A Stable Reference Interest Rate for Renters: Good News for Existing Tenants, but Challenging for Newcomers

The stability of the reference interest rate used to determine rent prices in June is good news for existing tenants, as it means that landlords will not have the power to increase rent. However, those looking to move may still face challenges with housing costs, especially in areas like Geneva where rent regulations are extensive but affordability remains an issue.

Despite this stability, adjustments can still be made retrospectively if contracts are based on a higher reference interest rate level. Forecasting future changes in the reference interest rate is challenging, but it is likely to remain stable for the rest of the year and beyond. Factors influencing the reference interest rate include the average interest rate of domestic mortgage loans, which change slowly over time.

While existing tenants may benefit from this stability, new renters may struggle to find affordable housing. As long as population growth continues and new housing is not being built at a sufficient rate, high housing costs will likely remain an issue for tenants in Switzerland.