Calculating a rent increase: reference interest rate, inflation, renovation and change of tenant, with form and deadlines
Private landlords rarely increase the rent, and when they do, they often get it wrong: a letter instead of the official form, a statement of reasons that cannot be checked by calculation, a date that does not fit the notice period. Each of these mistakes makes the increase void, and the tenant continues to pay the old rent, even if they never disputed the increase. This guide explains the rules of the Code of Obligations (CO) and of the Ordinance on the Lease of Residential and Commercial Property (VMWG) for landlords: which grounds support an increase, how the reference interest rate, inflation, general cost increases and value-enhancing investments are calculated, what is different when the tenant changes, how the form is filled in and delivered, and what happens if the tenant challenges it. With worked examples from the Baselbiet and the reference interest rate as of September 2026.
In brief
- Four grounds support an increase during an ongoing tenancy: a higher reference interest rate, inflation, general cost increases and value-enhancing investments; the market rent alone is not enough
- The mortgage reference interest rate has been 1.25 % since September 2025 and was confirmed on 2 September 2026; only a rise to 1.50 % will again allow a 3 % surcharge on the net rent, provided the current rent is based on 1.25 %
- Inflation may be passed on at 40 % of the rise in the Swiss consumer price index, general cost increases as a flat rate of around 0.5 % per year depending on cantonal practice
- For comprehensive renovations, 50 to 70 % of the costs count as value-enhancing and may be passed on to the rent with interest, amortisation and maintenance
- Notice only on the form approved by the canton, with reasons, at least ten days before the notice period begins, with effect from a termination date; the tenant can challenge the increase before the conciliation authority within 30 days
The four grounds and what does not count
During an ongoing tenancy the rent is protected: it may only be adjusted if the landlord’s costs have changed or the landlord has invested in the flat. The fact that the neighbours pay more or that the flat is “too cheap” is not enough.
Reference interest rate: the mortgage reference interest rate of the Federal Office for Housing reflects the cost of capital. If it rises, the landlord may increase the rent; if it falls, the tenant can demand a reduction. What counts is the rate on which the current rent is based, not the rate at the time the contract was concluded.
Inflation: the landlord may pass on 40 % of the inflation measured by the Swiss consumer price index since the rent was last set, as compensation for the equity capital invested.
General cost increases: maintenance, fees and insurance are becoming more expensive. The conciliation authorities accept a flat rate, in most regions around 0.5 % per year since the last adjustment, without the landlord having to document every invoice; anyone who wants more must prove it.
Value-enhancing investments: a new kitchen, an additional bathroom, thermal insulation, a lift, balconies. Whatever increases the utility value may be passed on to the rent; pure maintenance, such as a new coat of paint or replacing a faulty heating system with an equivalent one, may not.
Not permitted: adjustment to the market rent, higher mortgage interest charged by the landlord’s own bank regardless of the reference interest rate, a change of owner, an increase in response to the tenant’s complaints. In addition, an increase made in the first few years after a challenge or conciliation proceedings is suspected of being retaliatory, like a retaliatory termination, and is strictly scrutinised.
Reference interest rate: current level and calculation rule
The reference interest rate is published quarterly and rounded to the nearest quarter of a percentage point. It has been 1.25 % since 2 September 2025; on 2 September 2026 the Federal Office for Housing confirmed it unchanged. This is the lowest level since it was introduced.
The calculation rule: with a reference interest rate of up to 5 %, each increase of 0.25 percentage points justifies a 3 % surcharge on the net rent; between 5 and 6 % it is 2.5 %, above that 2 %. Conversely, for a reduction: 0.25 percentage points less give an entitlement to 2.91 % less rent, because the calculation starts from the higher rent.
Example: net rent CHF 1,800, last set on the basis of 1.50 %. The reference interest rate has since fallen to 1.25 %; the tenant can demand CHF 52 less, i.e. CHF 1,748. If the rate one day rises back to 1.50 %, the landlord may increase the rent by 3 %, from CHF 1,748 to CHF 1,800. Important: the landlord may only claim an increase based on the reference interest rate if they also lowered the rent when the rate fell previously, or the tenant waived this; anyone who never passed on the reduction from 1.50 to 1.25 % must offset it first.
