What do I need to consider if I become a landlord?

The pillars of successful rental

1. Rent structuring: Calculating in a legally compliant manner

The first mistake often happens even before the start. Many believe they can set the rent arbitrarily. But it's important for landlords to know that the rent must not be abusive.

• Reference interest rate: In Switzerland, rent is often linked to the mortgage reference interest rate. It is important for landlords to understand this mechanism in order to react correctly to decreases or increases.
• Local and neighborhood standards: Rent must be in line with market rates. It is important for landlords to analyze comparable properties to avoid being left with unsold housing or risking legal challenges.
• Official form: In many cantons (e.g., Zurich, Zug, Geneva), a specific form is mandatory for the initial rent. It is absolutely essential for landlords to use this form. Failure to do so makes the contract contestable, and the tenant can significantly reduce the rent.

2. Tenant selection: Creditworthiness takes precedence over personal preference.

Your tenant is your business partner for the next few years. A gut feeling isn't enough here. As a landlord, it's important to keep a cool head and check the facts.

• Debt enforcement register extract: Always demand a current original. As a landlord, it's crucial to see if there are any outstanding debts. Someone with certificates of uncollectible debt is a high risk.
• Affordability: As a rule of thumb, rent should not exceed one-third of net income. It is important for landlords to request proof of income or other documentation to avoid payment defaults.
• References: As a landlord, it's important to call the previous landlord. Was the rent paid on time? Was the tenant noisy? This information is invaluable.

3. The rental agreement and the security deposit

Avoid experimenting with contracts. As a landlord, it's crucial to use legally sound templates (e.g., from the HEV). Self-drafted clauses are often invalid in court.

The handling of the security deposit (rental deposit) is particularly important for landlords .

• You may charge a maximum of three months' rent.
• it is crucial that you never deposit this money into your personal account. It must be paid into an escrow account held in the tenant's name at a bank. Anything else is illegal.

4. The handover: Documentation is everything

The day of the key handover is crucial for the subsequent move-out. It is important for landlords to create a detailed handover protocol.

• Go through every room. Check every faucet, every electrical outlet, and every scratch in the parquet floor.
• it's crucial to document any defects in writing and have them signed by both parties. Without this record, you'll have difficulty proving that the tenant caused the damage when they move out. The burden of proof lies with you – this is an extremely important point for landlords .

5. Additional costs and administration

Whoever collects the rent must provide an accounting. It is important for landlords to accurately record the utility costs (heating, water, caretaker).

• Advance payments vs. flat rate: If you agree on advance payments, you must provide an annual statement. As a landlord, it's crucial to collect all receipts and create a transparent statement. Mistakes here can lead to tenants demanding refunds.
• Maintenance: Things break down. As a landlord, it's important to set aside funds for repairs (e.g., a broken refrigerator) and to respond quickly when defects are reported. If you ignore defects, the tenant has the right to a rent reduction.

6. Taxes and Finances

Rent is income. As a landlord, it's important to declare this income correctly for tax purposes.

At the same time, you can deduct maintenance costs. As a landlord , it's important to distinguish between measures that maintain the property's value (tax-deductible, e.g., painting) and measures that increase its value (usually not fully deductible, e.g., installing a luxury bathroom). Accurate bookkeeping is essential in this regard, and especially important for landlords .

Conclusion

Becoming a landlord is a business decision. It offers opportunities for returns, but also carries risks. It's important for landlords to see themselves not only as owners, but also as service providers. Those who conduct professional inspections, document legally soundly, and bill accurately minimize problems and protect their assets.

Never underestimate the administrative burden. As a landlord, it's important to allocate time for management or delegate this task to professionals if you can't handle it yourself.

If you are unsure whether your calculated rent is in line with the market or how to avoid legal pitfalls when renting out a property for the first time, Loft offers neutral data and analyses to help you make a successful start as a landlord.

Glossary

• Official form: A document mandatory in many cantons for reporting the initial rent. Its use is legally important for landlords to avoid legal challenges.
• Rent deposit: The security deposit (max. 3 months' rent) must be held in a blocked account. Proper handling is important for landlords .
• Reference interest rate: The relevant interest rate for rent calculation in Switzerland. It is important for landlords to pass on any changes to this rate to their tenants.
• Utility bill: The annual statement of actual consumption costs. Accurate preparation is financially important for landlords .
• Move-in inspection report: Documentation of the apartment's condition upon move-in. This is important for landlords to be able to prove any subsequent damage.