Swiss Mortgage Rate Hike Explained

On December 1, the Federal Housing Office (BWO) increased the reference rate for Swiss mortgages, meaning that a large number of people renting a house or apartment in Switzerland will soon face higher costs. This article provides an in-depth explanation of the decision, how much rental costs will increase, and what rights tenants have to appeal. Stay informed and protect your rights as a tenant in Switzerland.

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The Federal Housing Office (BWO) has announced an increase in the reference rate for Swiss mortgages, which will result in higher rental costs for many tenants in Switzerland. The reference interest rate will be rising from 1.5 to 1.75 percent, affecting around half of the renting population. This increase will allow landlords to raise rents, leading to potential rental cost rises of up to 6 percent in some cases.

The rise in rental costs will apply to tenants who have applied for a rent reduction or have rented a new property since June 2017. Those who started renting their property between June 2, 2015, and June 2, 2017, and have never applied for or had a rent reduction, will not be affected by the rise. Tenants who started renting their home before March 3, 2015, are still eligible for a rent reduction if they have not applied for or had one.

With the increase in the reference interest rate, landlords can raise rents by 3 percent, and the higher rents will apply from the next possible termination date for rental contracts, which for most will be on April 1, 2024. While tenants can appeal a rent rise, it will only be approved in limited circumstances, and they are advised to carefully analyze the rental cost rise as soon as it arrives.

Unfortunately, this may not be the last of the rental cost rises, as the reference rate is predicted to rise again on March 1, 2024. The Swiss Federation of Trade Unions has expressed dismay over the announcement, stating that it adds to an already “unbearable” situation on the housing market.