Rent Increase for Commercial Premises: Rights and Obligations in Switzerland

Basics of Commercial Tenancy in Switzerland

Commercial tenancy encompasses all rental relationships that are not for residential purposes. This includes office spaces, retail areas, production halls, storage facilities, practice rooms, and hospitality businesses. In contrast to residential tenancy, commercial tenancy is subject to a significantly more liberal legal framework.

The Swiss Code of Obligations (OR) regulates rental relationships in Articles 253 to 274g. While numerous protective provisions apply to residential premises, these are significantly reduced for commercial premises. The legislator assumes that commercial tenants act more professionally and are capable of safeguarding their own interests. This means more contractual freedom for both parties, but also less legal protection for the tenant.

A key difference: while tenant protection is highly pronounced for residential properties and rent increases are subject to strict rules, landlords of commercial premises can adjust their rents more flexibly. Contractual freedom allows for individual agreements that deviate from standard legal regulations.

Rent Increase for Commercial Premises: The Legal Framework

For commercial premises, contractual freedom generally applies. This means that landlords can increase the rent without having to provide a detailed justification. Unlike residential premises, landlords do not need to prove that the increase is justified by increased costs, inflation, or higher reference interest rates.

The increase typically occurs through a termination of the existing tenancy agreement and the offer of a new contract with amended conditions. The landlord must adhere to the statutory or contractually agreed notice periods. The tenant then has the choice to accept the new rent or vacate the premises.

Limits of Contractual Freedom

Despite extensive freedom, there are legal limits. A rent increase must not be abusive. According to Art. 269 OR, abusive rent increases include, among others:

• Rents that allow for an excessive return on the property
• Increases based on the landlord's dominant market position
• Increases that violate good faith

In practice, however, it is difficult to prove that a rent increase for commercial premises is abusive. The burden of proof lies with the tenant, and the hurdles are high.

The Reference Interest Rate: Does It Also Apply to Commercial Premises?

The mortgage reference interest rate is an important instrument in the regulation of residential rents. It serves as the basis for rent adjustments for apartments and is published by the Federal Housing Office (BWO). If the reference interest rate increases by 0.25 percentage points, landlords of residential properties can increase the rent by up to 3 percent.

For commercial premises, the situation is different: the reference interest rate generally does not apply mandatorily here. Landlords can increase commercial rent without having to refer to changes in the reference interest rate. At the same time, commercial tenants cannot automatically demand a rent reduction when interest rates fall.

Exceptions by Contractual Agreements

However, landlords and tenants can agree in the lease that the reference interest rate also serves as a basis for rent adjustments for commercial premises. Such clauses are valid and bind both parties. It is therefore worthwhile to carefully check the lease agreement to see if such a regulation has been agreed upon.

Likewise, index clauses can be agreed upon, where the rent is automatically linked to the development of the national consumer price index (CPI). Graduated rent agreements, where future rent increases are already set at the time of signing the contract, are also permissible for commercial premises.

Deadlines and Formal Requirements for Rent Increases

A rent increase for commercial premises is effected by terminating the existing lease agreement and submitting a new offer. The following deadlines and formal requirements must be observed:

Notice Periods

According to Art. 266a OR, the statutory notice period for commercial premises is:

• 6 months to a locally customary date or to the end of a rental year

Different periods can be contractually agreed upon, with shorter periods also being permissible. Carefully check your lease agreement to know the applicable notice periods.

Formal Requirements

The termination must be in writing. In contrast to residential leases, the use of an official form is not mandatory for commercial premises. Nevertheless, it is advisable to formulate the termination clearly and unambiguously and to send it by registered mail.

The landlord must communicate the new rent offer in the termination notice. The tenant can then decide whether to continue renting under the new conditions or to vacate the property.

When Can You Challenge a Rent Increase?

The possibilities of challenging a rent increase for commercial premises are limited. Unlike residential premises, there is no automatic protection against unreasonable increases in commercial leases. Nevertheless, legal remedies are available to you under certain circumstances.

Challenging Due to Abusiveness

You can challenge a rent increase before the competent conciliation authority if you believe it is abusive (Art. 270 OR). This is particularly the case if:

• The rent significantly exceeds the locally customary level
• The increase is disproportionately high
• The landlord exploits their dominant market position

The deadline for challenging is 30 days from receipt of the termination notice. If you miss this deadline, the rent increase is considered accepted.

Challenging Due to Formal Errors

A termination can also be challenged due to formal errors, for example, if the notice period was not observed or the termination was not in writing. In such cases, the termination is invalid, and the previous contract conditions remain in effect.

Differences Between Residential and Commercial Leases

The following overview shows the most important differences between residential and commercial leases regarding rent increases:

• Residential Lease: Strict rules, obligation to justify, reference interest rate decisive, official form required, 30-day challenging period
• Commercial Lease: Extensive contractual freedom, no obligation to justify, reference interest rate optional, no official form required, limited challenging opportunities

These differences reflect varying protection needs: while residential tenants enjoy special protection, commercial tenants are assumed to be professional actors capable of looking after their own interests.

Practical Tips for Tenants and Landlords

For Commercial Tenants

• Carefully check your lease agreement for clauses on rent adjustments, indexing, or graduated rents
• Negotiate extension options at fixed conditions when signing the contract
• React within 30 days if you wish to challenge a rent increase
• Inform yourself about customary local rents for comparable properties
• Seek dialogue with the landlord early if uncertain

For Commercial Landlords

• Observe the contractually or legally agreed notice periods
• Formulate terminations and rent increases clearly and unambiguously
• Send the termination by registered mail to have proof
• Orient yourself to market-standard rents to avoid challenges
• Consider agreeing on index clauses or graduated rents in the contract

Conclusion: What You Should Consider Regarding Rent Increases

Rent increases for commercial premises in Switzerland are subject to significantly more liberal rules than for residential premises. Landlords can generally set and increase the rent freely, provided no abusive practices exist. The reference interest rate only plays a role if contractually agreed upon.

For tenants, it is important to know the lease agreement precisely and to keep an eye on notice periods. An appeal is only possible within 30 days and requires that the increase is abusive – which is difficult to prove in practice.

Both tenants and landlords benefit from clear contractual agreements and open communication. For complex legal questions or uncertainties, consulting a lawyer specializing in tenancy law or the competent conciliation authority is recommended.

On maison.work, you will find a large selection of commercial premises throughout Switzerland – transparent, straightforward, and with all the important information you need for your decision.

Note: This article serves for general information purposes only and does not replace individual legal advice. For specific legal questions regarding rent increases or lease agreements, we recommend consulting a specialist lawyer for tenancy law or the cantonal conciliation authority.