The increase in the Swiss consumer price index is likely to have significant repercussions on rents in Switzerland. In this article, we will examine the main reasons for this increase and how it can affect landlords and tenants.
One of the main reasons for the rent increase is the inflation of construction prices. According to the latest data from the Federal Statistical Office, the Geneva construction price index has increased by 6.1% in one year. This price increase is mainly due to the rising costs of construction materials, particularly electrical installations, which have seen a 19.7% increase in Geneva.
This inflation in construction prices results in increased operating costs for buildings. Landlords will sooner or later pass these increases on to rents in order to maintain profitability. Additionally, the rising costs of constructing new properties also lead to higher rents for these new accommodations.
Another reason that can lead to rent increases is the new energy law in Geneva. This regulation requires landlords to renovate old buildings to meet certain energy standards. While this may result in energy savings for tenants after the renovations, the costs of these works often translate into higher rents.
Rising mortgage rates are also an important factor to consider. Mortgage interest rates for new deals have already increased, and this increase generally affects the reference mortgage rate used to calculate rents. If this rate goes up, landlords will be able to increase rents to offset the higher costs of mortgage loans.
Furthermore, the increase in the Swiss consumer price index also impacts rents. According to current tenancy law, a portion of this increase can be passed on to the rent, depending on the indexing formula used in the lease agreement. Indexed commercial leases are particularly likely to be adjusted based on the Swiss consumer price index.
In addition to these factors, building charges and maintenance fees are also increasing due to higher service provider rates. These increases in operating costs will eventually be passed on to rents, contributing to an overall cost increase for tenants.
It is important to note that each lease agreement is unique, and specific rent increases must be calculated individually for each contract. However, it is foreseeable that the combination of these different factors will result in a general increase in rents in the near future.
Landlords will be compelled to raise rents to cope with these economic pressures, while tenants should expect potential rent adjustments based on their type of lease and the prevailing legal provisions.
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