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This is a big issue everywhere: interest rates rise and rents automatically become more expensive as a result. “SonntagsZeitung” recently explained this to us as follows: “The mortgage reference rate will increase by a quarter point to 1.5 percent. Then, on the next termination date, rents can be increased by 3 percent.” And since that’s probably not the end of interest rate hikes — and because homeowners are allowed to rent 40 percent of inflation — “rents could rise by around 15 percent, depending on the inflation rate,” according to UBS.
Mistake! A typical tenant household, which previously paid about 30 percent of its disposable income in rent, is forced to work for the landlord about half a month more each year.
Puts low-income people in a difficult position
For lower income groups, the bill is often much saltier. This means either taking long trips to relocate and commute to the country, or government subsidies. Still, everyone seems to find this normal: interest rates are high, rents are rising. This seems to be the case with the Tenant Protection Act, which everyone knows but has not been questioned for a long time.
From a purely economic point of view, there is no reason for tenants to have to bear the costs of an interest rate hike. Explanation: Interest rates (almost) always rise only when inflation rises. That makes sense: 3 percent inflation means real debt is cut in half every 24 years. If the house has to be renovated or demolished after 72 years, the landlord is virtually debt-free. In turn, the creditor must accept that the loan balance will become virtually worthless over time.
Prevent damage, but how?
The creditor has two options to avoid the residual loss: It can charge a higher interest rate accordingly. This is the usual solution. Or it can agree with the borrower on a “real rate mortgage”. After that, the debt adjusts for continued inflation so that it stays the same in real terms. On the other hand, the creditor is satisfied with a low “real interest rate”, such as one percent.
So rising interest rates are ultimately a matter between the creditor and the home owner. It benefits from inflation reducing its debt in real terms and paying higher interest in return. The fact that he could pass this on to the lessee and thus enrich himself twice (profit on the lease plus a free reduction of the actual debt) cannot be justified from an economic point of view.
However, inexplicably, the tenancy law allows the landlord to do just that. The obvious question arises: why? Is it economic ignorance, or is it because the landowners in Bern have a stronger lobby? Probably both are true: the victors not only write history, they also write economic doctrines.
The growing Swiss population requires more and more living space, and yet fewer and fewer applications are made for construction. From where? ZKB cites basic structural conditions as the justification for its real estate research: building a house is like a race with a hurdle.
It now takes an average of 140 days from the zoning application to the building permit. That’s 67 percent longer than in 2010. The more densely populated an area is, the longer the delays. As a result, it takes around 200 days for an application to be approved in the canton of Zurich. The canton of Geneva has to wait the longest for a permit – 500 days.
But things can still go wrong even after the builders get their bags in the permits. “It is not for nothing that appeals is called the fifth national language,” says Ursina Kubli, 43, Head of Real Estate Research at ZKB. Despite the building permit, one flat is not built for every tenth. As a result, 4,000 apartments are missing every year in the rental housing market and the trend is rising. (kae)
The growing Swiss population requires more and more living space, and yet fewer and fewer applications are made for construction. From where? ZKB cites basic structural conditions as the justification for its real estate research: building a house is like a hurdle race.
It now takes an average of 140 days from the zoning application to the building permit. That’s 67 percent longer than in 2010. The more densely populated an area is, the longer the delays. As a result, it takes around 200 days for an application to be approved in the canton of Zurich. The canton of Geneva has to wait the longest for a permit – 500 days.
But things can still go wrong even after the builders get their bags in the permits. “It is not for nothing that appeals is called the fifth national language,” says Ursina Kubli, 43, Head of Real Estate Research at ZKB. Despite the building permit, one flat is not built for every tenth. As a result, 4,000 apartments are missing every year in the rental housing market and the trend is rising. (kae)
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
