Switzerland approves 60 percent rent reduction for businesses

Commercial tenants will only be liable for 40 percent of the rent owed during the coronavirus lockdown period, the Swiss government has decided.

The proposal, originally flagged in June and approved on July 1st by the Federal Council, comes after months of disputes surrounding how business owners should be compensated for losses incurred as a result of the government’s lockdown.

Commercial tenants will now be liable for 40 percent of the agreed rent for the period they were required to close due to the lockdown, with landlords liable for the remaining 60 percent.

If tenants and landlords have already come to an arrangement about how the rent should be deducted or waived as a result of the lockdown, this will remain valid rather than the new discount arrangement.

The deal applies to rents up to the value of 20,000 francs per month. The period will be the time in which the business was forced to close due to the coronavirus lockdown.

The plan is targeted to help smaller and medium-sized tenants, rather than larger companies who are better placed to absorb rental costs.

While the reduction will apply to 92 percent of commercially rented properties, it will only apply to 44 percent of the total amount of money paid in rent – illustrating just how much is paid by larger tenants.

Christian Levrat (Social Democrats) said in a statement that while “it is not an ideal situation… it’s the best solution given the situation”.

To help out property owners, the Swiss government has made 20 million francs available for landlords who have been negatively impacted by the lockdown.

Settling an ongoing dispute

The Council of States approved a previous plan to waive business rents for two months for commercial tenants, however this plan was knocked back by the Federal Council.

As reported in Swiss daily Watson on June 8th, the parliament offered a compromise deal which was finally accepted by the Federal Council.

Economy Minister Guy Parmelin opposed the motion, saying a better solution was that adopted for residential tenancies which encouraged landlords and tenants to negotiate a solution.

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