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RENTING

Renting in Zurich: Why sticking to one apartment will save you money

Renters in Zurich who frequently move around will pay more rent than those who have been living in their flat for a long time, a new study reveals. But why is that?

The Swiss city of Zurich.
The Swiss city of Zurich. Photo by Ilia Bronskiy on Unsplash

So far, there has been little information at the cantonal level on the extent of the difference between those recently agreeing their entering a rental agreement and those who have been renting long-term. A new publication by the Statistical Office of the Canton of Zurich now sheds light on the situation.

According to the study, households that have not changed residence for a long time pay less rent than those who move around.

For example, between 2016 and 2020 those in long term rental agreements paid on average a net monthly rent of CHF 1,840 for a four-room apartment in the canton of Zurich and those newly moving in paid a whopping CHF 2,100.

READ ALSO: Where are property and rent prices rising the most in Switzerland?

However, this figure conceals major differences in terms of the year the property was built as well as the region it is situated in. Apartments in Zurich built between 1945 and 1970, for instance, are the cheapest to rent, while newly built apartments are understandably the most expensive. Gunning for an apartment in the city or near the lake will also set you back more than relocating to the countryside – no matter the size.

READ ALSO: How can I reduce my rent price in Switzerland?

New rent agreements are more costly than longterm rents – especially in the city of Zurich

If we are to compare the rent of the households moving in with the rent of the longterm households, the same pattern emerges regardless of the apartment size and price region: Longterm households essentially pay less than new renters.

The differences between longterm and new rents are particularly notable in the city of Zurich where the vacancy rate is also lowest, and most households rent, thus demand is always high. On the other hand, the differences in rent are small in the less expensive municipalities, most of which are in the northern and western regions of the canton.

READ ALSO: How to find a flat to rent in Zurich

So, what’s behind the difference?

The study found that households opting to move out of their residence have often not lived in their apartments very long and therefore already pay higher rent prices. As a result, the rent cost for the subsequent vacant apartments is already significantly higher than those apartments in longterm rents. Hence the reason why those moving in will also pay a higher rent price.

Still, there are exceptions, especially in the cheaper, mostly peripheral communities in the north and east of the canton of Zurich where around 70 per cent of households rent.

As a general tip, it makes more sense to commit to an apartment longer term if you are looking to save money on rent.

 

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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?

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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