Selling a rented property: what to keep in mind

Author: Bernhard Bircher-Suits, FundCom AG

Let’s start with the most important information: in Switzerland, it is possible to sell a rented property at any time. However, it’s vital to have a good understanding of the basics of tenancy law. The key principle is that if a rented property is sold, the rental agreement is automatically transferred to the new owner. This means the rent, notice periods and all agreements remain unchanged (Art. 261 of the Swiss Code of Obligations).

For the tenant, the only change is who the landlord will be in the future. Their consent to the sale is not required – the automatic transfer is an important protection because it prevents someone from suddenly losing their home.

Two ways to sell

If you want to sell a rented property, you basically have the following two options:

Sale with existing tenancy

In practice, this is the most common approach: the apartment is sold together with the existing rental agreement. In other words, the tenants stay in the apartment and the new owner takes over the rental agreement. This can be attractive for buyers looking for capital investments, as they buy a property that is already generating rental income.

For example, an apartment has been rented out for CHF 1,800 per month for three years. The person who buys the apartment takes over the rental agreement and continues to receive that rent. As the owner, it is important to have transparent documentation. For example, note down:

• Whether apartments in an apartment building are empty (e.g. since when and why)
   
• Which issues are still unresolved (e.g. planned repairs, renovations, etc.)
   
• Whether legal proceedings are pending (e.g. a rent dispute or arbitration proceedings)

Selling a vacant apartment

If the purchasing party wants to use the property themselves, the tenancy must be legally terminated beforehand – i.e. with an ordinary termination effective on the statutory or contractually agreed date. For apartments, the statutory notice period is three months ending on a date customary in the local area, and six months for business premises (unless otherwise contractually agreed).

The formal legal requirements must be observed: the termination must be made on the officially approved form of the respective canton and, in the case of marital or civil partnerships, must be sent separately to each person concerned; formal errors render the termination invalid.

Tenant’s rights and protection

The sale of a property alone does not automatically create an entitlement to terminate the rental agreement. The new owner assumes all rights and obligations under the existing rental agreement – including maintenance obligations and contractual obligations.

Tenants also have various protection mechanisms. For example, they may be able to contest a termination or apply for an extension of the tenancy if moving out would cause them particular hardship. Tenants do not have a statutory right of first refusal in Switzerland, except in specific cantonal regulations or special cases. 

Viewings: consideration pays off

Viewings are usually unavoidable when selling a property. Legally, the tenant fundamentally has to agree to such viewing times. Nevertheless, it’s worth organising the process respectfully and requesting viewing times well in advance. Experience has shown that the process of selling works much more smoothly if you provide information early, agree viewing times jointly and group them together as much as possible. Transparent communication reduces uncertainty and creates trust – especially when tenants are worried about losing their apartment.

What buyers are particularly interested in

When it comes to a rented property, many prospective buyers are not only interested in the apartment itself, but also its financial position. Investors pay particular attention to factors such as the current rent, the stability of the rental agreement, the ancillary cost structure and past vacancies.

This information is crucial for calculating the expected return. The more transparently you document this information, the easier it will be to complete the sale.

Typical documentation includes:

• Rental agreement
• Details of rent and ancillary costs
• Bills for recent years
• Information on renovations or maintenance
• Documentation of the building condition (GEAK reports on the building’s energy consumption or reports by architects)
• Official valuations

Make the sale as tenant-friendly as possible

Selling a property can be unsettling for the tenant. Many conflicts arise not from legal issues, but from a lack of communication. That is why it is advisable to inform tenants openly and at an early stage: explain why you are selling, what the process looks like and what steps are planned next.

Practical things can also help: group viewing times together, take into account working hours or, if possible, provide information about the new ownership in good time. Respectful interaction pays off – not just to set the mood, but also for a successful sale.

To sum up: in Switzerland, selling a rented property is clearly regulated by law and usually straightforward. The existing rental agreement remains in place and is automatically transferred to the purchasing party. Good preparation, transparent communication and consideration for the tenant ensure that the sale is not just legally sound, but also fair – and that makes the entire process easier for everyone involved.