Rental agreement invalid if reference interest rate is too low – cash collapse espresso

If landlords smuggle a reference interest rate that is too low into the rental agreement, this is invalid. The official rate applies.

This is what happened: A property manager from the St.Gallen region issues rental agreements with the wrong reference interest rate. Instead of the current 1.75 percent, a too low reference interest rate of 1.5 percent is noted. This, without verbal or written notice. The prospective tenant complains, but it is not a printing error. The administration explains that it suspects that the reference interest rate will soon fall again. If the interested party wants the current interest rate in the contract, the rent would have to be increased.

What are possible consequences? If the reference interest rate noted in the contract is lower than the current one, the landlord can theoretically increase the rent at any time. If the reference interest rate falls, the landlord could also be tempted to refuse to reduce the rent. In the worst case scenario, when the reference interest rate is reduced, affected tenants do not realize that they are entitled to a reduction in their rent because the wrong number is in their contract.

Is a reference interest rate that is too low allowed in the rental agreement? No. And that’s the good news for tenants: only the official reference interest rate applies. It doesn’t matter what is in a contract, says lawyer Daniel Stähli from the Federal Office for Housing BWO to SRF. Even if the reference interest rate could actually fall on December 1, 2024, setting a lower reference interest rate weeks in advance is not valid, says Rahel Gsponer from the St. Gallen Tenants Association.

What can I do if I was given the wrong reference interest rate? In principle, the prospective tenant could have safely signed the contract. Because only the official reference interest rate applies. Tenants with an incorrect reference interest rate in their contract that is too low can still request a reduction in their rent the next time the rent is lowered. Unfortunately, very few tenants know this.

Kassenrutsch article & sample letter

What should you do if the reference interest rate actually falls as of December 1, 2024? If this is the case, tenants should proactively contact their management. The best way to do this is with a registered letter. In it you should refer to the lower reference interest rate and ask the landlord to adjust the rent to the next possible date. Very few landlords actively offer a rent reduction on their own initiative, says Rahel Gsponer from the St.Gallen Tenants Association.