A significant shift in the rental landscape is expected, with two-thirds of tenants potentially qualifying for a rent reduction. The Zurich Cantonal Bank (ZKB) has analyzed the housing market and predicts a decline in the benchmark mortgage rate by March 2025 at the latest. This benchmark, set quarterly by the Federal Housing Office (FHAB), reflects the average cost of mortgage loans and is expected to decrease, providing relief to renters who have faced recent increases.
Approximately one-third of renter households, who experienced two rent hikes last year, will be eligible for a reduction. This may lead to a wave of correspondence from tenants to landlords, particularly institutional landlords who have historically been more likely to implement rent increases compared to private landlords.
Recent data shows that only 7 percent of rental households with private landlords passed on a rent increase in the last quarter, while 13 percent of tenants under institutional landlords did so. This suggests that institutional landlords have been more aggressive in adjusting rents in response to market conditions, which may lead to greater scrutiny from tenants as the benchmark mortgage rate changes.
The historical context reveals that institutional landlords have also been quicker to pass on reductions in benchmark interest rates, allowing them to raise rents more frequently. This dynamic may make tenants more inclined to challenge rent increases, especially with the anticipated changes in the mortgage rate. The personal relationships between private landlords and tenants may contribute to a more cautious approach in raising rents, further complicating the rental market landscape.
As the conversation around benchmark mortgage rates intensifies, a significant portion of tenants may advocate for rent reductions. ZKB estimates that an additional one-third of tenants, who have not previously requested rent decreases, may now feel empowered to act. This potential surge in tenant activism could reshape the rental market, as more individuals become aware of their rights and the financial implications of fluctuating mortgage rates.
The upcoming changes in the benchmark mortgage rate are expected to have a ripple effect throughout the housing market. Tenants burdened by rising rents may find themselves in a more favorable position, leading them to engage with landlords regarding potential reductions. The outcome of this situation will depend on how landlords respond to the evolving economic landscape and the pressures exerted by their tenants.
The housing market will be closely monitored for shifts in tenant behavior and landlord responses as the deadline approaches in 2025. The interplay between mortgage rates, tenant rights, and landlord practices will be critical in determining the future of rental agreements and the overall affordability of housing. These anticipated changes could lead to a more balanced relationship between landlords and tenants, fostering an environment where both parties are more attuned to the economic realities of the housing market.