Bern says no to rent initiative, prepares alternative plan

The Federal Council has decided to reject the Rent Initiative, which calls for enshrining the definition of an abusive rent in the Constitution and introducing periodic, automatic controls. It announced the decision on Friday. According to the government, the proposed system would be extremely costly to administer and could discourage investment in the construction sector.

The government does acknowledge that a problem exists. Current rental rules, it says, are complex and lack transparency, making it hard for both tenants and landlords to determine whether a rent is lawful. For this reason, Bern intends to present an indirect counter-proposal: unlike the initiative, which seeks to amend the Constitution, the Federal Council's plan will rely on clearer rules at the legislative level, designed to let both tenants and landlords check more quickly and easily whether a rent is abusive.

A statistical reference rent

The plan includes a statistically calculated reference rent, to be used in setting the initial rent for new lease agreements. Indexing is also planned for leases already underway. The Federal Department of Economic Affairs, Education and Research has been tasked with turning these guidelines into a concrete legislative proposal. The Federal Council's dispatch to Parliament is expected to be ready by the end of 2027.

The decision to reject the initiative and pursue an indirect counter-proposal instead leaves one question open: will the new rules protect tenants as effectively as automatic, systematic controls would have? The Federal Council justifies its choice mainly by pointing to the administrative costs of the proposed system and the risk of a decline in private investment in construction — an argument that mainly concerns those who build and own property. Less clear, for now, is how the new rules will ensure affordable rents for those who are looking for housing or already renting.

The answer will only come with the legislative dispatch expected by the end of 2027, followed by the parliamentary debate that will ensue.