Practice in the Baselbiet: many contracts from the years 2008 to 2015 are still based on reference interest rates of 2 to 3 %. Such tenants are, often without knowing it, entitled to reductions of 10 % and more, offset against inflation and cost increases since then. A landlord who wants to increase the rent today should first work out whether the result might actually be a reduction; the conciliation authority will in any case add up all factors since the rent was last set.
Inflation and general cost increases
Both items are calculated from the last time the rent was set, not from the start of the contract, if the rent has been adjusted since then.
Inflation: the relevant index is the Swiss consumer price index of the Federal Statistical Office. The landlord may add 40 % of the rise in the index to the net rent. Example: index at the last rent setting 101.5 points, today 106.6 points, rise of 5.0 %; 40 % of that gives an increase of 2.0 %. On CHF 1,800 that is CHF 36.
General cost increases: a flat rate of around 0.5 % per year, a figure generally accepted by the conciliation authorities in Basel-Stadt and Basel-Landschaft; some regions go up to 1 %. If the rent was set four years ago, that gives around 2 %, i.e. CHF 36 on CHF 1,800. Anyone who can document higher cost increases, for example sharply increased fees, can demand more, but must then present the invoices.
Adding it up: the factors are added together and offset against any claims by the tenant for a reduction. In the example: reduction for the reference interest rate minus 2.91 %, inflation plus 2.0 %, cost increases plus 2.0 %, net plus 1.09 %, i.e. from CHF 1,800 to CHF 1,820. This exact calculation belongs on the form; an increase without traceable figures is set aside in conciliation.
Value-enhancing investments and comprehensive renovation
After a renovation, the landlord may pass on the value-enhancing share of the investment to the rent. How much is value-enhancing depends on whether it is a single measure or a comprehensive overhaul.
Individual measures: the value-enhancing share is determined case by case. A kitchen replacing a 30-year-old one is partly maintenance and partly added value through better appliances and more storage space; 30 to 50 % added value is usual. A new balcony or a lift where there was none before is 100 % value-enhancing.
Comprehensive overhaul: if work by several trades is carried out in one go, a flat 50 to 70 % of the total costs may count as value-enhancing, without individual proof. Energy-related measures count in full as added value, insofar as they go beyond the legal requirements.
Converting to rent: the value-enhancing amount earns interest at the reference interest rate plus 0.5 % on the capital tied up on average, i.e. half of it; added to this are amortisation over the service life and a surcharge for maintenance. Example of a flat in Pratteln: proportionate renovation costs CHF 60,000, of which 60 % value-enhancing, equal to CHF 36,000, service life 25 years. Interest 1.75 % on CHF 18,000 equals CHF 315, amortisation CHF 1,440, maintenance 10 % equals CHF 144, total CHF 1,899 per year or around CHF 158 per month. This increase is independent of the reference interest rate and inflation and can be combined with them.
How to proceed: inform the tenants before the renovation, give an approximate figure for the planned increase, and after completion increase the rent with the final statement and the form. Cantonal subsidies for energy-related renovations reduce the eligible costs. What a renovation means for the value of the house is explained in our guide Property valuation: methods explained simply.
Change of tenant: the initial rent
When the tenant changes, the landlord is freer, but not free. The initial rent may be based on what is customary in the locality and neighbourhood, but the new tenant can challenge it within 30 days of taking over the flat if it has been increased significantly compared with the previous tenant’s rent or if they were forced to sign the contract, for example because of a housing shortage.
Mandatory form: in some cantons, including Zurich, Zug, Lucerne, Fribourg, Vaud, Geneva, Neuchâtel, Nidwalden and Basel-Stadt, the landlord must notify the new tenant of the previous rent on the official form. In the canton of Basel-Landschaft there is no such obligation; it is nevertheless advisable to disclose the previous rent, because a later challenge is then unlikely to succeed.
