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Where in Switzerland are rent prices currently lowest — and highest?

Rents have gone up across most of Switzerland in October, but the increase is lesser in some regions than in others.

Published: 2 November 2022 16:11 CET
Where in Switzerland are rent prices currently lowest — and highest?
Swiss apartments are not only more expensive, but also scarcer. Photo by Pixabay

Overall, rents have increased by 1.4 percent on average in the country, though some areas have registered higher or lower hikes, according to ImmoScout 24’s Swiss Real Estate Offer Index released on Wednesday.

“October not only brought record-high temperatures, but also a significant increase in rental costs”, the survey found, adding that “tenants who are looking for an apartment right now must expect higher prices”.

The areas most affected by higher rents are central Switzerland and Zurich, which registered above-average increases, at 3.8 and 3.7 percent, respectively.

However, the situation is a bit better in the eastern part of the country, where rents rose by 0.6 percent, in the Central Plateau (0.4 percent), and in the Lake Geneva region (0.4 percent).

The latter statistic is (pleasantly) surprising, as the region, which encompasses Geneva and parts of Vaud, is among the most expensive in Switzerland.

On the other hand, rents actually fell in the northwestern regions (−0.6 percent) as well as in Ticino (−2.9 percent).

Looking ahead, the Index found that “it is quite possible that tenants will have to prepare for further increases in the coming months, as some of the inflation could be passed onto rents”.

One of the reasons for the upward trend — besides inflation — is “the growing demand caused by immigration and the housing shortage that is widespread in numerous regions” the survey found.

As The Local recently reported, property experts have been predicting for months a decline in the number of rental accommodations in most parts of the country.

According to Martin Neff, chief economist at Raiffeisen bank, the Swiss rental market is clearly heading towards a shortage. “Vacant housing will soon become scarce”, he warned.

Other than inflation and the “high demand-low supply” dynamic on the rental market, another reason for price hikes is because building standards are becoming more demanding and more expensive to implement. “It is therefore becoming more and more difficult to find cheap accommodations”, according to Robert Weinert, who carried out a new market analysis, Immo-Monitoring 2023.

At the same time, the cost of heating is also climbing, expected to increase the rent by 5 percent of an average gas- or oil-heated apartment next year, he said.

READ MORE: Switzerland set to experience housing shortage and (even) higher rents in 2023

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RENTING

EXPLAINED: Are you entitled to rent reduction in Switzerland right now?

The Swiss National Bank (SNB) announced on Thursday its second interest-rate cut of 2024. Does this mean some financial relief for tenants?

Published: 21 June 2024 14:05 CEST
EXPLAINED: Are you entitled to rent reduction in Switzerland right now?

After cutting the interest rate in March from 1.75 to 1.50 percent, Switzerland’s central bank slashed the rate by another quarter percent to bring it down to 1.25. 

The law of economics, at least in Switzerland, dictates that when the rates are cut, rents will fall as well.

That is because most rents in Switzerland are based on the so-called reference interest rate, which is set by the Federal Housing Administration.

It is an average of all interest paid on mortgages in Switzerland. These, in turn, are based on the SNB’s key interest rate.

As a rule, if the reference rate falls by 0.25 percent — as is the case now —tenants are generally entitled to lower rents.

According to Freddy Hasenmaile, chief economist at Raiffeisen Bank, “the bottom line is that this should slow the growth of existing rents somewhat.” 

When will this rent reduction go into effect?

Unfortunately, this doesn’t happen overnight.

Since long-term fixed-rate mortgages are also included in the calculation, it takes time for the reference interest rate to fall.

When that happens however — likely within the next few months — tenants will be entitled to rent reductions, provided the landlord had raised their rents when reference rates increased in the past.

Be proactive

Ideally, when the rates fall and tenants are entitled to have their rents lowered, the landlord should do this automatically.

But that is not always the case.

That is why it behooves tenants to take this matter into their own hands.

In all, an estimated 2.2 million households in Switzerland can apply for a rent reduction.

To make this process easier, the Swiss Tenants Association has prepared a sample form which can be filled out and sent to the landlard or management company. 

Can the landlord refuse your request for rent reduction, despite lower interest rates?

Yes.

According to Comparis consumer platform, the landlord could refuse to reduce your rent on grounds including value-enhancing works done to the property, higher operating costs due to inflation, or general increases in running expenses.

He or she can also say (and must prove) that the current rents are within the range of other comparable properties in the area.

Can you dispute this decision?

If you have valid reasons to do so, then yes.

For instance, landlords are allowed to  charge a maximum of 0.5 percent of the net rent to cover increases in operating and maintenance costs. 

Also by law, property owners may only pass on to tenants up to 40 percent of the inflation accumulated since the last rent adjustment.

If you have prove that these figures are exceeded, then you can file a complaint with your local conciliation authority. 

READ ALSO: How to solve a dispute with your Swiss landlord 

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