"The rent price initiative is an ineffective bureaucracy program against housing construction," says National Councillor Gregor Rutz, President of HEV Schweiz. "It does not provide a single additional dwelling, discourages investment, and makes construction and renovation even less attractive. Those who want lower rents must combat the housing shortage with more housing. This requires fewer regulations and faster approval processes. Anything else is smoke and mirrors."
The rent price initiative seeks to have the returns on rental properties regularly checked by the state. In practice, this means a new gigantic control apparatus for the verification of around 2.4 million tenancy agreements. The state would have to continuously monitor purchase prices or construction and land costs, investments, financing, mortgage interest rates, renovations, maintenance and operational expenses of each rental property. Even seemingly identical dwellings can significantly differ in costs, depending on purchase price and maintenance condition. With older buildings, acquisition costs are often missing. For buildings over 30 years old, the local and neighbourhood market levels of rents are decisive. State rent control would have to capture, assess, and constantly update all these differences.
"Switzerland already has strong tenant protection," says Markus Meier, Director of HEV Schweiz:
- In case of hardship or significantly higher initial rent compared to the
previous tenant, the initial rent can be contested.
- If the reference interest rate drops, a rent reduction can be requested. Moreover, every rent increase
- for example, in the case of value-adding investments - can be contested. Tenants are notified of
these rights of contestation with an official form.
- The competent conciliation authority consists equally of tenant and landlord representatives.
- The contestation procedure is free of charge for the parties.
The initiative replaces this proven system with a comprehensive state control of millions of tenancies. It is costly, slow, and ultimately counterproductive. The tenants' association bases its demands on its own, highly controversial commissioned study. This calculates a theoretical rent but does not show whether a rent is actually unlawful under current law. Rents are influenced not only by the reference interest rate but also by maintenance, operating costs, inflation, investments, renovations, location, and quality.
The problem in the housing market is the insufficient supply of dwellings. More housing means more choices for the population. More choices create more competition for housing offers and generate pressure on initial rents. Automatic rent controls do not create housing. They mean more bureaucracy at the taxpayers' expense. Investors are deterred by legal uncertainty, urgently needed housing construction is further slowed – and the housing shortage is exacerbated.
HEV Schweiz calls for real, effective solutions. Only if more dwellings are created will supply and demand function with the desired competitive pressure on the offers.