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Reference interest rate remains at 1.5 per cent

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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 remains at 1.5 per cent. At comparis.ch, you can calculate the amount by which your rent should be reduced.

The situation remains unchanged in December 2018: the reference interest rate has been holding steady at a record 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.

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.

Important: Any reduction in rent only takes effect after the next standard contract termination date. Therefore, you shouldn't wait too long.

Download sample letter here

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

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. 

N.B. 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.