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Tenancy Regulations in Switzerland

Tenancy Regulations in Switzerland

In Switzerland, two out of three people live in rented flats. We would like to provide you with an overview of the regulations to be aware of when entering into a rental contract.

Rental Contract

Generally, anyone interested in renting a flat has to fill in an application form. The applicant has to provide information such as age, marital status, profession, employer, salary, children, residency status, pets, etc. To confirm a tenant’s financial ability to pay the rent, the landlord often requests for a prospective tenant to provide an excerpt from the debt collection register (“Auszug aus dem Betreibungsregister”). The required document can be obtained at the local credit agency or ordered on-line.

The landlord and tenant usually enter into a written rental contract. By signing the contract, both parties are committed to the terms of the agreement. It is therefore imperative to read and fully understand the contract before signing it.

It is often the case that the landlord engages a property administration company to settle all matters concerning the rental contract and the tenants.

Rent and Ancillary Costs

The tenant has to pay rent to the landlord, usually in monthly dues.

The ancillary costs are the remuneration for the services of the landlord or a third party in connection with the use of the rental object. The tenant only has to pay the ancillary costs if he or she has specifically agreed to this with the landlord.

Deposit

Tenants are often requested to provide a certain amount of money in advance – a so-called security deposit. The deposit can amount to a maximum of three months’ rent and is paid into a special bank account held in the tenant’s name (“Mietkautionskonto”). For the landlord, the deposit serves as a security. When the tenant moves out, the deposit is returned with interest, less any damages.

Challenge of the Rent

According to Art. 270 of the Swiss Code of Obligations, the tenant of residential or commercial premises may challenge the initial rent as abusive before the arbitration authority and demand its reduction, provided certain conditions are met. Grounds for challenging the rent include: (1) if the initial rent required by the landlord is significantly higher than the previous rent for the same property; or (2) if the tenant felt compelled to conclude the lease agreement on account of personal or family hardship or by reason of the conditions prevailing on the local market for such rental properties.  This challenge must take place within thirty days of taking over the leased object.

During the rental period, the tenant may contest the rent as being unfair and demand that it be reduced as of the next termination date if he or she has reason to believe that the landlord, as a result of substantial changes to the calculation basis, in particular a reduction in costs, will obtain an excessive return from the leased property.

If the landlord intends to increase the rent (e.g. following a renovation to the property or if the mortgage interest rate increases), he or she is required to fill in an official form. If the tenant does not agree, he or she must appeal to the arbitration agency, in writing, within a period of thirty days.

Deficiency

Swiss tenancy law distinguishes between three types of deficiency: severe, moderate and mild.

Only in the case of a moderate-heavy or severe deficiency does a tenant have the right to demand for the defect to be remedied by the landlord. In addition to the right to a remedy, a tenant impacted by defects is entitled to a rent reduction and compensation. In case of a serious defect that considerably impairs or even makes it impossible to live in a property, the tenant can also terminate the rental contract without notice provided that the tenant has not caused the damage.

A mild defect or even small maintenance matters have minimal, if any, impact on a tenant’s living situation. For example, a loose screw on a socket or a dripping tap. Such defects must be repaired by the tenant (Art. 259 of the Swiss Code of Obligations). The limitations of such small maintenance matters, however, are not regulated in the Swiss Code of Obligations. In recent years, the general practice in tenancy law is that only defects which a tenant with so called standard skills can repair him or herself, without the involvement of experts, are the responsibility of the tenant.

Termination and Extension of the Rental Contract

The rental contract can be terminated by either the tenant or the landlord. The fixed dates and periods of notice are stated in the contract.

If the tenant terminates the contract, he or she must do so in writing and preferably by registered post. Married couples have equal rights. Therefore, the letter of notice is only valid if both spouses have signed it. If a tenant wants to move out of the rental property at a time other than that which is stated in the contract, he or she can recommend a subsequent tenant who is prepared to take over the rental contract based on the same conditions. Within approximately four weeks, the landlord must verify if the appointed tenant fulfills the conditions of the contract and is able to pay the rent. If not, the tenant is obliged to continue to pay the rent up through the termination date of the contract.

If the landlord terminates the contract, he or she must use an official form. In the case of married couples, each spouse receives a form in a separate envelope. In certain cases, the landlord can terminate the contract at short notice (e.g. outstanding rent). If a tenant receives a notice of termination which he or she doesn’t agree with, the tenant must appeal to the arbitration agency, in writing, within thirty days. The tenant is entitled to file a claim for cancellation of the termination due to abuse or to request an extension of the tenancy in case of hardship.

Ralf Voger is an Attorney at Law at Studhalter & Pfister Rechtsanwälte AG, rv@stu-law.ch.

For further information regarding our services: www.stu-law.ch

info@livinginluzern.swiss

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