Switzerland Rental Laws: Pro-landlord, Neutral or Pro-tenant?

Switzerland's landlord and tenant laws are judged by the Global Property Guide to be slightly Pro-Tenant between landlord and tenant. Switzerland aims for legal fairness and market balance, but with a protective framework to shield tenants from abuse or hardship, especially in cities where housing is tight.

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

The amount of the initial rent can be freely agreed upon between the landlord and the tenant.

In some cantons, landlords are required to include a form informing tenants of their right to challenge the initial rent if it is unreasonably high.

Apart from challenging the initial rent, the tenant has the possibility to challenge the rent as unfair during the lease. Rents are considered unfair if they permit the landlord to derive excessive income from the leased property or if they yield a clearly excessive income. Swiss courts consider an income excessive once the net return exceeds half a percent of the interest rate for the first mortgage. In this context, it is quite common to request a rent reduction as soon as the reference interest rate falls. An income is considered clearly excessive if it substantially exceeds the benchmark of an earning rate calculated on the basis of standard rents for similar property in the locality or district.

Provided several formal requirements are met, the rent for a tenancy agreed for an indefinite period can be increased by the landlord at any time with effect at the next termination date. However, if the new rent is significantly higher than the old rent, the rent increase runs the risk of being considered abusive.

Security Deposit

The landlord can ask for rental security. For residential leases, the requested security shall not exceed three months' rent. The landlord is obliged to deposit the security in a savings account or in a deposit account in the tenant's name.

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

Leases may be concluded for a limited or indefinite duration. While a lease for a limited duration expires without any further notice on expiry of the agreed period of time, the termination of a lease with indefinite duration needs to be observed with legally prescribed notice periods and termination dates:

• Three months' notice expiring on a date fixed by local custom or, in the absence of such custom, at the end of a three-month period of the lease for residential premises;
• Two weeks' notice expiring at the end of a one-month period of the lease for furnished rooms, separately rented carports, or similar facilities;
• Six months' notice expiring on a date fixed by local custom or, in the absence of such custom, at the end of a three-month period of the lease for business premises;
• Three days' notice expiring at any time for chattels.

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

The law provides specific reasons justifying the termination of the contract by special periods of notice, or even with immediate effect.

On the side of the landlord, e.g., if:

• The tenant is in arrears with payment of rents or accessory charges after having been served notice by the landlord
• The tenant neglects his duty of taking care of the object in such a way that a continuation of the tenancy becomes unconscionable for the landlord
• Upon a change in ownership, the new owner claims an urgent need of own use of the let object
• The tenant becomes bankrupt and can't provide a security payment within an appropriate time limit

On the side of the tenant, e.g., if:

• The rented property has a serious defect that is not taken care of by the landlord within a reasonable period of time
• In the event of the death of the tenant ,his heirs can extraordinary terminate the contract

In Switzerland, landlords can generally end a rental agreement without needing a specific reason. However, they must follow the legally required notice periods—or those outlined in the contract—and issue the termination using an official form.

Tenants are entitled to know why their lease is being ended and can challenge the termination if it appears to violate the principle of good faith. For example, a lease termination might be considered unfair if it comes after the tenant requested a rent reduction or necessary repairs, or due to changes in their family situation. If tenants wish to contest the termination, they have 30 days to bring the matter to their local conciliation authority.

Even when a termination is legally valid, tenants may still be able to extend their lease under certain hardship conditions. This could apply if they’re facing serious financial difficulties, health problems, or if housing options on the market are severely limited.

How effective is the Swiss legal system?

The legislators' intention was to encourage extra-judicial conflict resolution. Therefore, some requests must be submitted to the landlord prior to filing the lawsuit.

Cantonal conciliation authorities are available to mediate when tenants and landlords cannot settle their disputes.

Legislation

The most important regulations can be found in Art. 253 to Art. 274 g Swiss Code of Obligations as well as in the Ordinance on the rental and letting of residential and commercial properties. In addition, there are various other relevant regulations.

Brief History: Recent changes in Swiss landlord and tenant law

In an international comparison, Swiss tenancy law can be considered tenant-friendly. This might be a reason why Switzerland is known as the land of tenants; compared to other Western European countries, Switzerland ranks amongst those countries with the highest proportion of tenants. Due to falling mortgage rates, this picture has slightly changed during the past years, while today the rise in mortgage interest rates begins to redraw the picture. Therefore, tenancy law features prominently on many politicians' agendas. The focus of political interaction lies on rent regulation in particular. However, since the entire revision of tenancy law in 1990, no attempts for another revision have been successful. In 2010, the last reform request was rejected by the national council.