How do you calculate the right to a rent reduction?

The 3-point orientation

In Switzerland, entitlement to a rent reduction is calculated first on the basis of changes in the mortgage reference interest rate. If this falls by 0.25 percentage points, the net rent is generally reduced by 2.91 percent. However, the landlord may deduct allowable inflation, general cost increases and previous adjustments from this. It is therefore not the gross rent that is decisive, but the correctly adjusted net rent.

The principle: It is not the gross rent that is decisive, but the net rent

When calculating a rent cut, it is usually not about the entire monthly payment, but about the net rent. The service charges are considered separately. Anyone who pays 2,200 francs per month, including 1,950 francs net rent and 250 francs service charges account, generally calculates the reduction to 1,950 francs.

It's a common mistake. Many tenant calculate the percentage reduction in gross rent and are therefore too high. The landlord can then correct or partially reject such a request. It is cleaner to only use the net rent from the start.

The second central point is the starting point. It is not enough just to know the current reference interest rate. The reference interest rate on which the current rent is based is also decisive. This value is often in the rental agreement, in the last rent notice or in an earlier adjustment notice. Without this information, the claim can only be roughly estimated.

Step 1: Determine the previous reference interest rate

The first calculation step is: What is the reference interest rate for the current rent? In the case of new rental contracts, this is often directly included in the contract. In the case of older tenancies, you must check the last formal rent adjustment. It should state on which interest rate, which country index and which cost level the rent is based.

For example, if the current rent is based on a reference interest rate of 1.75 percent and the current reference interest rate is 1.25 percent, there is a stronger claim to cut than with a starting position of 1.50 percent. The larger the difference between the old and current reference interest rate, the higher the potential rent reduction.

The tenants' association shows different reductions for a reduction to a reference interest rate of 1.25 percent: If the current rent is based on 1.50 percent, the result is a reduction of 2.91 percent; at 1.75 percent, it is 5.66 percent. This shows that the correct starting point determines the actual claim.

Step 2: Apply the interest rate change to the net rent

In the second step, the change in the reference mortgage interest rate is transferred to the net rent. The Federal Housing Office explains: If the reference interest rate falls by 0.25 percentage points, the rent will in principle be reduced by 2.91 percent.

A simple example: The net rent is 2,000 francs per month. The previous rent is based on a reference interest rate of 1.50 percent, the current rate is 1.25 percent. In principle, this results in a reduction claim of 2.91 percent. 2,000 francs multiplied by 2.91 percent result in 58.20 francs per month.

The new net rent would therefore be 1,941.80 francs before allowable counterpositions from the landlord were taken into account. This is exactly where the most important practical point lies: These 58.20 francs are not automatically the final claim. They are the first calculation step.

Step 3: Take inflation into account

When calculating, landlords may not only look at the reference interest rate, but may also take inflation into account under certain conditions. This refers to the development of the country index of consumer prices since the last significant rent setting.

In Swiss tenancy law, part of the inflation can be passed on to rent. There is often talk of 40 percent of inflation. This means that if general inflation has risen since the last adjustment, it can partially reduce the reduction requirement.

It is important for tenants: Inflation must not simply be claimed across the board. It must be calculated correctly. The current index level and the current or relevant new index level are decisive. If you want to calculate the claim precisely, you therefore need not only the reference interest rate, but also the index level when the rent was last set.

Step 4: Review general cost increases

In addition to inflation, general cost increases can also be taken into account. This includes, for example, increased maintenance costs, operating costs or other property-related cost developments. These positions may also reduce the subsidy requirement.

The practice differs in part depending on the canton or conciliation authority. The tenants' association expressly points out that landlord can offset inflation and general cost increases against the reduction claim. The Zurich courts also provide a rent calculator for such calculations, which takes into account, among other things, reference interest rates, cost increases and investments.

For tenant, this means that a reduction calculated from the reference interest rate is only the initial value. It is only after deducting admissible counterpositions that it becomes apparent how high the effective rent reduction is. Anyone who does not examine these opposing positions may overestimate the claim too high or too low.

Step 5: Include previous rent adjustments

Another important point is previous rent adjustments. If the rent has already been reduced in the past due to a lower reference interest rate, today's claim may be lower. If, on the other hand, an earlier reduction was never passed on, the claim may be higher.

That is why you should reconstruct the rental history. The original rental agreement, all rent increases, reductions, form notifications and written agreements are relevant. The last contestable rent setting is particularly important because it often forms the starting point for the new calculation.

Anyone who only compares the current rent and the current reference interest rate may be overlooking important intermediate steps. Particularly in the case of long-term leases, the requirements may therefore be greater than the initial estimate suggests. Conversely, previous adjustments may reduce claims.

Calculation example: This is what a rent reduction can look like

Assume that the net rent is 2,000 francs. The previous rent is based on a reference interest rate of 1.50 percent. The current reference interest rate is 1.25 percent. In principle, this results in a reduction of 2.91 percent.

