A landlord’s key rights and responsibilities

If you own a property and have decided to rent it out, you have already taken a significant step towards a successful investment strategy. Rentals can be a stable source of income and help to increase a property’s value. However, it is important to understand that renting out property comes not only with rights, but also with responsibilities.

The property rental business is based on statutory regulations and contracts. It is not just about leasing residential or commercial space, but about the relationship between you as the landlord and your tenants. This relationship is governed by the abovementioned rights and responsibilities.

Being unaware of legislation and regulations can lead to disputes, generate unnecessary costs and ultimately strain your relationship with your tenants. As a landlord, it is therefore essential to understand your rights and responsibilities – and to comply with them.

A landlord’s key responsibilities

1) Appropriate condition

As a landlord, you are responsible for ensuring that the rental property is in a condition that is suitable for its intended use. This includes both the specific, contractually agreed features (contractual condition) and general standards that are essential for the use of a home.

In short, this means that the property must have everything that tenants need to live in it. In other words, in addition to empty rooms, it must also have the necessary facilities, such as a kitchen and plumbing facilities.

For example, there must be a bathroom or toilet in adequate, working condition. The property must have a heating system that is capable of ensuring appropriate temperatures of 20 to 22 degrees in the living rooms and 16 to 18 degrees in the bedrooms during winter.

Fixtures and fittings can vary greatly depending on the property. A modern city apartment, for example, is subject to different standards than an Alpine chalet. Such differences are regulated within the framework of contractual agreements or based on the prevailing local conditions.

2) Maintenance and repair

As a landlord, you must maintain the abovementioned appropriate condition throughout the rental term. This means that you are responsible for necessary repairs and maintenance work, unless these can be contractually delegated to your tenants (such as work that is regarded as minor maintenance). This work must be carried out and/or commissioned in a professional manner and within a reasonable period of time.

As a landlord, you pay the costs incurred. You can include an appropriate amount in the rent to cover such expenses – this is normal and permissible.

3) No unlawful agreements

Any contractual agreements that deviate from the responsibilities described above to the detriment of tenants are invalid according to Article 256 Para 2 of the Swiss Code of Obligations (CO). This ensures that tenants’ rights are protected in every situation and that landlords meet their responsibilities.

A landlord’s key rights

1) Increasing the rent

According to Swiss tenancy law, as a landlord, you have the contractual freedom to determine and adjust the rent, for example by means of a rent increase. However, certain legal provisions must be observed. These can be found in Article 269 CO and Articles 19 and 20 of the Ordinance on the Rental and Lease of Residential and Commercial Property (RRBPO).

Rent increases or other unilateral contractual amendments by landlords are permitted, provided they are:

• communicated using a specified form,
• justified by the landlord and
• implemented without threat of termination.

As a landlord, you are legally entitled to adjust the rent to reflect increased costs. However, tenants are entitled to contest this adjustment. They can also terminate their rental agreement early if you adjust the rent.

A rent increase is deemed permissible if at least one of the following reasons applies:

• Rising inflation
• Increase in a property’s operating and maintenance costs
• Increase in regional rents
• Increase in mortgage base rate
• Extensive renovation work

As a landlord, it is important to carefully consider these factors and clearly justify your decision to increase the rent. This is the only way to ensure that your rights are protected and that you meet your responsibilities towards your tenants.

2)  Terminating the rental agreement/notice

Under Swiss tenancy law, you may not end a tenancy without good reason and without observing the statutory notice period. Justified termination may occur, for instance, if, as a landlord, you need the rental property for your personal use, or tenants fail to pay the rent despite being asked to do so and given a specified deadline or grossly disregard their duty of care and consideration. As an example, repeated violations of the house rules could constitute such a reason.

As a landlord, you may end the tenancy without notice in some specific cases – i.e. termination without notice. This applies if a tenant is more than two months in arrears with their rental payments or if they physically attack or seriously abuse you or other tenants. Serious violations of the house rules may also justify termination without notice.

As a landlord, you have to meet certain formal requirements in the event of termination. You should also bear in mind that in Switzerland, tenants have numerous legal means at their disposal to contest a termination. This can result in the termination process being delayed or even cancelled altogether.

The legal basis for termination by a landlord can be found in Articles 266 and 271 CO.

3) Invoicing utility costs

Utility costs represent payment for any expenses a landlord has actually incurred in connection with the use of the rental property. These mainly include the cost of:

• Heating and hot water
• Various operating costs
• Public taxes directly related to the use of the rental property.

In Switzerland, the RRBPO regulates the invoicing of utility costs. According to Articles 4 to 8 RRBPO, tenants only have to pay utility costs if these are explicitly stated in their rental agreement. Otherwise, it is assumed that utility costs are included in the rent.

As a landlord, you should consider the following points to ensure utility costs are billed accurately:

• A thorough review of the billing period is essential, especially when a tenant moves in or out, as in this case the utility costs can only be calculated pro rata.
• It is a good idea to compare the utility cost breakdown with the previous year’s bill. You should take a close look at any new items and increased amounts and check that everything is consistent with the utility cost items agreed in the rental contract.
• As a landlord, you are obliged to split the total costs between all the tenants, according to a clear, reliable distribution formula. Tenants only have to pay the share of the total costs that is attributable to their home. 
• You must calculate the advance payments and flat rates correctly, as specified in the rental agreement. In the event of a claim for subsequent payment, the total utility costs must exceed the total advance payments. If the opposite is the case, you must refund the tenant for any excess advance payments.

The correct and careful preparation of utility bills creates transparency and trust and can prevent disagreements between you and your tenant.

Summary

Finally, as a landlord, it is important to be aware that a successful rental is not only based on your own rights but also on your own responsibilities. Knowing and understanding the relevant rights and responsibilities enables you to avoid potential disputes and misunderstandings with tenants and build a positive, lasting relationship with them.

In the complex world of tenancy law, there are numerous resources and services to help you tackle this challenge. So seek expert advice to make sure you consider all the relevant aspects and act in accordance with the law.