental contracts are based on a reference rate.
In the Bern region, as well as in northwestern parts of the country, that proportion is just over 53 percent, while in the western and southern cantons (which include Geneva and Vaud), less than half of rental contracts are tied to the reference rate.
What will happen now?
If you fall under the category of tenants described above — that is, your rent is based on the 1.50-percent rate — expect to receive a letter from your landlord or management company acting on their behalf, informing you of the 3-percent increase.
If your rent had not been raised recently and is still based on the old 1.25-percent rate that had been in effect before June, your landlord can legally increase the rent by more than 3 percent.
Know, however, that the landlord can ask for higher rent 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: when consumer prices go up, landlords are allowed to pass on part of the costs of inflation by raising rents.
Last but not least, 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.
When will your rent be increased?
There are strict rules about how, and when, these hikes can be implemented.
If your landlord does decide to raise your rent, timing is important.
Just because the reference interest rate went up today, doesn’t mean your rent will be increased right away.
In fact, the landlord can only up the rent once a year — either on the specific date mentioned in the lease, or the next possible termination / notice date.
The notice period in Switzerland is typically three months, which means landlords will be able to charge the higher rate from April 1st, 2024.
Also, the landlord must notify you of the rent increase using a form authorised by your canton.
In it, they must justify the raise, providing specific reasons, as outlined above.
Anything other than this official format — word of mouth, SMS or WhatsUp message, for instance — is not valid.
What can you do?
Swiss Tenants Association (ASLOCA) immediately reacted to the hike news, encouraging tenants who believe their increase is unjustified to contest it.
“They have very little time to do so, and must contest the increase within 30 days of receiving the notice rent increase,” according to ASLOCA’s president Carlo Sommaruga. “If this deadline is exceeded, the new rent is considered accepted, and this new rent will serve as a basis for future rent adjustments."
ASLOCA therefore encourages tenants to quickly check their rent when notified of an increase by using a special calculator.
If you find the increase is not legitimate, you can inform the BWO by a registered letter within 30 days of signing the lease or receiving the notice of the increase.
Their address is: Hallwylstrasse 4, 3003 Bern
What is the government doing about the incessant rent increases?
It has recently proposed measures that would have "a moderating effect on rents and increase the transparency of prices on the rental market,” the Federal Council said,
In concrete terms, this means that general cost increases can no longer be passed on to tenants. Instead, landlords would have to prove by how much their costs have gone up to justify the rent hikes.
It would also become easier for tenants to dispute increases they deem unjustified by showing, for example, that their rents are higher than those in similar housing in the area.
READ ALSO: How does Swiss government plan to curb rent increases?
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