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The reference interest rate is rising for the first time in 15 years – with some major effects on rents. An overview.
Rents in Switzerland could rise by 10 to 20 percent in the coming years – those of existing contracts. This is an extreme scenario. The reason for the higher burden: the reference interest rate is rising for the first time in 15 years. It’s a slow process – not all tenants are affected. SRF business editor Manuel Rentsch answers the most pressing questions.
What’s new?
The reference interest rate rose today, Thursday, for the first time since 2008 – to 1.5 percent from the previous 1.25 percent. This was announced by the Federal Office for Housing (BWO). The reference interest rate is an important component for calculating the rents of the current contracts.
What are the implications of the increase to 1.5 percent?
A quarter percentage point increase in the reference interest rate means that the rents of the existing contracts can be increased by three percent. However, there are limitations. Only those rents that are based on the current reference interest rate of 1.25 percent may be increased. In other words, those homeowners who have passed on the reductions to tenants in recent years are allowed to raise rents.
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The reference interest rate has risen for the first time in 15 years. Accordingly, rents in Switzerland could rise by 10 to 20 percent in the coming years.
KEYSTONE/Michael Buholzer
How many households will be affected by the rent increase?
There are more than two million households in rented apartments in Switzerland. Around half of these leases are based on the current reference interest rate. This means that a rent increase in Switzerland could potentially affect more than a million households. However, many homeowners will certainly forgo an increase.
When will rents go up?
The rents can be increased on the next termination date. Most contracts provide for a notice period of three months. This means that most rent increases could be implemented by October 1st.
How much do rents increase in a year?
It can be assumed that the reference interest rate will continue to rise, probably to 1.75 percent as early as December. Together with the increase announced today, this would entitle the tenant to a six percent rent increase. In addition, the landlords can claim the accrued inflation as a general cost increase. All of these elements can add up to a 10 percent increase in rents within a year.
How much will rents rise in the medium term?
Assuming inflation remains high and interest rates continue to rise, this could lead to a 10 to 20 percent increase in rents in the coming years compared to the current level. However, there are also factors that could slow the rise. For example, if a lot should be built and this creates competition. In addition, such a sharp increase in rents would be unbearable for many households and homeowners will therefore probably not take full advantage of the rent increases.
Why is the reference interest rate increasing?
Interest rates in Switzerland are generally rising. For example, the National Bank has raised the key interest rate from minus 0.75 percent to plus 1.5 percent, and long-term interest rates on the capital market have climbed. As a result, the banks increased mortgage interest rates, which has a delayed effect on the reference interest rate.
What is the bottom line?
Many households in Switzerland will sooner or later have to pay higher rents. This is after the additional costs for heating and hot water have already increased and the health insurance premiums are increasing. Many people worry about their own financial situation, as recent consumer sentiment surveys show.