Solid rent increase does not only affect the poor: ‘Disposable income is getting smaller’

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Many households will feel the impact of the decision on their wallets. The Federal Housing Office (BWO) raised the reference interest rate for rents by 0.25 percentage point to 1.5 percent on Thursday. It is the first increase since its introduction 15 years ago. Landlords can rub their hands: many of them are now legally allowed to increase rents by as much as 3 percent. At the end of the month, many households receive a letter stating that the rent will be increased from the next cancellation date.

According to the BWO, the rent for many households will probably rise by 5 or 6 percent this year. Because the tenants are also allowed to pass on part of the inflation. And according to the federal government, another increase in the benchmark interest rate could soon be due to the evolution of average interest rates on mortgages, to which the increase is linked. This allows landlords to turn the rent screw again.

Many can no longer afford a house, car or holiday

Higher health insurance premiums, rising additional costs, more expensive groceries – and now even more rent. Philipp Frei (39), general manager of the umbrella organization Budgetberatung Schweiz, is concerned about these prospects. “The cost of living has been rising for years. Disposable income is getting smaller and smaller,’ he says.

Single-family home, car, holiday abroad: 40 years ago this was no problem for a family. “Today many can no longer afford it.” Not only families on the poverty line are turning to budget advice centres, but also middle class people who are struggling to pay the bills due to the enormous cost increases.

In the past, the rule of thumb was that rent should not exceed one third of income. But now that doesn’t fit anymore, says Frei. The advice nowadays is to spend about a quarter on rent – otherwise it could become too tight.

“Budget is growing treacherously”

Health insurance premiums were hit the hardest. According to estimates by the federal government, it is currently almost 700 francs that a household has to spend on premiums on average. 2.1 people live in such an average household. Extrapolated over 12 months, that’s CHF 750 more than five years ago.

Meanwhile, costs in other areas have increased only slightly. But even that ripples on. “The budget continues to rise,” notes Andrea Gärtner (62), social adviser at Caritas Zurich. She advises families in the city who are affected by poverty.

As a result of the rising cost of living, parents no longer regularly take their children to the doctor – but only when it is really urgent. A development that you have been observing for several years. “In addition, more and more families have to make compromises when it comes to the quality of the food.” And visiting family in the home country has also become unaffordable for many families with a migration background. Her conclusion: The fact that rents are now also rising in addition to energy costs is “very bad” for people living in poverty.

What can you do to avoid financial problems? Philipp Frei advises families to prepare a budget. With rent and additional costs, you should take into account a slightly higher amount than the actual amount, he advises. “It’s good if you have at least one or two months’ salary behind.”

Dear readers, are the upcoming rent increases or rising health insurance premiums really going to get you into trouble? How do you deal with it? What’s the first thing you give up? Write below in the comments or contact us at the reader reporter number.

Source:Blick