Reference interest rate remains at 1.25%

| By Frédéric Papp |
Source: iStock / DaniloAndjus

The reference interest rate for mortgages is still 1.25%. At, you can calculate the amount by which your rent should be reduced.

The reference interest rate for mortgages (in German, French and Italian only), which is used in the calculation of rents, is currently 1.25%. It was cut by a quarter of a percent in March. For many tenants, this represents an opportunity to request a rent reduction of at least 3% (in German, French and Italian only). 

The reference interest rate offers a point of reference for the calculation of rents: if it decreases, rents should go down, too. However, landlords are not obliged to reduce rents automatically when the reference interest rate goes down. It’s therefore up to tenants to take action themselves. You can calculate in advance what rent reduction you are entitled to. 

Calculate rent reduction now

Rent reduction takes effect after the next termination date

If you didn't request a reduction in your rent the last time the rate went down, you should act now. You will find the interest rate currently applied in your tenancy agreement or most recent rental increase notice.

Note: any reduction in rent only takes effect after the next standard contract termination date. Therefore, you shouldn't wait too long. Note that all the tenants listed in the tenancy agreement must sign the letter requesting the rent reduction.

Download sample letter here

The reference interest rate for mortgages has influenced rents since September 2008. Back then, it was 3.5% and has steadily decreased since. The latest data is published by the Federal Office for Housing once every quarter. 

What about the rental price of a parking space?

It is possible to get a reduction in the rental price of an ancillary unit such as a parking space or hobby room, provided there is a “close connection” between the main unit (apartment/house) and the ancillary unit. This is deemed to be the case if both units are covered by the same agreement. A “close connection” can also exist if there are two separate rental agreements provided a) the main and ancillary units are let by the same company and b) it is clear that the ancillary unit is only let because the main unit belongs to the same property.

What to do if the landlord refuses?

Landlords must respond within 30 days. They can deny the request based on factors such as inflation or higher operating expenses. Tenants should scrutinize the objections raised:

  • Landlords may charge a maximum of 0.5% of the net rent to cover increases in operating and maintenance costs. 
  • Inflation: by law, landlords may only pass on up to 40% of the inflation accumulated since the last rent adjustment to the tenant.

Note: not all tenants can benefit from the lower reference interest rate. Rental contracts with indexed or government subsidized rent (often with housing cooperatives) are not linked to the reference interest rate. Tenants with such a contract are not entitled to this kind of rent reduction.