In Switzerland, rents have been rising for the past year and are expected to continue rising.

If you are paying too much, there is a way to request a reduction.

Tenants in Switzerland had to pay an additional 4.3% on average for housing throughout 2022, though some regions of the nation saw increases of more than 8%.

The following three areas experienced the biggest price increases in 2022.

• Ticino, which experienced an increase of 8%.
• The Greater Zurich Area, 61.1%.
• 31.8% of the population is in the Lake Geneva region (Geneva and Vaud).

There are several causes for this, including increased housing demand brought on by increased immigration and a decline in construction due to the difficulty (and high cost) of finding suitable construction sites.

Tenants in Switzerland may face even worse news as 2023 draws to a close because the mortgage reference rate, which serves as a benchmark for other interest rates, is predicted to increase beginning in March.

It has an impact on how much rent is charged in Switzerland because as this rate rises, landlords face higher mortgage payments, which they pass along to their tenants.

Currently, the reference rate in Switzerland is 1 point 25 percent, and 54 percent of rental agreements are based on that rate.

Nevertheless, a greater number of rentals are based on that rate on a regional level.

According to the Moneyland consumer platform, more than 60% of rental contracts are based on a 1% reference rate in the Zurich area and central Switzerland, for example.

How can you tell if your landlord is charging you excessive rent?

The Federal Court, Switzerland’s highest court, ruled in 2020 that landlords can receive returns that are up to 2% higher than the benchmark interest rate.

Consequently, at the moment, when the reference rate is 1 point 25 percent, landlords are only allowed to receive returns of 3 point 25 percent; anything higher than that is regarded as “abusive” toward tenants.

The calculation will need to be redone in March if the reference rate increases, but the 2% profit cap will still hold.

Unfortunately, not all landlords follow this rule.

For instance, according to Raiffeisen Bank, the overall return on apartment buildings in Switzerland was approximately 6.5% in 2021.

Such “excessive rents deprive households of billions of francs each year,” according to the Swiss Tenants Association to Watson news portal. ”.

What choices do you have if you discover that your rent is, in fact, “abusive”?

If the math (as mentioned above) doesn’t work out, it makes the most sense not to rent the apartment in the first place.

If you already have a lease, you have the right to challenge an abusive rent by notifying the Federal Housing Office (BWO) in a registered letter within 30 days of the lease’s signing.

Despite knowing the rent was too high, you must explain why you signed the contract.

It might work if you can show that you signed the document without realizing your rent was significantly higher than the previous tenant’s.

But not many people make these complaints.

The BWO “recorded just over 1,259 disputes in 2021,” according to Watson. This number is extremely small when compared to the 23 million people who rent housing in our nation. ”.

The explanation, according to Linda Rosenkranz, the attorney for ASLOCA, is that “a dispute requires an appearance before the authority of conciliation and, if necessary, even before the court. This can take a lot of time and money. ”.

Another factor is the Swiss’ tendency to avoid conflict: “They are very polite and fear conflicts,” she continued.

This is supported by a study by the Sotomo Research Institute, which discovered that tenants value their relationship with their landlord highly and do not want to endanger it.