immo!nvest – Die Plattform für Standorte und Immobilien

Tag: Mietregulierung

  • Rent cap eats its own children

    Rent cap eats its own children

    Since the Housing Protection Ordinance came into force in Basel-Stadt in May 2022, planning applications for rental apartments have plummeted by 76 percent. in 2024, only 151 new-build apartments were completed in the city canton, less than a quarter of the long-term average. While Zurich recorded a 20 percent increase in building applications in the same period, construction activity in Basel effectively came to a standstill.

    No renovation, buildings fall into disrepair
    Regulation not only slows down new construction, it also paralyzes the renewal of existing buildings. Craft businesses are complaining about a lack of orders; individual companies are looking for work 40 kilometers away in Fricktal. Necessary energy-efficient renovations are not being carried out and properties are falling into disrepair. This ultimately affects the tenants themselves and thwarts any claim to climate protection.

    Geneva 40 years of regulation, 40 years behind
    Geneva has had one of the strictest tenant protection laws in Switzerland since 1983. The result is sobering. 83.5 percent of residential buildings over 40 years old have never been comprehensively modernized, compared to 47.6 percent in Basel and 41.3 percent in Zurich. New tenants in Geneva pay an average of 30 percent more per square meter than existing tenants. Strict tenant protection therefore primarily protects those who already have an affordable apartment. Not those who are looking for one.

    The real problem, too little supply
    If you want to reduce rents, you have to increase supply. This means faster approval procedures, more densification, more replacement new builds and extensions and fewer objections. The Zurich Cantonal Council has already drawn up two counter-proposals that focus on better framework conditions rather than bans. This is the right direction.

    What Zurich needs to decide
    The housing market in the canton of Zurich is under pressure, that is real. But a rent cap does not solve the problem, it exacerbates it. Basel and Geneva are not a theory, but a living warning. On June 14, Zurich has the choice of learning from its mistakes or repeating them.

  • Zurich housing protection initiative increases value at risk for real estate portfolios

    Zurich housing protection initiative increases value at risk for real estate portfolios

    In February 2024, the Zurich housing protection initiative was submitted with over 20,000 signatures. Initiated by the Tenants’ Association, SP, Greens and AL, it is intended to give municipalities more leeway to intervene in the housing market in future. The vote is planned for 2026. However, property owners should already be analyzing the potential effects on their portfolios.

    Flexible framework with unclear consequences
    The cantonal bill is limited to framework definitions. Municipalities are given the right to define temporary rent caps in the event of housing shortages, conversions, demolitions or conversions into property. Whether and how these are implemented is at the discretion of the municipalities. Any municipal decree would be subject to a referendum. However, based on examples such as Basel-Stadt or Geneva, many municipalities are likely to adopt similar instruments.

    Risks to value retention and investment momentum
    The potential “value at risk” for real estate portfolios lies in restrictions on rent adjustments, uncertainty in project development and a declining willingness to invest. Experience from other cantons shows that rent caps dampen new construction and renovation activities, which can lead to supply bottlenecks and the erosion of residential quality in the medium term. Existing properties in tight markets are particularly affected.

    Strategies required to minimize risk
    For institutional investors, a differentiated scenario analysis is recommended, which takes into account possible reductions in value as well as tax and regulatory consequences. Strategic diversification, active asset management and timely communication with local authorities will be crucial in order to secure room for maneuver.