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Reference interest rate remains at 1.5 per cent – request rent reduction now!

NEWS
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Many tenants in Switzerland could save money each month by requesting a reduction in rent. Source: iStock.com/DaniloAndjus

On 2nd June 2017, the reference interest rate dropped to a historical low of 1.5 per cent; and as of 2nd December 2017 it remains at 1.5 per cent. Tenants who haven't done so already can still request a rent reduction of almost 3 per cent. Calculate online how much this should be.

On 1st June 2017, the Federal Office for Housing (BWO) announced that the reference interest rate for mortgages would drop by 0.25 per cent to an all-time low of 1.5 per cent as of 2nd June 2017.  Until that day, it had been at 1.75 per cent since 2nd June 2015. As of 2nd December 2017 it remains at 1.5 per cent.

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

Those who did not request a rent reduction with the last decrease should act now. This means that tenants should check their rental contract or last rental increase notice to see which interest rate is currently used. A rental reduction will take effect after the next regular contract termination date. Therefore waiting too long does not pay off.

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 next possible date for the reference interest rate to change is on 1st March 2018.

 

Download a draft letter in Word format.

 

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!
  • For inflation (based on the national consumer price index), the landlord may raise rent only by 40 per cent of this amount.

Not all tenants benefit from a lower reference interest rate. Rental contracts with indexed or government subsidised rent (often with housing cooperatives) are not bound to the reference interest rate. In this case, those with such a contract are not entitled to a rent reduction.