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Since the strictest housing protection law in German-speaking Switzerland came into force in Basel-Stadt, significantly fewer apartments have been renovated.
Minus 80 percent – that’s how strong the decline in requests for apartment renovations in Basel-Stadt is. This is what Regula Berger from the management of the Basler Kantonalbank said. At the invitation of the Basel government, she spoke to more than 100 investors, real estate representatives, architects and pension funds. Apartment buildings in particular will be renovated significantly less often compared to 2022, says Berger.
Cantonal housing protection deters investors
The Basel Housing Protection Act, which has been in force for a year and a half, is one of the reasons for this. But not the only one: “The interest rates have tripled,” Berger continued. “And then there are inflation and fears of recession.”
Renovation backlog due to declining returns
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Legend: Basler Versicherungen rents out apartments in Basel. She is currently no longer renovating this. They only do repairs. Keystone/Georgios Kefalas
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Legend: Renovations would not be worthwhile, argue the Basel insurance companies. The rent increases after renovations are capped. The insurance company is currently restructuring, especially in cities where laws similar to those in Basel could be introduced. KEYSTONE/Georgios Kefalas
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Legend: An example of such a city is Zurich. SP National Councilor Jacqueline Badran is also launching a housing protection initiative. KEYSTONE/Ennio Leanza
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Legend: The fact that there is hardly any renovation going on in Basel-Stadt is a particular problem for craft businesses; Their orders are collapsing. KEYSTONE/Gaetan Bally
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Legend: Many craft businesses are hoping for the coming year. Some believe that more orders for renovations could come in again. KEYSTONE/Gaetan Bally
The law alone is not the reason for the renovation backlog. However, requests for renovations within northwestern Switzerland have only fallen so sharply in Basel-Stadt.
Basel Housing Protection Act
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Legend: An aspiring craftsman at the European Skills Championships (symbolic image). swiss skills/Michael Zanghellini
Anyone who renovates the rental apartment must have the rent surcharge approved by the Housing Protection Commission. At least in times of housing shortage. Then the law applies. It was launched in May 2022.
On the occasion of an initial assessment, the Basel Tenants Association made examples from the commission public in January. This showed that most landlords provide for a higher rent surcharge after renovation than the commission approves. On average, they wanted to serve four times more. In one case, the commission also said that the landlord in question was allowed to increase the rent more than he had planned.
One of the big players in the real estate market is Basler Versicherungen. They still repair things when something breaks in one of their Basel apartments. However, they refrain from renovations.
Rent surcharges after renovations are only possible to a limited extent due to the cantonal housing protection law. Therefore, renovations would no longer be worthwhile, said the insurance company’s real estate manager a few weeks ago.
On the occasion of the Basel government’s “investor talks”, the Basel insurance companies doubled down. Housing protection and retirement provision would clash, said an insurance representative. “As an insurance company, we need a return of between two and four percent.”
Conflict of objectives: living space versus retirement provision
In his vote, he took a close look at an example from the Housing Protection Commission. This has been monitoring renovations since the introduction of the Housing Protection Act. In the example, she approved a rent surcharge of 69 francs. “That would mean an interest rate of one percent for us,” he calculated. “We are not allowed to do this renovation because of the pension provision that we have to finance.”
The renovation backlog brought politicians into the spotlight in Basel weeks ago. The cantonal parliament said the law was anti-investor. Citizens want to relax housing protection again through five proposals.
This task is very demanding.
In front of the investors, government councilor Lukas Engelberger drew attention to the dilemma in which the government finds itself. The Housing Protection Act goes back to a referendum.
“The voters didn’t give us an easy task,” said Engelberger. She introduced this “social goal”. The government must now reconcile it “with the canton’s growth goal” and the climate goals. “This task is very demanding.”
Hardened fronts
The investors and builders said little at the “investor discussion”. This amazed Lukas Engelberger. When he was asked to give the final vote, he said: “It comes sooner than I expected.”
It is possible that those present remained silent because the topic has been hotly debated for months. It has been generating some very critical votes for a long time.
The other side is also attacking. In the local parliament, the representative of the tenants’ association announced that they would fight the easing of restrictions – “with all the means at our disposal”.