As a tenant, you can request a rent reduction, particularly when the reference mortgage rate decreases. The reference interest rate has been established since September 2008 to adjust rent amounts based on changes in the mortgage rate (it is based on the average mortgage rate of banks and rounded to the nearest quarter percent; Article 12a of the Ordinance on Residential and Commercial Leases, hereinafter referred to as OBLF).
Since March 3, 2020, this rate is set at 1.25% and can be adjusted four times a year (every quarter). You can always check the reference interest rate on the federal website via the following link:
According to Article 13, paragraphs 1 and 4 OBLF, for every decrease of ¼%, there is a right to a proportional rent reduction as follows:
An increase in the mortgage rate by ¼% generally entitles the landlord to a maximum rent increase of:
2% when mortgage rates exceed 6%;
2.5% when mortgage rates are between 5% and 6%;
3% when mortgage rates are below 5%.
If there is a decrease in the mortgage rate, the rent must be reduced proportionally unless the resulting savings for the landlord are offset by increased costs.
When adjusting the rent following a change in the mortgage rate, it is also necessary to consider if and to what extent previous variations have led to a change in rent.
Examples:
If the reference mortgage rate decreases from 2.25% to 2%, the proportional rent reduction will not be 3% but rather 2.91% (calculation: 3/103% = 2.91%).
If the reference mortgage rate decreases from 3.5% to 1.75%, the proportional rent reduction will be 17.35% (calculation: 21/121% = 17.35%).
However, if the reference mortgage rate decreases from 2.25% to 2%, then increases to 3%, and then decreases again to 2.25%, and if no prior rent decrease or increase was applied, the rent amount remains unchanged.
According to Article 270a, paragraph 1 of the Code of Obligations, the tenant may dispute the amount of the rent and request a reduction for the next notice period. This is an imperative right, meaning that the landlord cannot include a contractual clause where the tenant waives the right to request a rent reduction in advance (ATF 125 III 358). To do this, the tenant must submit their request in writing to the landlord for the next notice period.
This request must reach the landlord before the start of the notice period. If the tenant does not adhere to the notice period, the effects of the rent reduction are postponed to the next contractual period (Article 266a, paragraph 2 of the Code of Obligations by analogy).
The landlord has thirty days to respond. If the landlord does not respond or rejects the request totally or partially, the tenant can approach the conciliation authority within thirty days.
If the tenant does not approach the judge within the legal time frame, the right to a rent reduction is not "expired," but the tenant will need to restart the procedure, and the reduction can only be granted for a future contractual term. The tenant cannot request a retroactive rent reduction.
Would you like more information on rent reductions due to a decrease in the reference mortgage rate, the procedure, or the calculation method? Our team of professionals will be pleased to welcome you at our office located at rue du Valentin 1, 1004 Lausanne, to provide you with advice.
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