What should the ideal rental period be?

The cost of employee turnover: The enemy of returns

determine the ideal lease term , we first need to understand what happens when a tenant leaves. Every turnover costs money.

• Vacancy: Even in good locations, an apartment often remains vacant between two tenants for two weeks to a month.
• Maintenance: Painting, sanding parquet floors, minor repairs. These costs are incurred immediately upon switching providers.
• Administrative effort: placing advertisements, conducting viewings, drawing up contracts, credit checks.

If you only consider these costs, the ideal tenancy duration seems "infinite." The longer the tenant stays, the less frequently these turnover costs are incurred. Statistically, the costs of finding a tenant often only pay for themselves after 18 to 24 months. An ideal tenancy duration should therefore definitely exceed this threshold. Those who constantly experience tenant turnover after a year are often only working to cover administrative costs and not generating profit.

The "perpetual tenant": blessing or curse?

So, is a tenant who stays for 30 years a guarantee for the ideal tenancy duration ? Not necessarily. This is where the concept of "opportunity costs" comes into play.

If a tenant stays for a very long time, the rent often deviates from the market rent.

• The problem is that you can only adjust the rent in an existing contract based on the reference interest rate and inflation. You often can't pass on the general market increase (excess demand) in full.
• The backlog of renovations: The ideal tenancy period often ends where comprehensive renovations become necessary (bathroom, kitchen, plumbing). A long-term tenant often won't tolerate a complete renovation while still living in the property.

Many experts believe the ideal tenancy period is therefore in the range of 5 to 8 years . This period is long enough to amortize the moving costs, but short enough to bring the apartment back up to current market standards in terms of both technology and price when the next tenant moves out.

Business apartments and furnished apartments

Furnished rentals are a special case. Different rules apply here regarding the ideal rental period .

• Target group: Expats, project staff, weekly commuters.
• Time horizon: The ideal rental period here is often between 6 and 18 months .

Why is short-term rental the ideal duration here ? Because the rent is significantly higher (furniture surcharge) and this target group is willing to pay for flexibility. The higher income compensates for the frequent tenant turnover costs. If a tenant were to stay for 10 years, the wear and tear on the furniture would be so high that it wouldn't be financially viable. Therefore, for this segment, short-term rentals are indeed the ideal duration .

Strategies for controlling the lease term

You can't force the ideal rental period , but you can influence it.

1. Choosing the right tenant

If you are aiming for an ideal rental period of several years, look for tenants who are settled.

• Families with school-age children rarely move. In these cases, the chance of a long, ideal tenancy is high.
• Young singles or students are more mobile. Their life situation changes quickly (partner, job change). The ideal rental period is often not achieved in these cases.

2. The lease agreement

In Switzerland, fixed-term contracts are possible, but uncommon for residential properties.

• Minimum rental period: You can agree on a minimum rental period (e.g., 1 year) in the contract. This ensures that you at least recoup the initial costs and brings you closer to the ideal rental period .
• Fixed-term contracts: These end automatically. They guarantee planning security, but deter many tenants who are looking for a long-term home.

3. Active Relationship Management

Once the ideal rental period has been reached, you want to keep the tenant.

Small gestures (a new refrigerator after 10 years, prompt repairs) ensure tenant satisfaction and encourage lease extensions . Ignoring these gestures leads to termination of the lease.

The tax perspective

The tax office also has an influence on the definition of what the ideal rental period is for you.

• Maintenance costs (preservation of value) are tax deductible.
• When a tenant moves out, many maintenance tasks often arise. By bundling these tasks wisely, you can mitigate the effects of progressive taxation.

An ideal tenancy duration allows you to plan these renovation cycles in a way that optimizes them for tax purposes (e.g., major work every 5-7 years when moving in). Too frequent a turnover leads to constant minor repairs, which offer less tax flexibility.

Conclusion

Is there such a thing as the ideal rental period ? Yes, but it varies from person to person.

For a classic unfurnished apartment in Switzerland, a period of 3 to 7 years is considered the "sweet spot".

Within this timeframe, the ideal lease term is long enough to minimize vacancy and administrative costs. At the same time, it is short enough to allow for rent adjustments to the market and necessary renovations when the tenant moves in.

Beware of the pipe dream of a 30-year tenant, unless you shy away from all the effort and forgo potential returns. And avoid the hassle of annual tenant turnover, unless you're running a business apartment with correspondingly high margins. Ultimately, the ideal lease term is the result of a deliberate strategy that aligns tenant profile, property condition, and market conditions.

If you want to analyze the tenant turnover rate in your neighborhood or what the ideal rental period is statistically most profitable for your specific apartment type (e.g., 2.5 vs. 4.5 rooms), Loft offers neutral market data to optimize your rental strategy.

Glossary

• Tenant turnover rate: A metric that indicates how frequently tenants change in a property. A low rate suggests a long, often ideal, tenancy .
• Opportunity costs: The lost profit when an apartment is rented far below market price because a long-term tenant blocks the adjustment to the current market rent.
• Vacancy risk: The danger that the apartment generates no income between tenants. A longer ideal tenancy period minimizes this risk.
• **Minimum rental period: A contractual clause that excludes termination before the expiry of a period (e.g. 1 year) in order to guarantee a certain ideal rental period .**
• Amortization of switching costs: The period it takes until the income covers the costs of re-letting (advertisement, painter).