Two thirds of tenants can soon look forward to lower rents
Published: Friday, Oct 11th 2024, 09:10
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Rents in Switzerland are not only going up. According to Zürcher Kantonalbank, around two thirds of tenants will soon be able to demand a rent reduction. The reason for this is the latest interest rate cut by the Swiss National Bank.
After the Swiss National Bank (SNB) lowered the key interest rate and thus financing costs for the third time this year in September, many tenants can hope for a reduction in the reference interest rate soon, as the Zürcher Kantonalbank (ZKB) wrote in the latest edition of its "Real Estate Barometer 3rd Quarter 2024".
The reference interest rate is derived from the average interest rate of all mortgages granted. "We assume that this will be the case by March 2025 at the latest," the ZKB report continued.
However, only tenants whose rental agreement is based on at least the current reference interest rate can also demand a rent reduction. Anyone who has already felt the impact of the two reference rate increases on their wallet will then at least benefit from a rent reduction. This would apply to around a third of rental households, who would then be able to reclaim at least part of the increase.
Overall, around two thirds of rental households should soon have the option of a rent reduction. In addition to the third of tenants whose rent was last increased, there is likely to be an equally large fraction that could demand a reduction because not all rent reductions have been claimed in the past, writes the ZKB.
Institutional landlords react faster
According to the ZKB, institutional landlords have passed on rent increases more frequently than private landlords in the past. In the past quarter, for example, only 7% of private landlords passed on a rent increase compared to 13% of pension funds, insurance companies and real estate funds.
One reason for this was that institutional landlords had also passed on reference interest rate reductions more frequently in the past and were therefore more likely to be entitled to increases, the ZKB added.
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