Rent Increase in Switzerland – Limits and Contestation

Rent Increase: What Is Permissible?

Rent increases are among the frequent points of dispute in tenancy law. Not every increase, however, is lawful.

Two questions that are often confused

With a rent increase, two quite different questions have to be kept apart — they have different consequences and different deadlines.

Nullity for a formal defect concerns the way the increase is communicated. A void increase has no effect from the outset. Abusiveness concerns the level of the rent. It must be contested within 30 days, otherwise the increase counts as accepted.

A formal defect therefore does not make an increase "abusive" — it can simply make it ineffective. When in doubt, have both examined and still observe the 30-day deadline.

Formal requirements and nullity

Under Art. 269d para. 1 of the Swiss Code of Obligations (CO), the landlord must announce the increase for the next possible termination date, notify the tenant at least ten days before the start of the notice period on a form approved by the canton, and give reasons.

The increase is void under Art. 269d para. 2 CO if the landlord:

• does not use the prescribed form
• gives no reasons
• threatens or gives notice of termination together with the notification

The same applies to other unilateral amendments to the tenant's detriment, such as introducing new ancillary costs (Art. 269d para. 3). Other defects — late delivery or the wrong date, for example — do not automatically render the increase void; they may mean it only takes effect at a later date. Which consequence applies depends on the specific defect.

Permissible Grounds for Rent Increases

The landlord may raise the rent in particular in the event of:

1. An increase in the reference interest rate
2. Cost increases (maintenance costs, charges)
3. Value-enhancing investments
4. Adjustment to rents customary in the locality or district

Contesting abusiveness: 30 days

If you consider the level of the new rent abusive, you must contest the increase within 30 days of receiving the form before the conciliation authority of your district (Art. 270b CO). This deadline is short and cannot be extended.

When is a rent increase abusive?

The relevant provisions are Art. 269 and 269a CO. A rent increase may be abusive in particular if:

• The landlord obtains an excessive return
• The increase is based on a clearly excessive purchase price
• The increase is disproportionately high and cannot be based on one of the recognised grounds

Formal defects do not belong on this list — they fall under nullity pursuant to Art. 269d para. 2 CO (see above).

The Reference Interest Rate as a Key Factor

The mortgage reference interest rate is an important factor for rent adjustments. If it falls, a reduction comes into consideration; if it rises, the landlord may demand an increase. The figures below apply at current interest levels, that is, a reference rate below 5 percent (Art. 13 Ordinance on the Lease of Residential and Commercial Premises); at higher rates the adjustments are smaller. The percentages refer to a change in the reference rate of 0.25 percentage points (for instance from 1.50 to 1.25 percent), not 0.25 percent of the previous rate.

Change in the reference interest rate	Effect on the rent
Decrease of 0.25 percentage points	approx. 2.91 % rent reduction
Increase of 0.25 percentage points	approx. 3 % rent increase

A claim to a reduction does not follow automatically from this, however. What matters is which reference rate the current rent is based on — if an earlier reduction was never passed on, the claim may be larger; if the rent was last set at a lower rate, smaller or non-existent. The landlord may also set off counterfactors such as inflation, increased maintenance costs or value-enhancing investments. We work through your starting position before you file a reduction request.

How We Support You

We review the lawfulness of your rent increase, calculate the permissible rent and represent you before the conciliation authority. Send us your rent increase form for an initial review.