Flood to arbitration boards: Tenants association’s rent calculator miscalculates

Example: Anyone who states that the last rent adjustment was made on September 3, 2013 at a 0.5 percent flat rate ordinary cost increase would give the machine a negative value. Rent should be reduced according to the MV vehicle. A monthly rent of 1,000 francs would have to be reduced to 987 francs. Tenants must object to any rent increase. For this, the letter is ready to use.

In fact, the landlord has the right to raise the rent to CHF 1,014. MV admits this error: According to the person in charge of the tenants association, the result of the MV calculator may actually be wrong in this “special case”: “We need to clarify this internally.”

This so-called “special case” occurs in months when the reference interest rate is lowered. The program does not seem to understand exactly when the change in the reference interest rate takes effect.

This has been the case nine times since 2008 – since the introduction of the statutory reference interest rate system. The federal rent reference rate defines how strong the cost reduction or cost increase of an apartment rental is due to rising or falling mortgage interest rates. This reference interest rate was last increased by a quarter point to 1.5 percent on June 2, 2023. Therefore, landlords are generally entitled to increase rents as long as they meet certain legal requirements.

It is not possible to find out how many rental contracts were affected by this “special circumstance” because there are no statistics about it. It is estimated that there are probably several hundred households in Switzerland who could inadvertently apply for a reduction in rent at the arbitration boards and then face an increase in the arbitration court.

«False challenges don’t help anyone»

Bättig says he has already reported this bug to the department of the Bernese tenants association. His main concern: “Dozens of households shouldn’t be objecting to the rent increase for nothing, and arbitration officials are telling them, ‘You miscalculated’.” Bättig is also concerned about the overloading of arbitration committees. “Faulty appeals benefit no one, the landlord, the tenant, or the arbitral tribunals.”

Other possible difficulties

The MV calculator includes a second easy-to-use rental calculator at the bottom of the website. Access is via location search. And the calculator has a selection field that is difficult for the layman to understand and can more often lead to incorrect results. This is the input field for the so-called flat rate: The field can be freely set, for example “0 percent”, “0.25 percent”, “0.5 percent” or “1 percent”.

If a Bern-based user enters “0 percent” or “0.25 percent” into the MV tool, the rent calculator will give a misleadingly low value. “Such tenants will be informed, at the latest, before the arbitration board that the flat rate fee was incorrect,” says Bättig: “There was nothing but expenses.”

Theoretically, the calculation method using a flat rate fee is not allowed. However, many arbitration boards and experts, including the tenants’ association, use this tool as it is widespread and efficient. For example, Bern has a flat rate of 0.5 percent. Some cantons use 0.25 percent, French-speaking cantons use 0 percent. Even for houses older than thirty years, the 0.75 percent value is used. However, actual costs are applied in court.

Housewives have secret trump cards

There’s also a third case where rent calculators lead to wrong conclusions: It’s about value-enhancing investments, such as installing a dishwasher, in a rented flat where the landlord never asks for a raise. Searching for an input field for this case in the MV calculator is futile.

“It is not uncommon for landlords to not increase the rent despite having made small, value-enhancing investments in the past,” says Bättig. Now if tenants – for current reasons – object to the rent increase, the landlord can claim these costs for not taking them into account in the past. Even then, it may be unnecessary for the tenant to object to the rent increase.

MV Switzerland also makes a reservation in many footnotes of the rental calculator: that the rental calculator does not provide reliable value for value-enhancing investments. Regardless, the Swiss homeowners association is backing down with harsh criticism. “It’s too early to assess issues with rent calculators.” As long as the competition period continues, it is necessary to wait until the end of July.