The Federal Housing Office (BWO) is maintaining the benchmark mortgage rate at 1.25 percent for the time being, it announced on December 1st. How will this impact rents?
The rate has remained at the same level since September 1st, when the BWO lowered it from 1.50 percent.
The Swiss mortgage reference rate is a key factor for setting rents, so its fluctuations (both down- and upward) are important for tenants.
Higher rates allow landlords to raise rents, while lower ones benefit the tenants.
Most rents in Switzerland are determined by the reference interest rate — an average of all interest paid on Swiss mortgages.
These, in turn, are based on the Swiss National Bank’s key interest rate, which now stands at 0 percent.
Current rate allows some tenants to benefit from a 2.91-percent reduction.
Can all tenants benefit from this rate?
It depends on the personal circumstances.
For instance, you wouldn’t be able to take advantage of this rate if you live in subsidised housing, which is often subject to it own specific rent regulations.
Other factors can also affect the price, according to BWO – for instance, changes in the consumer price index (increase in inflation) can play a role in setting rents.
“Inflation can be taken into account up to 40 percent In addition,” it said.
Also, if your landlord’s costs, such as for property management, taxes, or insurance, go up, they can include these added costs in your rent, which means your actual reduction may not add up to 2.91 percent.
Last but not least, if you are looking to rent a new apartment rather thn remain in your old one, your rent is likely to be higher than previous tenants’.
That’s because when an old tenant moves out and a new one arrives, landlords have the right to increase the rent by up to 10 percent.
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Do you qualify for rent reduction?
In all, an estimated 2.2 million households, whose rents are determined by the reference rate, can apply for a rent reduction.
If yours is (this information is typically included in your lease), then you can fill out a sample form and send it to the landlord or management company.
