Switzerland moves to make rental contracts more transparent

In a bid to cut down on excessive rents, rental contracts in Switzerland will be made more transparent from October 1. The Federal Council hopes the reforms will give tenants more confidence to challenge unfair rents, but critics have accused the government of watering down its own plans.

Rental contract changes in Switzerland explained

From October 1, new rules around rental contracts will come into force in Switzerland, the Federal Council has confirmed. The rules are designed to “ensure greater transparency in the setting of rents... [enabling] tenants to better assess the initial rent and whether there are grounds for contesting it,” the government wrote.

Under the new rules, landlords must clearly state the inflation rate and reference interest rate used when calculating the previous tenants' rent. This should allow tenants to asses and contest unfair costs when renting a house or apartment, such as in cases where inflation or the reference interest rate fell since the last tenancy was agreed.

However, the change will only apply in cantons where these rental forms are required, namely Zurich, Geneva, Basel-Stadt, Fribourg, Lucerne, Zug and some towns in Neuchâtel and Vaud. All other cantons will be allowed to make the same forms mandatory, but only if they choose to.

Crucially, if the old forms are still used in rental agreements made after October 1, 2025, “the rental agreement could be considered invalid with regard to the amount of the initial rent,” the Federal Council warned. 

Critics accuse Swiss government of watering down reforms

Though the government hopes the plan will make it easier for new tenants to appeal high rental costs, critics have argued the reforms are highly watered down. The proposal was originally part of a four-point plan designed to reduce rents, but the other three proposals to stagger rent increases, make inflation-related rises more precise and give tenants more freedom to appeal, were all defeated during consultation.

However, the government also confirmed that the Federal Housing Office has been ordered to redesign the system used to determine what landlords can charge in rent. They argued that the current system, created in the 1980s, is no longer fit for purpose.

Illegal rents rife in Swiss cities, argues Tenants' Association

The news comes as rental costs in Switzerland continue to rise. The latest study from the Zürcher Kantonalbank revealed that thanks to ongoing shortages, slow housing construction and high demand, asking rents in places like Canton Zurich have risen by over 20 percent since 2020.

Though the claim is disputed, in early March the Zurich Tenants’ Association argued that illegal rents are common in Swiss cities. “In the city of Zurich alone, we estimate that there are several hundred tenancies that constitute the criminal offence of usury," legal head Larissa Steiner told Tages-Anzeiger.

She added that in cities especially, expats are some of the most common victims of illegal rents. Those who take up jobs in Switzerland and need a local address to register for a residence permit often end up paying too much for sub-par accommodation. This is made worse by the fact that Swiss cities have both an acute housing shortage and some of the highest rental costs in the world, making it difficult for newcomers to spot the line when high rents become illegal.