Property search and moving

Reference interest rate remains at 1.5 per cent

NEWS
|
Rents in Switzerland are defined based on the reference interest rate. What are the implications for your own home? Source: iStock.com/DaniloAndjus

The reference interest rate for mortgages is 1.5 per cent and thus remains at the same level as in the last quarter. As the reference interest rate has not changed since 2017, no new entitlement to a reduction or increase has arisen. However, if your individual rent has not yet been adjusted to reflect the current reference interest rate of 1.5 per cent, you can demand a reduction. At comparis.ch, you can calculate the exact amount you are entitled to.

The situation remains unchanged in September 2018: The reference interest rate has not budged from its all-time low of 1.5 per cent since June 2017.

The reference (or benchmark) interest rate offers a point of reference for the calculation of rents: if it decreases, rents should go down, too. As only few landlords reduce the rents on their own initiative when the interest rate is low, tenants usually have to take action themselves.

 

Waiting costs money

If you did not request a rent reduction with the last decrease, you should act now. That is, tenants should check their rental contract or last rental increase notice to see which interest rate is currently used. A rent reduction only takes effect after the next regular contract termination date. Therefore, you shouldn't wait for too long.

Download sample letter here

The reference interest rate for mortgages has influenced rents since September 2008. Back then, it was still at 3.5 per cent and has continuously gone down since. The current data are published by the Federal Office for Housing (BWO) once every quarter. The next possible date for the reference interest rate to change is on 3rd December 2018.

What to do if the landlord refuses?

The landlord must respond within 30 days. He can deny the request based on, for example, inflation or higher operating expenses. Tenants should look into the objections in question:

  • The landlord may charge a maximum of 0.5 per cent of the net rent to cover higher operating and maintenance costs – and no more! 
  • No more than 40 per cent of inflation (based on the national consumer price index) may be passed on to the tenant. 

NB: Not all tenants benefit from a lower reference interest rate. Rental contracts with indexed or government subsidised 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.