New rent calculations required

Friday 19 August 2011, 16:58 clock
While lower interest rates in Switzerland, which persist at a high level of rents: The rents for the relevant reference rate since December 2010 is unchanged at 2.75 percent. The tenant association is now insisting on a change in the method of calculation.
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Image facade of an apartment rental building.
The tenant association is the calculation of rents unfair. keystone

The claim is based on the recent intervention by the Swiss National Bank to weaken the strong Swiss franc. Therefore expects a further, extended period of low interest rates. May also directly benefit homeowners, which may occur during the renegotiation of mortgages with lower interest rates.

The Swiss Tenants' and Tenants Association (SMV), it is therefore all the more troubling that the lease ends, "are systematically disadvantaged" by the calculation of the reference rate for many years as he informed.

"The new round of rate cuts to make a quick change in calculation method even more urgent." SMV, calls on Federal Johann Schneider-Ammann, change the method of calculation toward a mathematical rounding.



Schneider-Ammann decides in the fall

This requirement means the SMV enters uncharted territory. In early summer, led by the Federal Housing Office (FHO) through a consultation, whether the computation should continue to follow normal rounding rules. How Cipriano Alvarez, head of legal at FOH, said the consultation was completed.

Proponents and opponents of a change in calculation method were roughly balanced, Alvarez said. Therefore, now more tips and association talks with experts would be held. Whether it finally come to a change in the calculation of the reference interest rate, be open. Federal Johann Schneider-Ammann will make the decision this fall.

However, "the new interest rate environment as a new element to flow into the decision," Alvarez said, given the expected low-interest period.

Complex method

Changing the calculation method of the Bundesrat, to a mathematical curve, then the reference rate for the next future mathematically quarter percentage point up or down, continued Alvarez.

Since September 2010, the reference interest rate for rent at 2.75 percent, while the average interest rate for a mortgage at 2.54 percent in Switzerland in late March.

The reason for the difference between the average interest rate of the mortgage and the reference rate is the value of 3.43 percent, which was calculated at the system's introduction in September 2008 for the average mortgage rates.

Only when the mortgage rates - measured change in these 3.43 percent to 0.25 percent, and the reference interest rate is adjusted. That is, only when the average interest rate would fall from 2.54 to 2.43 percent today, there would be a reduction in the reference rate. The same applies for a raise.

Since 2008, when the financial crisis broke out at the same time, the rate fell from 3.5 to 2.75 percent. On 1 September 2011 will be published next to the reference rate.

A change in the benchmark interest rate by a quarter percentage point affects approximately 2.91 percent on the rent. However, a landlord can deduct, according to the homeowners' association, a portion of inflation and higher maintenance and operating costs.