Interest rate at record low: rent reductions?

The reference rate for rents has fallen to a record low. Landlords are increasingly confronted with requests for rent reductions. When must the tenant be granted a rent reduction?

A rent reduction is based on the mortgage reference rate published quarterly by the Federal Office for Housing (as at 31 March 2017: 1.5%). If the reference interest rate was higher than 1.5% at the time the lease commenced, a tenant may be entitled to a rent reduction.

However, the tenant is only entitled to a rent reduction if the landlord has provided a ‘translated income’ in accordance with Art. 269 f. of the Swiss Code of Obligations. OR achieved. Therefore, should the current rent fall within the local or neighbourhood rent or if additional services provided by the landlord are justified by cost increases (cf. Art. 269a para. 1 OR), the rent need not be reduced. In individual cases, the relevant clarifications are relatively complex.

If the prerequisites for a rent reduction are fulfilled, the tenant must take action and request the landlord in writing to reduce the rent on the next possible termination date. The landlord must reply within 30 days of receipt of the request for a reduction.

Our leasehold law experts Patricia Jenny, Sandra Schmitt and Alexandra Vonarb are available for further questions.