What is a Swiss rent reduction and how can you apply for it?
In Switzerland, there is a system where tenants are allowed to apply for a reduction to their rent. The price of renting a house or apartment is tied to government-controlled interest rates, which allows tenants to ask for rent decreases, should the interest rate fall.
Rent reductions in Switzerland
The Hypothekarischer Referenzzinssatz or Taux d’intérêt de référence is the reference interest rate for mortgages, given by the Swiss government to regulate the market and to guide banks on how much to charge for their mortgages. The rate is published every three months on the Federal Office for Housing's website.
If the reference interest rate falls after tenants sign their rental contract, they are able to apply for a rent reduction. The theory is that landlords benefit from a reduction in mortgage interest rates, and those savings should be transferred to tenants. The last change in the interest rate occurred in March 2020, and while the reduction is not guaranteed, applying can save hundreds of Swiss francs in rent a year.
How to apply for a rent reduction in Switzerland
Although success is not guaranteed, applying to reduce your rent in Switzerland is a relatively simple process, involving the following steps:
Check the reference interest rate
The first step in applying for a rent reduction is to check the reference interest rate that was agreed in your contract when you started the lease, and what the current rate is. If your interest rate is higher than the current reference rate, then you can move forward with an application.
Some calculators are available on Comparis, although these must be taken as estimations and not a true reflection of how much you could save. Also bear in mind that inflation, utility costs and maintenance fees can be used to explain why a rent reduction is not justified.
Write a rent reduction letter
If you wish to move forward with your application, you should send a letter by post to your landlord or landlord company, asking for a rent reduction using the reference interest rate as evidence. This letter should include:
- The address of the sender, landlord, place and the date
- An explanation that the Federal Office for Housing has lowered the reference interest rate from x to y percent
- A request to reduce net rent accordingly from the next possible date of termination
- A request to receive confirmation from the landlord within 30 days, and an explanation if the request for a rent reduction is denied
- Signatures from all of the tenants listed on the original rental agreement
Wait for your landlord's response
Your landlord then has to respond to your request within 30 days. If they want to reject your request, they must explain their reason for doing so in writing. If you do not believe the reason is fair or justified, you are able to appeal the decision, as long as you respond within 30 days of receiving their reply.
If you are unsure of their reasons or want extra clarity on whether you should appeal, it is best to consult a lawyer. Some cantons and councils (Gemeinde) have their own rules on requesting rent reductions, which you should consult before launching an application.
Why doesn't everyone apply for a rent reduction in Switzerland?
According to the president of the Swiss rental association MV, Natalie Imboden, the reason why people choose to not apply is “that people simply don’t know about it” or “don’t apply because they are worried it will jeopardise good relations with their landlord.” She explained that many fear they may have their rental contract terminated if they ask.
Imboden confirmed that renters are legally entitled to request a rent reduction and shouldn’t fear the consequences. She noted that the fear of a long-drawn-out process is unfounded and that a rent reduction is an avenue that every renter should explore.