The bliss or burden of letting

Living within one’s own four walls continues to be desirable in Switzerland. The currently favourable financing climate due to low interest rates, attractive supply thanks to brisk construction activity and a deep-seated belief in real estate values as a long-term means to secure savings are all clearing the way to owner-occupied residential property.

According to the Federal Statistical Office, the proportion of homeowners has thus risen from 28.5 per cent to 38.2 per cent of households (2016) since 1970. If things continue like this, the proverbial “country of tenants”, as Switzerland is considered in comparison with Europe as a whole, will slowly but surely become a phenomenon of the past.

Once a house or apartment is occupied, fully furnished and the garden or balcony is planted, its owners rejoice in their happiness. At least for as long as circumstances remain favourable. A simple unforeseen change of employment to some location further afield, for example, can turn that joy into commuter pain. Real-world experience also shows that a separation, such as can occur even in the best families, rapidly turns the disunited couple’s thoughts to a change of residence.

Emotionally attached

Thus, sooner than one might think, an owner-occupied residential property can turn into property that is rented out to a third party. Such a decision might also rear its head many years down the road: by now, the house has become grossly oversized, the maintenance too costly, and in any case it is unsuitable for elderly people. People moving into a condominium were often previously single occupants of their own houses. Sometimes, the passing away of a loved one can force the decision. And yet, many homeowners remain unwilling to sell: they are still too emotionally attached to a property that they may have occupied for a long time.

So – rent it out! Finding a tenant is rarely problematic, especially when the location, size and asking price are right. And after all, regular rental income going into a bank account also has its appeal. But slipping into the role of landlord overnight is not an easy undertaking. It entails dealing with all kinds of questions: contract details and other legal issues, administration, financial and tax aspects. Ancillary costs must be charged according to exact stipulations: tenancy law is inherently complicated and riddled with pitfalls. The effort involved should not be underestimated.

A condominium landlord is responsible for everything within his apartment unit, as well as being the point of contact for the tenant. The condominium owners’ association manages only the property’s shared systems and facilities, not the co-owners’ actual Apartments.

An open-ended agreement may be terminated by either contracting party on the next possible termination date, subject to observance of contractual or statutory periods of notice. Limited-duration agreements terminate on expiry of the agreed term, unless they are renewed.

As a rule, a rent security deposit is agreed as part of the lease, to be paid into an escrow account. This deposit serves the landlord as security for non-payment of rent and/or damage to the rented property. For apartments, the deposit is limited by law to three months’ rent.

There are four variants for settling ancillary costs: 

• Payment on account: the tenant pays the landlord a monthly amount in advance. At the end of the accounting period, the landlord calculates an annual statement of account with a comparison of the actual costs incurred.
• Lump sum payment: ancillary costs may be defined as a fixed amount (flat rate) in the lease agreement, in which case the tenant does not receive an annual statement of account.
• Gross rent: this completely dispenses with separation of ancillary costs and the rent compensates all benefits provided by the landlord.
• Direct payments to third parties: costs not included in the net rent are liable for payment by the tenant, who is then responsible for purchasing fuel, for example. This system is frequently used in the rental of single-occupancy dwellings.

Source: Swiss landlords association (HEV Schweiz)

Where do most problems occur?

Ambiguities regarding maintenance and structural changes are regular causes of conflict. In any case, it makes sense for tenants and landlords to talk to each other: good communication saves trouble on both sides.

What must tenants be aware of?

The tenant owes punctual payment of rent and ancillary costs and must take care of the rented property. In a single-occupancy dwelling, he is the sole tenant and bears all ancillary costs himself. House and garden are more work than a rented apartment.