Switzerland: Landlord and Tenant

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Swiss law is pro-tenant

Thanks to Langner Stieger Trachsel & Partners

Switzerland is a land of tenants (70% of the population) and therefore the law in Switzerland is pro-tenant.

Rents: Can landlord and tenant freely agree rents in Switzerland?

The initial rent amount of rent can be freely agreed between the land-lord and tenant. However, within 30 days after the takeover of the rented property the tenant can appeal against the rent as abusive, if he was forced into agreeing to the rent due to serious personal or familial difficulties, due to the conditions of the local residential property and business premises market, or if the new initial rent is significantly higher for the same rented property than the old rent. This happens very rarely, because the judge is supposed to intervene only in extre-mis.

For a tenancy which has been arranged for an indefinite period (see be-low), several formal prerequisites have to be met by the landlord in or-der for a rent increase to be permitted. Besides these formalities, there are only a few legally admissible reasons for increasing the rent. It is easier to increase the rent in case of a fixed term contract which has come to an end, but still, if the new rent is significantly higher than the old rent, it runs the risk of being seen as abusive.

A progressive rent clause is possible, but only for tenancies that have been signed for a minimum of five years. The rent amount must then be adjusted in line with the Swiss Consumer Price Index. If the rental agreement is fixed for at least three years rents can also be agreed to increase annually by a fixed formula.

Security Deposit

The security deposit must not exceed the equivalent of three monthly rent payments. Security deposits are usual. The landlord must lodge the deposit with a bank in the tenant’s name.

What rights do landlords and tenants have in Switzerland, especially as to duration of contract, and eviction?

Swiss law recognizes two kinds of residential tenancy – a contract for a specific term, and an indefinite period contract.

Specific term contracts. If a specific time frame is set, the contract expires without any need for notice of termination at the end of the period set. If the parties continue the contract beyond expiry, the tenancy becomes a contract for indefinite duration. Perennial tenancy agreements are not allowed, and are automatically converted into agreements of indefinite duration.

While it is not illegal to repeatedly renew expired tenancies, such a chain of agreements may be interpreted as an agreement unlimited in time. A contract with provision for automatic renewal after a year, for instance, would be interpreted as an indefinite duration tenancy.

Indefinite duration contracts. A tenancy is considered a contract of indefinite duration, unless otherwise agreed on.

In the case of an indefinite duration tenancy, a termination notice must be given by one of the parties. The law stipulates minimum terms:

Three months for residential properties;

Two weeks for furnished rooms, separately rented carports or similar facilities;

Six months for business premises;

Three months for other realties and chattels.

The following paragraphs relating to cancellation apply both to specific term contracts, and to indefinite duration contracts:

In certain cases the law entitles both the landlords and the tenants to cancel the tenancy before its regular expiration date or without respect-ing the terms of cancellation, e.g., if:

The tenant has fallen behind on the payment of the rent or the additional charges.

After taking over the rented property, the tenants neglect their duty to look after it, so that a continuation of the tenancy ceases to be acceptable.

If the rented property is sold, the subsequent owners can effect an extraordinary termination of the tenancy under certain condi-tions.

There are crucial reasons which render the performance of the contract unreasonable for the landlord.

The tenant goes bankrupt and therefore cannot provide a security payment for future rent payments within a reasonable period of time.

The tenant can effect an extraordinary termination of the tenancy in the following cases:

The rented property has a serious defect which is not taken care of by the landlord within a reasonable period of time.

The tenant gives the rented property back early and proposes a new, reasonable tenant prepared to take over the contract under the previous conditions.

There are crucial reasons which render the performance of the contract unreasonable for the tenant.

In the case of the death of a tenant, his/her heirs can effect an extraordinary termination of the tenancy.

The tenant can contest the landlord’s termination notice as unlawful (e.g., if the termination violates the principle of ‘good faith’, for instance by being aimed at exerting pressure to force the tenant to buy the apartment). This however only happens very rarely. He can also ask the court to extend the tenancy for reasons of hardship. This extension may not be for more than four years for living-tenancies and six years for business-premises.

The tenant can sub-let with the consent of the landlord, but the landlord must not unreasonably refuse.

How effective is the Swiss legal system?

The government has established a free-of-charge arbitration board, which is the obligatory first port-of-call for any claim. The conciliation proceeding is simple and quick, there being no elaborate formal re-quirements.

If no agreement can be obtained, or if the decision is not accepted, the party which insists on its demand has 30 days to file a lawsuit. If the issue is taken before a judge, it can take one to two years before a de-cision is finally handed down.

Legislation

The most important regulations can be found in Art. 253 to Art. 274 g of the Swiss Code of Obligations, as well as in the Order on the Rent of Residential Properties and Business Premises. In addition, there are various other relevant regulations.

Brief History: Recent changes in Swiss landlord and tenant law

The codification of the tenancy law took place in 1881, together with the ratification of the Swiss Code of Obligations. Switzerland has a long tradition of emergency based Federal Acts restraining rents and control-ling the termination of tenancy contracts. Full freedom of contract only existed between 1925-1936 and 1970-1972. In 1972 the Federal Act Against Abuses in the Tenancy Market was enacted, increasing the ten-ant’s protection against unfair termination of contract and excessive rent increases. This Federal Act was integrated into the SCO in 1990 when the tenancy law was entirely revised.

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