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  • Mortgage reference interest rate stable at 1.75 per cent

    Mortgage reference interest rate stable at 1.75 per cent

    The mortgage reference interest rate, which is decisive for setting rents throughout Switzerland, will remain at 1.75 per cent. This was announced on 3 June 2024 and is based on the volume-weighted average interest rate for domestic mortgage receivables, which stood at 1.72% on 31 March 2024. This average interest rate has not changed since the last quarter, meaning that the reference interest rate relevant under tenancy law remains at 1.75 per cent, rounded to the nearest thousandth of a percentage point. This stability will be maintained until there is a significant change in the average interest rate of below 1.63 per cent or above 1.87 per cent.

    Significance for rent claims
    The reference interest rate of 1.75 percent has remained unchanged since 2 December 2023. Tenancy agreements based on a higher reference interest rate of 2.00 per cent or more are still entitled to a rent reduction. Conversely, landlords are entitled to a rent increase if the underlying reference interest rate is 1.50 per cent or lower, in accordance with the provisions of tenancy law, which stipulate an increase of 3 per cent per quarter of a percentage point.

    Exceptions and additional influencing factors
    There are exceptions for certain rental agreements such as indexed or graduated rents and turnover rents for commercial premises. Subsidised flats are also often subject to special regulations. In addition, other cost factors such as the change in the national consumer price index and maintenance and operating costs can influence the rent structure. Inflation can account for 40 per cent of the rent calculation, which can lead to adjustments.

    Regular publication and legal basis
    The mortgage reference interest rate and the underlying average interest rate are published quarterly by the Federal Office for Housing (BWO), with the next publication on 2 September 2024. Since 10 September 2008, the uniform reference interest rate has served as the basis for setting rents in Switzerland, in accordance with Article 12a of the Ordinance on the Rent and Lease of Residential and Commercial Premises (VMWG). This regulation replaced the interest rates for variable mortgages previously applicable in the individual cantons and ensures a standardised and transparent rent calculation throughout the country.

  • The reference mortgage rate remains at 1.25 percent

    The reference mortgage rate remains at 1.25 percent

    The Federal Housing Office (BWO) has left the mortgage reference rate for tenancies unchanged at 1.25 percent. In a press release by the BWO, it is pointed out that this rate, which applies to rent structuring throughout Switzerland, has not been changed since March 3, 2020.

    The reference interest rate is determined on the basis of the quarterly average interest rate for domestic mortgage claims. This was determined on December 31, 2020. According to the BWO, the rate fell from 1.30 percent to 1.28 percent in the previous quarter. The reference interest rate applicable under rental law remains at 1.25 percent and remains at this level until the average interest rate falls below 1.13 percent or rises above 1.37 percent, explains the BWO. The rate is always given with a quarter percent accuracy.

    Since the rate remains unchanged, according to the BWO, there is no new lower or higher claim. If a rent in the individual contractual relationship is not based on the current reference interest rate of 1.25 percent, there is a right to a reduction. Changes in costs, for example in the case of maintenance costs, could also lead to an adjustment claim.

  • Rents rose in August

    Rents rose in August

    In August, asking rents in Switzerland rose by 0.26 percent. The upward trend is particularly confirmed in the annual analysis with a plus of 0.88 percent. This is shown by the current rental price index figures from homegate.ch and Zürcher Kantonalbank ( ZKB ). It measures the monthly, quality-adjusted change in rental prices based on current market offers.

    The rental price development in the canton of Thurgau is striking, according to a media release from the real estate marketplace homegate.ch. The rent there rose by 0.71 percent, almost three times the Swiss average. The canton of Valais also shows a noticeably higher value with a plus of 0.62 percent. In the cantons of Zurich, Glarus, Appenzell Ausserrhoden and Appenzell Innerrhoden, apartment hunters are confronted with rents that have risen by 0.50 percent, in Schaffhausen it is plus 0.49 percent. On the other hand, Geneva recorded the steepest decline with a minus of 1.48 percent. The rent index is only stagnating in the cantons of Basel-Stadt and Schwyz.

    The cities of Geneva (-2.43 percent) and Lugano (-1.41 percent) recorded a large decline. In contrast, asking prices in the city of Zurich rose (+1.31 percent). Only in the city of Basel does the rent index remain unchanged.