What justifies an increase on a change of tenant: comparable properties in terms of location, size, finishes and year of construction; a renovation between tenancies; a previous rent that was well below the market because of a long-standing tenant. An increase of more than around 10 % compared with the previous rent is considered significant and must be supported by comparable properties. The conciliation authorities generally require five comparable flats; in practice landlords often fail at this, which regularly leads to reductions in Basel-Stadt and Zurich. How to set the rent for a flat properly is explained in our guide Letting a flat: setting the rent correctly.
Form, deadlines and delivery
When it comes to rent, form is not a formality. If it is missing, the increase is void, even if it would be justified in substance.
- Official form: every canton approves a form for rent changes; in the Baselbiet it is available from the conciliation office for tenancy matters and from the homeowners’ associations. It contains the current and the new rent, the effective date, the reasons and a notice of the right to challenge, with the address of the conciliation authority.
- Statement of reasons: clear and verifiable by calculation: “reference interest rate from 1.25 % to 1.50 %: plus 3 %; inflation CPI from 104.2 to 106.6: plus 0.92 %; general cost increases 2 years: plus 1 %”. If the reasons are missing or only general, the increase can be challenged.
- Date and deadline: the increase takes effect at the earliest on the next termination date, and the form must reach the tenant at least ten days before the notice period begins. With a three-month notice period to the end of March, the form must therefore be with the tenant by 21 December at the latest; early December is safer.
- Delivery: by registered mail, one copy per tenant; for married couples and registered partnerships, to both persons separately, even if only one of them signed the contract. What counts is receipt by the tenant, not the date of dispatch; if a collection period applies, the seventh day after the delivery attempt counts.
- No threats, no termination: the form must not contain any threat of termination. A termination issued together with an increase can be challenged.
After delivery: the tenant has 30 days to challenge the increase before the conciliation authority. If they do, they pay the old rent until the decision; the authority examines all factors since the rent was last set and sets the rent, often by way of a settlement. If they do not challenge it, the new rent applies from the date stated. An increase is not a termination; anyone who wants to get rid of a tenant because of a dispute should read the guide Termination for personal use and be under no illusions. For landlords who would rather not put themselves through all this, we take care of the calculation, the form and the correspondence; this also includes the ancillary costs statement.
Questions on this topic.
How much can I increase the rent if the reference interest rate rises?
By 3 % of the net rent for every 0.25 percentage point rise in the reference interest rate, as long as the rate is below 5 %. The condition is that the current rent is based on the lower rate; the landlord must first offset previous reductions that were not passed on.
What is the reference interest rate in 2026?
Since 2 September 2025 it has been 1.25 %; the Federal Office for Housing confirmed it unchanged on 2 September 2026. It is published quarterly; the next announcement is due in early December 2026.
Can I set the rent freely when the tenant changes?
Largely, but the new tenant can challenge the initial rent within 30 days if it has been increased significantly compared with the previous rent. In Basel-Stadt, Zurich and some other cantons the previous rent must be disclosed on the official form, but not in Basel-Landschaft.
Do I need an official form for a rent increase?
Yes, in every case. An increase by letter or e-mail is void, even if the tenant does not react. The form must contain the reasons and be delivered by registered mail at least ten days before the notice period begins, to each tenant individually.
How is a renovation passed on to the rent?
The value-enhancing share of the costs, 50 to 70 % for comprehensive renovations, earns interest at the reference interest rate plus 0.5 % on half the amount, is amortised over the service life and given a maintenance surcharge. With CHF 36,000 of added value and 25 years, that comes to around CHF 158 per month.
What happens if the tenant challenges the increase?
They must apply to the conciliation authority within 30 days and pay the old rent until the decision. The authority examines all factors since the rent was last set, including the tenant’s claims for a reduction, and usually proposes a settlement. A correctly reasoned increase generally stands.
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