The costs of mortgages and building maintenance are rising. Rents are following. In French-speaking Switzerland tenant arbitration organisations are receiving a deluge of complaints and requests for help from tenants, reported RTS.
In Switzerland, it is common for rental agreements to contain a clause that allows rents to be adjusted up or down based on a reference interest rate, which is calculated based on the average cost of mortgage finance. The rate was adjusted up in June 2023. This has led to a significant number of rent increases.
In Vaud nearly 1,200 disputes related to rent increases have been officially registered, 485 of these in Lausanne alone. The canton has created a position for someone to specifically deal with the disputes. The situation is similar in the canton of Geneva.
The recent rise in the reference rate allows landlords with the adjustment clause in contracts signed after 2020 to raise rent by 3%, an amount roughly in line with inflation. Roughly half of all renters are likely to be affected.
Many of the landlords, particularly in cities, are insurance companies, banks and pension funds. It is typically these large landlords that are quick to pass on extra costs whenever they can.
The insurance company La Bâloise has already informed around a third of its tenants in Vaud that their rent will rise. This had impacted 870 households and around 100 of them decided to oppose the rises. 60 of these have reached an agreement with a remaining 40 left to process.
At the same time an aging population is putting pressure on Switzerland’s pension funds further compelling them to improve the return on their investments where possible.
However, many tenants do not see it this way. They view current rents as excessive and rental increases as insult added to injury.
While the rental reference rate clause works both ways and allows tenants the possibility of a rent cut when the rate falls, the legal costs of disputes are borne by those who initiate a claim. This currently means tenants are having to pay these costs.
An association representing landlords sees nothing underhand about the current round of rent rises. Frédéric Dovat, a representative of one, says that tenants are heavily protected by tenancy laws and only an extreme minority of tenants are disputing the increases. In addition, most disputes don’t result in lower rent.
In any case rental disputes are unlikely to disappear as another hike in the rental reference rate is expected this year – the rate is based on the average mortgage rate and this is almost certain to rise as current mortgages roll off old fixed rate deals and on to new higher rate ones.