Subletting apartments: is it permitted?

Jürg Zulliger

Temporarily moving to a different city – or even abroad – is increasingly common these days. But who wants to cancel their rental contract and give up a nice apartment at a reasonably priced rent for a temporary move? After all, in most Swiss cities, it’s still pretty tricky to find a suitable apartment quickly.

High rental costs and a housing shortage in some cities are helping to drive this trend. Anyone who manages to hit the housing jackpot – good location, affordable – won’t be in a hurry to give it up again.

Subletting: owner’s permission required

By law, landlords must consent before tenants can sublet their rental accommodation. ‘In practice, it’s not uncommon for people to enter into a relatively informal sublet agreement, without thinking about whether they need the landlord’s consent,’ says Hans Bättig, a lawyer and tenancy law expert from Bern. Tenants who follow proper procedures must gain permission in advance of subletting an apartment. A provision of Swiss tenancy law grants tenants the right to sublet so, in general, no landlord would be able to prohibit a sublet. The owner of the property cannot take this right away from their tenant.

Three permissible objections

The law states that there are only three grounds on which a landlord can refuse permission to sublet (Art. 262 Swiss Code of Obligations [CO]):

• Non-disclosure of the terms and conditions: the tenant must disclose the main terms of the sublet agreement. This includes, for example, the name of the subtenant, the number of inhabitants, the rent agreed for the sublet and the duration of the sublet agreement; most landlords will require a copy of the sublet agreement. If the tenant does not disclose this information, the landlord may refuse their permission.
• Improper subletting: it is also an issue if the tenant wants to turn subletting their apartment into a business. Obviously, tenants are not permitted to make an excessive income from subletting. This would be just as improper as the landlord making an excessively high profit from the main rental agreement. But at what point does rent become excessively high? Depending on the point of view, stakeholders believe that a surcharge of three to ten per cent is acceptable. After all, you could argue that the tenant incurs expenses by subletting. For example, the cost of furniture, electricity, internet, other incidental costs and fees. There is also a certain amount of risk involved and the cost of collecting the rent. Experts cite court decisions to support the view that charging 30 per cent more than the rent specified in the main tenancy agreement for a sublet would be improper. In summary: if a tenant receives excessive income from the sublet, the landlord can refuse permission.
• Detrimental to the owner: this is the third point. The landlord or building management can refuse permission for a sublet if it would be to their significant detriment. Of course, this rule is subject to a certain degree of interpretation. If the apartment is the subject of a standard tenancy agreement, any subtenant can only sublet it for the same purpose. Our conclusion: landlords can refuse permission to sublet if the apartment were to be used for a purpose for which it is not intended. For example, it would not be permissible for an apartment to be used as a hairdressing salon. Or, as an even more extreme example: a landlord would not have to agree to a sublet if the subtenant planned on using the apartment for rehearsals with their rock band or to give drumming lessons.

Risks of subletting

Expert Hans Bättig points out that there are a few other issues to consider. For example, it would be problematic if the sublet agreement were for a longer period than the main rental contract. After all, it’s impossible to rule out the possibility of the main tenancy agreement being terminated for some reason or another, which is something that could happen if the building needed to be completely renovated. Other potential risks: what if the landlord puts up the rent but the tenant (depending on the contract in place) is unable to pass on the additional cost to the subtenant? There are also pitfalls to a tenant suddenly becoming a landlord themselves.

‘The main tenant is liable,’ says Hans Bättig. Naturally, this also means that they are liable for damages caused by the subtenant. So, if the subtenant causes major damage, or simply doesn’t pay their rent, the main tenant is liable for those costs.