If you want to rent out your flat in Geneva, it is important to consider the following points:
The flat rental market in Geneva
The flat rental market is favourable to landlords, and there has been a housing shortage for a very long time. Flats in the lower and middle rent segments are particularly in demand.
Renting out an apartment in a ppe (propriété par étage)
Authorisation to rent a flat in a ppe
In principle, every owner has the exclusive right to use, manage and fit out the interior of his or her private share. There are limits to this right. The owner must take into account the interests of the other co-owners and must not damage or alter the common areas. Use of the common areas must not be hindered. General restrictions, such as the use to which the property may be put under planning law, must be respected.
The community of co-owners may restrict the use, rental or management of private shares. A case in point: The Federal Court has ruled that a ban on AirBnB in a building that includes communal facilities such as a swimming pool, sauna, fitness room and roof terrace is lawful.
Checking whether there are any restrictions
To check whether there are any restrictions, it is necessary to consult the deed of the condominium, the rules for use and administration and the minutes and written agreements.
The regulations
The tenant must comply with the regulations of the ppe, the internal regulations and the decisions of the co-owners. Sometimes the regulations stipulate that the co-owner who rents out his or her lot must notify the administrator.
Finances to check
If you have lived in your flat, which you financed with pension fund or 3rd pillar assets, and you wish to rent it out, you will not have to repay the funds. You are not allowed to withdraw funds from your pension fund or 3rd pillar if you do not intend to live in your shared-ownership flat, but are only buying it to rent it out.
You should check with your mortgage lender whether the mortgage conditions change if you rent. You may want to take out a new mortgage at a low rate for a longer term, to better calculate the cash flow over the next few years and avoid unpleasant surprises if mortgage rates rise in the future.
Expenses and future repairs and renovations need to be taken into account. It may be necessary to refurbish or renovate the flat before letting it out.
Flat in a development zone
If you own a flat in a development zone, you will have to occupy it yourself during the inspection period. The inspection period lasts for 10 years from the average date on which the first owners moved into the property, and you are not allowed to rent it out. The state will check whether you are living in the property yourself, and if you fail to comply, you risk a fine of up to 20% of the cost price of the property. You can apply to the Cantonal Housing Office for a derogation for just cause, and they will set the maximum rent allowed if it is accepted.
Furnished or unfurnished rental
Furnished flats are more expensive to rent than unfurnished flats. Tenants of furnished flats tend to rent for short periods, which increases rental costs. Furnished apartments have to be fully equipped, including crockery, towels, etc., and certain items such as linen, mattresses, etc. wear out relatively quickly. Unfurnished flats are more sought-after and are rented for longer periods.
Different forms of rental contracts
For subsidised flats located in the development zone and for old renovated flats, rents are controlled by the government for a few years and you must use the pre-printed forms and apply the relevant regulations. For non-subsidised flats, you can draw up the rental agreement yourself or use the agreement form provided by the real estate trade associations.
Setting the rent
The rent must be set in accordance with the tenancy law and regulations. The rent must be reasonable and at least allow you to cover your costs. A rent is considered unreasonable if it provides the landlord with an excessive return or if it results from an excessive purchase price. Rents for subsidised dwellings or flats in the development zone are controlled by the state and cannot be freely set by the landlord, even if they are lower than normal market rents.
Common costs and tenant's costs
The common costs of the condominium are already included in the rent and cannot be passed on to the tenant, e.g. ongoing repairs, ongoing maintenance, building insurance costs, etc. The heating and service charges in the condominium tenancy agreement usually include the costs for heating and hot water and sometimes the cable TV subscription. Most condominium managers keep two separate accounts: one for the costs of the condominium's common expenses and one for the heating and service charge account. If the two accounts are kept separate, it is easier for you to determine the costs to be charged to the tenant. The costs can be included in the rent. You can also calculate a flat rate based on the average heating and service charges for the last three years. If you use one of the two methods, you do not have to prepare an annual statement. The third option is to prepare an annual heating and service charge statement and agree monthly payments on account with the tenant.
Special clauses
Special clauses must be compatible with tenancy law, otherwise they are void.
Preparing the flat
Under tenancy law, the landlord is obliged to hand over the flat in a condition suitable for the purpose of the tenancy. Renovations and repairs may be necessary before the tenant moves in.
Finding a tenant
Finding a tenant takes time. You can take care of it yourself or hire a property management company. Once you have found a potential tenant, it is necessary to check his or her application, especially creditworthiness, before committing to signing a lease. In this regard, I refer you to my article and video on choosing a tenant.
Flat handover protocol
When the tenant moves in, you draw up a handover protocol in the tenant's presence. If you rent a furnished flat, you should add a detailed inventory.
© Written by Esther Lauber, Property Fiduciary with Federal Diploma of Higher Vocational Education and Training, real estate agent in Geneva, translated from French to English with DeepL
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