Landlord renovate, tenant pay
After a building renovation, rent usually skyrockets. It is difficult for tenants to determine whether the new rent is reasonable. By Jürg Keim, lic. iur., lawyer and editor at the Beobachter Advisory Center.
Rents are continuing to rise. This cost spiral is reflected not only in new buildings, but also in renovated old apartments. And the need for renovation is enormous: around 1.5 million buildings in Switzerland are in urgent need of an overhaul. As a general rule, as soon as the landlord renovates and thereby increases the value of the property, he may increase the rent to the extent of the increase in value. However, measures purely aimed at maintaining the value of the property do not entitle the landlord to increase the rent.
In practice, however, this distinction is not easy to make. Only in the case of extensive renovations - i.e. when several parts of the building are renovated and the balcony is enlarged - does tenancy law allow a flat rate of 50 to 70 percent of the total investment to be passed on as value-enhancing. The longer maintenance work has been postponed, the lower the corresponding percentage is to be set. It is more difficult if only individual parts of the building are renewed. In this case, the percentage that can be passed on is generally calculated on the basis of the difference between the cost of the new equipment and the inflation-adjusted cost of the original equipment.
Check the rent increase
The following criteria must be taken into account:
Example A: Amortization of the facility: This is the successive repayment of the invested capital over a certain period of time. It results from the expected life expectancy of an asset.
Example B: Interest on investments: Interest is to be paid on the capital actually invested. The appropriate interest rate is taken to be the interest rate that is half a percent above the reference interest rate for mortgages. As the interest-bearing capital decreases annually due to amortization, interest is paid on half of the capital over the full amortization period.
Example C: Future maintenance costs: Future maintenance is calculated as a percentage of the investment costs.
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Book tip
Tenancy law: Moving, costs, termination - everything tenants need to know
Numerous examples, tips and sample letters help - even in tricky cases. 256 pages, Fr. 34.- , ISBN 978 3 85569 429 7, Beobachter-Buchverlag.Net-Metrix Audit, February first interactive women's magazine in the world44 million unique clients worldwidecomScore, November 2010


