Specifying the rental tariff

Due to contractual freedom, as a general rule the parties can specify the rental tariff as they see fit. However, in the case of the rental tariff for residential and business property, the rental tariff may not be improper. This is not, however, checked by the authorities. The law allows the tenant to take the initiative.

If the rental tariff is improper, the following options are available to the tenant:

  • Contest the initial rental tariff,
  • Contest a rental tariff increase,
  • File an application for a reduction.

However, the regulations on determining whether or not a rental tariff is improper are very complicated. In brief there are two methods, namely the absolute method (on a specific appointed day it is determined whether or not the rental tariff is improper) or the relative method (review of whether or not the rental tariff has become improper since the last authoritative stipulation).

In general it can be said that the rental tariff in the current tenancy can only be moderately adjusted in line with the development of the reference interest rate (which is currently at a low level > see www.referenz-zinssatz.ch), rising prices and general cost increases (flat-rate approx. 0.5% to 1% per year). If the lessor improves the rented property, this also enables him to increase the rental tariff. In the case of newly let property, the market plays an increasing role because tenants are frequently unable to successfully content initial rental tariffs. To achieve greater transparency and foresee future developments, a so-called indexing of the rental tariff is agreed upon in the case of renting business floor space. The rental tariff is then tied 100% to rising prices. However, indexing is only possible if the tenancy agreement is entered into for at least five years.