Current rules governing rent setting are considered complex and, in some cases, difficult to understand. For this reason, the Federal Council decided in September to propose an indirect counterproposal to the Rent Initiative. This counterproposal is intended to simplify protections against abusive rents while simultaneously facilitating investment in housing construction.
At the heart of these considerations is a new model in which initial rents are determined based on statistical benchmarks. During the term of a lease, rents could be indexed to inflation. This would at least partially replace the current linkage to the mortgage reference rate.
For property owners and real estate investors, this would represent a far-reaching systemic change. The calculation of future rental income, property valuations, and the economic viability of renovations could be affected.
The Swiss Real Estate Industry Association (SVIT) is generally open to modernization. However, it calls for market-based comparative rents, full indexation, and adequate protection for investments in new construction and renovations. It takes a critical view of additional interventions, such as waiting periods for rent increases following a change in ownership.
Significant opposition comes from the Tenants’ Association, which fears that statistically based comparative rents could lead to a gradual increase in rent levels. In mid-October, the association submitted a petition with more than 100,000 signatures opposing the planned counterproposal.
Much is at stake for the real estate industry. A new rent model could simplify long-term revenue planning, but at the same time create new uncertainties during the transition. The calculation of comparative rents, the treatment of existing leases, and the rules for value-adding investments will be decisive.
These are still political proposals. The Federal Council plans to hold a public consultation in the first half of 2027. Until then, the existing rent regulations will remain unchanged.
This discussion is likely to become one of the most important real estate policy issues in the coming years. At the heart of the matter is the question of how tenant protection, investment security, and the creation of additional housing can be reconciled.
