In September 2025, the Federal Office for Housing (BWO) lowered the mortgage reference interest rate to 1.25 percent. For roughly 2.3 million tenants in Switzerland, this is a significant change. Landlords also need to actively assess this step \u2014 it affects not only rent adjustments, but also the valuation of investment properties.<\/p>\n\n\n
The mortgage reference interest rate is set quarterly by the BWO based on the average interest rate of domestic mortgage claims across all banks. It is the key figure for the legally prescribed rent adjustment mechanism in Switzerland: when the reference rate rises, landlords may charge higher rents \u2014 when it falls, tenants are entitled to a reduction.<\/p>\n\n\n
Tenants do not have an automatic right to a reduction. They must actively assert the reduction with the landlord in writing, generally as of the next ordinary termination date. What matters is the reference interest rate that applied at the last rent-setting \u2014 not the current one. So anyone who has lived in the same apartment at the same rent for years may, depending on their starting position, be entitled to a noticeable reduction.<\/p>\n\n\n
The reduction in the reference interest rate lowers rental income \u2014 provided tenants assert their claim. Landlords should not treat this step as a loss, but as an occasion to review their tenancies thoroughly: are inflation adjustments correctly recorded? Are ancillary costs billed transparently? Have any value-preserving investments been properly documented for rent purposes?<\/p>\n\n\n
Falling rents mathematically affect the income value of an investment property. Anyone currently selling or having a multi-family building valued should factor expected rent adjustments into the valuation. A current, objectified market analysis is the basis for any serious sale.<\/p>\n\n\n