Rent is unfair if it is determined on the basis of inadmissible criteria or on the basis of the incorrect application of the relevant criteria. Rent may become unfair if the basis of calculation changes over time.
Unfair rent entitles the tenant to demand a rent reduction (Art. 270a CO), to challenge the initial rent (Art. 270 CO, Art. 270d CO) or to challenge a rent increase by the landlord (Art. 270b CO).
System of criteria of unfairness
The law provides for various criteria to check rent for unfairness, some of which are in conflict with each other. To check the unfairness of rent, a distinction is made between relative and absolute adjustment criteria. Relative and absolute criteria cannot be applied at the same time. If one party invokes an absolute criterion, the other party can cite relative criteria as a counter-argument. The relationship between the criteria is complex.
Absolute criteria
Yield – Cost rent
The return on the rental property is used to assess whether the rent is permissible or unfair. The net yield (art. 269 CO) and the gross yield (art. 269a lit. c CO) are handled differently.
Local and neighborhood standards
On the basis of local and neighborhood custom (comparative rent; Art. 269a lit. a CO), it can be assessed whether the rent corresponds to the rent for comparable rental properties in a certain area.
Relationship of the absolute criteria to each other
The absolute adjustment criteria cannot be cumulated. They are mutually exclusive.
It follows from the legal system that the principle of cost rent (gross or net yield) has priority. In the case of older buildings, which are more than 30 years old at the beginning of the lease or were purchased more than 30 years before the beginning of the lease, the comparative rent is given priority, since the investment costs, which are decisive for the calculation of the cost rent, can often no longer be proven (BGE 144 III 514; BGE 139 III 13, E.3.1.2).
Relative criteria
The relative calculation method is based on the previous rent and examines whether and how the relative adjustment criteria have changed since the last rent adjustment.
Additional services of the Landlord – Value-enhancing Investment
If an investment by the landlord in the rental property creates added value or if the landlord provides additional services in another way (art. 269a lit. b CO), an increase in the rent or no reduction in the rent may be justified.
Increase in costs
Changes in the landlord’s costs for the financing, maintenance and operation of the rental property as well as fees and charges may be relevant for the calculation of a rent adjustment (art. 269a lit. b CO).
Inflation adjustment
The inflation or the inflation adjustment on the invested equity (art. 269a lit. e CO) can provide grounds for adapting the rent.
Cumulation of relative criteria
According to the practice of the Federal Supreme Court, the relative adjustment criteria may be cumulated. In the literature, the cumulation is criticised because increases in mortgage interest rates and maintenance and operating costs are already taken into account in the national consumer price index.
Exceptions
The provisions on unfair rent are not applicable to:
- luxurious flats and single-family houses with at least six rooms for living
- holiday homes rented for a maximum of three months
- rental properties that are neither residential nor commercial premises
- residential premises whose provision was subsidised by the public authorities and whose rent is controlled by the authorities.
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