What is the reference interest rate?
In Switzerland, there are legal requirements that landlords must comply with when setting rent. There are also statutory bases for adjusting rent up or down.
One criterion used when changing the amount of rent charged is the mortgage reference interest rate. This is calculated by the Swiss National Bank and is the average of all the interest rates applied to mortgages in Switzerland – rounded to ¼ %. This video (right) by the Swiss Federal Housing Office gives a good explanation of the reference interest rate.
Source: Federal Office of Housing (BWO, german version)
Why are rents linked to the mortgage reference interest rate?
On the one hand, owners need to be able to finance their properties and, on the other hand, these properties need to form reserves for future investments. If the owners are pension funds, they have the additional task of protecting these pensions.
If mortgage interest rates – and therefore the costs for owners – rise, they can pass these costs on to their tenants. It is a landlord’s responsibility to take action if they want to adjust their rent. Equally, it is up to their tenants to request a rent reduction if the reference interest rate goes down.
How has the reference interest rate changed up to now?
Since its introduction in 2008, the reference interest rate has fallen continuously until march 2023. It increased for the first time as of June 1st 2023, from 1.25% to 1.5%. On 1 December 2023, the reference interest rate rose again from 1.5 to 1.75%.
Further questions about the reference interest rate are answered in our FAQ.
What does it mean for me, as a tenant, if the reference interest rate rises?
In the case of existing tenancies, the property owners have the option of increasing the rent.
Whether your rent goes up and by how much depends partly on what the property owner decides to do but also on the reference interest rate your current rent is based on.
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Example 1: You signed your tenancy agreement on 1 June 2020. |
Your landlord has the option of adjusting your rent. |
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Example 2: You signed your tenancy agreement on 1 february 2017. |
Your landlord does not have the option of adjusting your rent based on the reference interest rate*. *However, inflation or cost increases may lead to an adjustment. |
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Example 3: You signed your tenancy agreement on 1 february 2017. |
Your landlord has the option of adjusting your rent. |