New Case Law on Tenancy Law

New Case Law on Tenancy Law

30. June 2022

I. Introduction

On 2nd May and 4th May, 2022, the Federal Supreme Court specified its case law with respect to the abusiveness of the initial rent for flats in old buildings and with respect to the requirements for the admissibility of the termination of a rental flat contract due to renovation work.

II. Abusiveness of the Initial Rent for Flats in Old Buildings

In its judgment 4A_554/2021 on 2nd May 2022, the Federal Supreme Court clarified its case law on the initial rent for flats in old properties.

In the case of a flat in an old building located directly on the lake, the Federal Supreme Court confirmed that the initial rent is presumably abusive if there is a massive increase (i.e. more than 10%) in the rent compared to the previous rent and this is not justified by an increase in the reference interest rate for mortgages or an increase in the national consumer price index.

With regards to the abusiveness of the rent, the Supreme Court relies on the reversal of the absolute criteria applicable to old buildings. Accordingly, the criterion of rents that are customary in the locality or neighborhood takes precedence over the criterion of the net return on the invested equity (BGE 147 III 14 E. 4.2; BGE 140 III E. 3.1).

The landlord was unable to refute the presumption that the rent of CHF 2,280.00 net was abusive compared to the previous rent of CHF 1,562.00 in the specific judgment. The rental court of the Canton of Vaud set the rent at CHF 1,800.00, based on statistically collected data of rental fees. The tenants appealed to the Federal Supreme Court on the grounds of arbitrary rent setting.

The Federal Supreme Court came to the conclusion that the rent paid by the previous tenant should be the sole basis for the determination of the rent by the court if no other evidence was available. However, since statistics from the Federal Office for Statistics are available in this specific case on the “average rent per m2 in francs by number of rooms, per canton”, these values can be included in the rent determination without violating the prohibition of arbitrariness, taking into account the specific circumstances.

III. Requirements for the Admissibility of the Termination of a Rental Flat Contract Due to Renovation Work

In the judgment of 4th May 2022 (BGer 247/2021), the Federal Supreme Court concluded that a termination is not abusive if the landlord intends to renovate the rented property and the tenant’s departure is unavoidable for this purpose.

The Federal Supreme Court recalls, however, that sufficient concrete circumstances must indicate that the renovation is actually intended and not merely misused as a pretext to terminate the lease.

-MLaw Ralf Voger, Attorney at Law
-BLaw Nicolas Briw, Legal Intern