The first calculation step is 2,000 francs × 2.91 percent = 58.20 francs. Without further counterpositions, the new net rent would therefore amount to 1,941.80 francs. If the landlord can now claim allowable inflation and general cost increases of, for example, 20 francs per month, the effective reduction is reduced to 38.20 francs.

The new net rent would then be 1,961.80 francs. This example shows why the rent calculation is more than a simple percentage calculation. The claim is based on several factors, which are offset against each other.

What information do you need for a clean calculation?

For a serious calculation, you need several documents. This includes the rental agreement, the current rent composition, previous rent notifications, the last rent increase or decrease, the current reference interest rate, the reference interest rate at that time, the then and current index level, and information on cost increases.

Separating net rent and service charges is particularly important. On payments for heating and service charges are not included in the normal reference interest calculation. Separate garage rentals, ancillary rooms or flat rates should also be carefully examined.

Anyone who does not have this information complete can still submit a request for a reduction. The landlord must always explain their rejection or settlement in a comprehensible manner. However, for a strong position in the conciliation process, it is better to collect the most important documents already.

Online calculator: Helpful but not always final

There are various rent calculators that tenant can use to obtain an initial estimate. Such calculators are helpful because they structure the reference interest rate, inflation and cost increases. The Zurich courts, for example, provide a computer that shows the adjustment based on the reference interest rate and other factors. Associations and comparison portals also offer practical tools.

Nevertheless, computers do not replace a case-by-case review. They work with standard assumptions and cannot always fully cover special contract clauses, previous agreements, indexed rents, subsidized apartments or comprehensive renovations.

A computer is therefore a good starting point. However, for a formal request for a reduction, the result should be compared with the contract documents. For large amounts, a long rental period or a complicated history, advice can be useful.

What can the landlord offset?

The landlord must not invent opposing positions at will. Only factors recognized by tenancy law are permitted. These include in particular inflation, general cost increases, possibly value-adding investments and previous adjustment bases.

Not every claimed increase in costs automatically reduces the claim. The calculation must be comprehensible. If the landlord writes in a lump sum that there is no claim due to cost increases, the tenant should request a detailed calculation or refer the matter to the conciliation authority.

Particularly in the case of major renovations, a distinction must be made: Pure maintenance must not be handed over at will. Value-adding investments, on the other hand, can play a role. The delimitation is often complex and depends on the specific object.

Deadlines: Calculation alone is not enough

Even if the claim exists mathematically, it must be filed in good time. A rent reduction is generally required on the next possible termination date. The request must be received by the landlord before the start of the relevant notice period.

If the landlord refuses, only partially agrees or does not answer within 30 days, the tenant can contact the conciliation authority within a period of time. Anyone who waits too long usually does not lose the claim for good, but postpone the start of the reduction.

That is why the calculation always includes a deadline check. A correctly calculated claim is of little use if the request for a reduction arrives too late and the reduction only takes effect months later.

Common mistakes when calculating

The first mistake is the calculation based on gross rent instead of net rent. The second mistake is the assumption that any reduction in the reference interest rate automatically triggers the full amount. The third mistake is ignoring inflation and cost increases.

Another mistake is the failure to check the baseline. Anyone who does not know which reference interest rate the current rent is based on can hardly calculate the claim correctly. It is therefore worthwhile to take a closer look at old rent advertisements, especially for older tenancies.

Unauthorized rent cuts are also dangerous. Even if the calculation claim appears clear, the previous rent should continue to be paid until an agreement or decision is reached. Otherwise, there is a risk of late payment with possible consequences under tenancy law.

Conclusion: The claim is based on several factors

The answer to the question How do you calculate the entitlement to a rent reduction? is: First, you check which reference interest rate the current rent is based on. You then compare this with the current reference interest rate and calculate the percentage reduction on the net rent. A reduction of 0.25 percentage points results in a reduction of 2.91 percent.

Appropriate counterpositions are then examined: inflation, general cost increases, previous adjustments and special contract conditions. This is the only way to effectively rent reduction. If you only look at the reference interest rate, you often calculate too easily.

The following applies to tenant: collect documents, determine the net rent, check the initial reference interest rate, calculate the reduction, take counterpositions into account and submit the request for reduction in due time. In this way, the claim can be realistically assessed and enforced cleanly.

Glossary for calculating rent reduction

Net rent: Rent excluding service charges. It is the central basis for calculating rent reduction.

Reference interest rate: Official mortgage reference interest rate, which forms an important basis for rent adjustments.

Inflation: Development of the national consumer price index. Some of this may reduce the subsidence requirement.

Cost increases: General cost developments by landlords, which can be offset against the reduction claim under certain conditions.

Request for reduction: Written request from the tenants to the landlord to reduce the rent to the next possible termination date.