After raising the reference rate: Private landlords should avoid these mistakes

Most of these people rent their properties with little expertise. After an increase in the reference interest rate, you are in unfamiliar territory and you can quickly fall into legal traps, meaning you can make mistakes when renting. We clarify important questions:

Who can increase the rent?

These are landlords who agree on a 1.25% reference interest rate on their leases.

At the beginning of June, the rate rose to 1.5 – meaning that in this case the owners can claim 3 percent more rent from the next termination date. For example, if contracts show a higher rate of 1.75 percent, rents are not allowed to rise. This is the case when the administration refrains from citing previous reductions in the reference rate. Or vice versa, the tenants had not claimed them.

But this increase will not be the last: the rate is expected to rise to 1.75 during the winter months and possibly more increases later. After all, most homeowners will have to take action.

How much more can I charge due to inflation and general cost increases?

Interest costs are not the only cost block. Homeowners will also be able to claim 40 percent of the accrued inflation and overall cost increase. The second point includes all operating costs not incurred by tenants as ancillary costs: for example, an increase in insurance premium or a recent surcharge from a craft business.

In principle, the administration can always claim inflation and additional costs – even in years when the reference interest rate does not change. However, it is recommended that the two cost blocks be linked to the change in the reference interest rate so as not to disturb the tenants.

How are these costs calculated?

For example, if inflation, as measured by the national consumer price index, reaches 2.8 percent in one year, rent may increase by 1.12 percentage points (40 percent).

Most cantons set a rate of 0.25 to 0.5 percentage points per year for the overall increase in costs. In principle, however, only actual costs can be claimed. In case of doubt – when challenging the increase – the administration should be able to prove the costs before the arbitration board or the rental court.

To continue with the example: inflation and cost increases (0.5 percent) together increase the monthly rent from 1,000 francs to 1,016 francs. If the reference interest rate is also raised, the rent rises to CHF 1,046.

How to raise the rent correctly?

The basic requirement was mentioned earlier: the contract should be based on the previously valid reference interest rate (last 1.25%). The landlady must then also comply with the deadlines and official requirements: the notice must reach the tenants in an officially approved form and by registered letter with return receipt. The reason for the increase in rent should be clearly stated in the letter.

It’s good to act early. Because it’s not just about complying with a three-month notice period – tenants also have ten days to decide whether to accept the increase.

This adds up to about a hundred days. What this means is that homeowners who haven’t yet acted after the benchmark rate hike in early June should be patient. Because October begins less than a hundred days later. The earliest possible termination date if the time buffer is respected.

Provided that the lease can be terminated monthly at the end of the month, the next chance does not come until the beginning of November. But many apartments can only be dissolved a few times a year. Common dates are end of March, end of June and end of September.

What if the tenant objects to the raise?

If tenants do not agree to the increase, they can contact the arbitration authorities – they have 30 days after receiving the letter to do so (the date of the postmark is valid).

The procedure is also free of charge for landlords and they have to come personally to the responsible authority from the flat’s address. Many districts have arbitration boards. For example, you can ask the tenants association about the responsible agency.

Good preparation is particularly important: the landlord must be able to prove or present all the costs and documentation associated with the rental property. The involvement of a lawyer is not usually necessary. The procedure is not very formal and aims only at reaching an agreement between the parties. However, if the dispute cannot be bridged, the rental court takes a second step. This level also incurs costs to the home owner.

What else is there to think about?

Nobody likes to pay more rent: when landlords raise the rent, they send an unpleasant message. That’s why tact is required: Tenants appreciate when the landlord announces the rent increase in person over the phone or at the front door.

Or if the communication is by post, there is a nice letter in the envelope as an appendix to the document. A French idiom sums it up: “C’est le ton qui fait la musique.”

“Building relationships with tenants works – this way landlords are less likely to risk dealing with tenant changes or rent disputes,” says Karin Weissenberger, head of the advisory team at the sustainable homeowners association Casafair Switzerland.