Rent adjustment: when you may raise and must lower the rent

The reference interest rate as benchmark

Since 2008, the benchmark for rent adjustments based on mortgage interest rates in Switzerland is the hypothetical reference interest rate (hypothekarischer Referenzzinssatz) published by the Federal Housing Office (FCHO). It is set quarterly and applies to all residential tenancies in Switzerland. The FCHO publishes the current value with a validity date on its website; it is the only legally binding basis for an interest-rate-based rent adjustment.

How much the rent changes

For every change of 0.25 percentage points in the reference interest rate, the rent changes on a sliding scale under Art. 13 VMWG. At the currently low reference rates below 5 percent, this amounts to around 3 percent rent change per 0.25 percentage points. This applies in both directions, for increases as well as reductions. The exact sliding scale for higher rate levels is set out in the VMWG.

Inflation and cost increases

In addition to the reference rate, landlords may claim further factors: up to 40 percent of the accumulated inflation since the last adjustment as measured by the National Consumer Price Index, plus general cost increases, either as a flat annual amount or supported by evidence (Art. 16 VMWG). These factors are offset against the reference-rate adjustment. A complete adjustment history per tenancy is decisive for fully retaining this right of offset.

Reduction: what tenants may claim

When the reference interest rate falls, tenants are in principle entitled to a rent reduction on their request. As the owner, you may offset inflation and cost increases that have not yet been passed on against the reduction. Without a complete adjustment history, you lose this right of offset and will have to lower the rent by more than necessary. An owner-initiated reduction without the official form is possible informally.

Increase: form and deadlines

A rent increase is only valid if made on the official form with a complete, clear statement of reasons. It must be communicated in good time for the next termination date and reach the tenant before the notice period begins. If the official form is not used, the increase is void. The tenant may challenge any increase within 30 days before the conciliation authority (Art. 269d CO).

The most common errors

Avoid: no official form or a form from another canton, a missed deadline or the wrong termination date, a missing or incomplete statement of reasons, overlooking the right of offset in reductions, and a lack of documentation of all previous adjustments. Any of these errors makes the adjustment challengeable or void. Particularly common: the increase is communicated for a date on which the notice period has already started.

Special case: rooms, flatshares and co-living

For furnished rooms with frequent tenant changes, rent adjustments in practice are usually made via the initial rent for each new tenancy rather than through ongoing formal adjustments. The official form and deadlines still apply to increases within a running tenancy. How the operation is correctly structured on behalf of the owner is explained in the guide on managing rooms, flatshares and co-living.

More on this in the related guide: Have rooms, flatshare or co-living managed in Switzerland

Handling adjustments correctly in the mandate

Correct rent adjustments are part of a good management mandate. What property management otherwise covers is explained in the guide "What does a property management do?"; what it costs, in "What does property management cost in Switzerland?".

Note: This guide provides general orientation and does not constitute legal advice. The individual case and the reference interest rate currently published by the FCHO are decisive; disputes are decided by the conciliation authority.