A new law to cap rent costs in the city of Basel has come under fire from landlords and property developers, who claim that it will lead to derelict or even unsafe housing. Meanwhile, supporters of the law argue it will lead to greater protection in rental contracts and will make flats in the city more affordable.

Rent controls designed to reduce threat of increased costs

The initiative "Yes to Real housing protection!" passed the vote in Canton Basel Stadt's latest round of referendums. The law puts all rental apartments under greater price protection, ensures renovations of all types of housing will be subject to approval by the local council (Gemeinde), rent surcharges will be capped and demolition of living space can only be approved if 20 percent more space is created by the renovation.

The laws were designed to make sure tenants weren't priced out of their apartments. The concept of renovating apartments and then charging higher rents is not new in Switzerland; recently, tenants in Zurich were shocked to learn that their rent had increased by 800 Swiss francs a month after a renovation.

In Basel, a joint statement by the political parties in favour of the law hailed it as a “good day for tenants in Basel.” They made the point that the legislation will only be active during housing shortages, which is defined as a vacancy rate of 1,5 percent or lower. Currently, the rate in Basel is 1,1 percent.

The vote came about after reports that pensioners were being “uprooted” by investment plans for housing in the city, backed by Swiss banks and even pension funds. Current protection through the Housing Protection Act was seen as too landlord-friendly by activists, who managed to carry new legislation over the line with 53 percent of the vote in the referendum in November.

Landlords say the law will prevent important renovations

In response, landlords in the city have criticised the plans as “extreme.” In essence, the housing market in the city is now state-regulated, according to the President of the Home Owners Association (HEV) for Basel Stadt, Patricia von Falkenstein. She made the case that the law "has not worked in any city where a rent cap has been introduced," highlighting a black market that had arisen in Geneva and Berlin where rent caps were introduced and how rents continued to rise as investment in new housing fell.

The association fears that landlords will be put off from doing essential repairs and renovations to older apartments due to the extra bureaucracy. They say that “residential rubble,” not housing protection, is the best way to describe the referendum result.