In Switzerland all rental arrangements are governed by its rental law (OR 253 ff., Swiss Code of Obligations). Rental agreements differ depending on type and purpose of the rental object:
Office and business rentals
- today, most of these properties are rented unfinished (interior finish by tenant)
- rental agreements are of no less than five years’ duration, with one or multiple extensions possible
- indexed rent
- value-added tax option to be considered.
Residential rental objects
- finished interiors, such as kitchens
- rental agreement without time limit
- fixed rent, adjustments subject to restrictions
- conditions of use do not apply or apply only in part to certain rental objects such as luxury dwellings, subsidized lodgings, and vacation apartments rented for less than three months.
A tenancy agreement [Pachtvetrag] details usable rights of an object against payment of the rent.
Agricultural tenancy agreement [Landwirtschaftliche Pacht]
Concerns rented working farms or land. Rent may also be paid in kind; examples are produce or milk.
» landwirtschaftliche-pacht.ch (German)
Time sharing arrangements cover several individuals using a property or exercising rights in connection with regular or vacation real estate, to be occupied in turn, at predetermined or to-be-determined times of the year.
In Switzerland there is no such thing as time-limited ownership. Time sharing agreements involve several individuals owning a property together or being shareholders in a property-owners limited company. An agreement on user and management regulations specifies the property’s use.
» timesharing.ch (German)
Leasing / Sale and Lease back
Real estate leasing covers an object (land and buildings) for use during a limited period of time, against payment. Sale and lease back means that the property seller subsequently becomes the rent-paying tenant. In Switzerland leasing contracts are not legally regulated. They are considered innominate contracts.
Right of abode / Right of usufruct
The right of abode gives individuals the right to dwell in a given building or a part thereof.
» wohnrecht.ch (German)
The right of usufruct gives the beneficiary the use and benefit of a property.
» nutzniessung.ch (German)
The right of abode and right of usufruct are rare legal acts that benefit previous owners or heirs.
Development rights allow division of a property into land and buildings. Development rights, that is the right to build on the land of another and to leave the building standing, can be entered in the Land Register (property with development rights). Development rights are limited to no less than 30 and no more than 99 years (the latter considered permanent). Such properties may be sold at will.
- Development rights are mainly sought for new constructions, particularly when little land is available.
- The long-term profitability of a piece of land depends largely on the solvency of the rights holder and the quality of the development rights contract.
- Swiss banks only finance properties with development rights that come with government-issued development rights.
- For those awarding development rights, a highly solvent recipient with a quality construction contract can be as lucrative as it can be financially disastrous if the recipient is or becomes insolvent or the building is too specialized.