Rent reduction when the reference interest rate falls: how it works
How can I request a rent reduction when the reference interest rate is lowered, and what are the reasons it might be refused? Comparis can help – including a sample template.
17.04.2026
iStock / fizkes
1. Reference interest rate in Switzerland: what does it mean for tenants?
The mortgage reference interest rate for rental arrangements is based on the average interest rate of all mortgages held by Swiss banks. It is communicated quarterly by the Federal Office of Housing.
The reference interest rate serves as guidance for calculating rents:
If the reference interest rate drops by 0.25 percentage points, you as a tenant are generally entitled to a rent reduction.
If the reference interest rate rises by 0.25 percentage points, your rent may increase..
Since 2 September 2025, the mortgage reference interest rate has been 1.25% in Switzerland.
Please note: You must take action yourself
Tenants must apply for a rent reduction themselves. To do so, they must assert their claim in writing from the next termination date The so‑called «rent reduction request» must reach the landlord before the start of the termination period.
Good to know: The landlord may claim 40% of the inflation and any general cost increases to the tenant. Therefore, check in advance whether a reduction request is really worth it. In some cases, inflation adjustments and cost increases may even be higher than the potential savings.
2. How much does rent go down if the reference interest rate falls?
Depending on the tenancy, your rent might be based on an outdated reference interest rate. You will find the interest rate applied in your rental agreement or most recent rental increase notice.
This table provides an overview of possible claims for changes to your rent:
Is the reference interest rate at the start of the rental period not specified in your rental documents? If so, you can use the Federal Government’s reference interest rate trend, you can check which reference interest rate was in effect at the time you entered into your contract. You can see the trend in the following chart.
Example of a reduction in the reference interest rate: What does this mean for my rent?
The federal government has reduced the mortgage reference interest rate from 1.50% to 1.25% as of 2 September 2025.
For tenancy agreements based on the previous reference interest rate of 1.50% tenants are entitled to a rent reduction of 2.91%.
If you pay a monthly rent of 2’000 francs, without an adjustment for inflation, this corresponds to an annual saving of almost 700 francs.
However, the potential savings decrease if, in return, the landlord claims an inflation adjustment or general cost increases .
3. From when does the rent reduction apply?
A rent reduction usually takes effect from the next ordinary termination date. If this date is not specified in the tenancy agreement, the local ordinary termination dates apply.
Important:
When sending the request for a rent reduction, please take the notice period into account.
All tenants listed in the rental agreement must sign the letter requesting the rent reduction.
Rent reduction and reference interest rate: Does this also apply to parking spaces?
In principle, the entitlement to a rent reduction when the reference interest rate is reduced only applies to rental apartments and business premises. However: It is possible to get a reduction in the rent for ancillary units such as parking spaces or hobby rooms, provided there is a so-called «inherent connection» between the main unit (apartment/house) and the ancillary unit in place. This is deemed to be the case if both units are covered by the same agreement.
An «inherent connection» also exists in the case of two separate rental agreements under the following conditions, both of which must be met:
The ancillary and main units are let by the same company.
It’s clear that the ancillary unit was only rented because the main rental unit is part of the same property.
4. Can the landlord refuse a rent reduction?
In certain circumstances, your landlord may refuse a rent reduction. To do this, they must respond to your letter within 30 days to your letter. Reasons for a rent reduction or refusal may include:
Value-enhancing investments: If the landlord has invested in the quality of the property (e.g. a new kitchen, improved thermal insulation), the resulting added value may partially or fully offset a rent reduction.
Cost increases or inflation: Rising operating costs or general inflation may offset the reduction in part or in full.
No excess profit: The landlord can prove that they do not generate any excessive profit even without the rent reduction.
Local or neighbourhood practice: If the rent is within the usual range, the landlord can cite comparable properties to refuse a rent reduction.
If you disagree with the landlord’s response, you can contact the conciliation authority within 30 days of the response (link only available in German).
Important: Not all tenants benefit from a reduction in the reference interest rate. For tenancy agreements with indexed or government-subsidised rent the reference interest rate does not apply.
5. Frequently asked questions about rent reductions when the reference interest rate changes
The reference interest rate was last reduced to 1.5% in June 2025. In September 2025, the reference interest rate fell again and has been 1.25% since then (as at April 2026).
If the reference rate falls, you may be able to request a rent reduction. There is a condition, however: your current rent must be based on a higher reference interest rate.
When the next reduction in the reference interest rate will occur cannot be predicted. How the reference interest rate develops depends on the development of mortgage interest rates.
Good to know: The current reference interest rate is announced every three months, at the beginning of March, June, September and December each year.
You can request no retroactive repayment if the landlord has not reduced the rent following a decrease in the reference interest rate. If the landlord does not grant the rent reduction on their own initiative, you must take action and request it.
However, you can also request a rent reduction some time after the reference interest rate has been reduced. It will then apply from the next contractual termination date.
This article was first published on 01.12.2020
