Government figures from Geneva and Zurich have claimed that people who rent a house or apartment in Switzerland are paying a total of 14 billion francs a year more than what is technically allowed. Using studies from Swiss banks and the tenants’ association, they argue that the average family loses 500 francs a year to the high prices.

Swiss politicians argue current rental costs are too high

According to 20 minuten, Zurich National Councillor Jacqueline Badran and Geneva State Councillor Carlo Sommaruga have submitted new statements calling on the government to make rules for landlords stricter. They argued that the current prices quoted in rental contracts - which have risen significantly in August alone - are not strictly legal.

Their argument stems from the fact that by law, a landlord can only make an annual profit on renting their property worth 3,25 percent of the property's value and of all the costs they have incurred (mortgages, maintenance, utilities and cleaning). They argue that, as average mortgage interest rates have fallen from 7 percent in 1993 to less than 2 percent today, the amount of rent that landlords can charge should have fallen as well.

Tenants pay up to 14 billion francs a year more than they should on rent

Badran and Sommaruga quoted a study by Swiss bank Raiffeisen completed in 2017, which found that rental costs should be “much, much lower today, by a maximum of 40 percent.” According to the Swiss Tenants’ Association, this means that renters pay a total of 14 billion francs more a year than they should.

Raiffeisen real estate specialist Michel Fleury told 20 minuten that the reason why rents haven’t fallen is that it is ultimately up to tenants to request a rent reduction when the reference interest rate falls. “The tenant has an obligation to collect," he noted, admitting that very few renters actually request reductions.

Renewed calls to regulate the Swiss rental market

“People are short of 500 francs in their wallets every year, which they can either spend or save,” Badran noted. Together with Sommaruga, she called on the Federal Housing Office to become more involved in the rental market, including making random checks of rental costs to make sure they comply with the rules.

"People with a migration background often don't know enough about their rights, and many tenants simply want to please the landlord," noted Green National Councillor and tenants’ association vice president Michael Töngi. He told 20 minuten that regular government checks would have a preventative effect on high rents, but questioned whether they could be implemented: "The real estate lobby is enormously strong, including here in Parliament."

Homeowners argue that most are satisfied with current laws

In response, National Councillor and board member of the Swiss Homeowners’ Association, Maja Riniker, argued that the proposals had already been rejected at the committee level earlier in the year, arguing that “regular controls would take a disproportionate effort as there are 2,3 million rental households.”

Riniker made the point that current data from the Federal Housing Office shows that a majority of tenants are satisfied with current laws, and that the statistics used by the tenants’ association still leave room for doubt.