Renters pay an average of 8 to 9 billion francs more each year than property owners. Calculated on a monthly basis, this is between 130 and 730 francs, depending on the amount of the mortgage and the size of the property. This means that owners save between 1,600 and 8,800 francs each year compared to tenants.
Due to the extremely favorable mortgage interest rates, homeowners have been benefiting for several years already. Although it is generally the case that when mortgage interest rates fall, the reference interest rate for rents also falls, but this does not fall nearly as quickly as the mortgage interest rate. The result: owners benefit more than renters.
However, low mortgage rates are not the only reason why owners are better off. The option of not having to pay off the first mortgage and thus being able to deduct debt interest from taxes for decades provides another advantage on the part of the owner. For many Swiss, owning their own home is a big dream in life, which not everyone can afford for a long time now. The reason for this is the sharp rise in property prices in recent years. According to a study by moneycab.com, two-thirds of all Swiss are now excluded from the Swiss real estate market.
Wealthy people clearly benefit more
A property always entails running costs. The amount of the costs is strongly determined by the amount of the mortgage and the required interest payments as well as the amortization. The following rule of thumb applies to this relationship: the lower the loan-to-value ratio, the greater the saving. The reason for this is the falling interest costs as well as the elimination of amortization. The law only requires property owners to pay off the second mortgage. At the same time, debt up to 65 percent of the market value no longer has to be paid off. Especially people with higher incomes benefit from this situation, because due to the tax progression it often makes more sense not to amortize further. In addition, they often have sufficient equity to take out a first-ranking mortgage. The result is that wealthy households benefit, while low-income households have to pay rents that become more expensive every year.
Condo with 4 rooms is cheaper
Tenants living in a 4-room apartment have to pay an average of 1,600 francs per month. A property owner, on the other hand, pays only 870 francs in interest for the same apartment and spends about 500 francs per month on amortization. If tenants buy the property instead of renting, they could save between 10 to 50 percent of their monthly costs. The savings potential depends to a large extent on the size of the mortgage.
According to the data from moneycab.com 45 percent of all customers ask for first-ranking financing. 55 percent are looking for a mortgage that exceeds two-thirds of the market value. The latter mortgage must necessarily be amortized. With the help of this data, it is possible to calculate an average of the amount homeowners save per year. Property owners save an average of 6,000 francs each year when compared directly to renters.
Savings potential increases with size
How much savings potential there is, is not only due to the size of the mortgage. The number of rooms and square footage also factor into the equation. As a rule of thumb, the more rooms in the property, the more potential savings the property has when purchased. We can only speculate on the exact reasons for this. But an important factor is certainly the stark difference in supply between rental and ownership properties depending on number of rooms. 4- to 5-bedroom apartments are much more common in the ownership market than 1- to 2-bedroom apartments.
Using the buzzer of all rental households and the tenant distribution of 1- to 6-bedroom apartments, the annual loss of tenancy, or. The homeowner's savings will be determined. In 2015, there were a total of 3.6 million households. Of those living in 2.03 million. Households for rent. Of these, in turn, one-third each lived in a 3- to 4-room apartment in 2013 and 2014. For 2015, the statistics only make a statement about the total number of all renter households. The distribution in detail was not surveyed. Therefore, we assume the same proportional distribution of rental housing. No data from the FSO regarding the distribution is available for 2016 as of the writing of this article. Therefore, the calculation could only be made for the years 2013 and 2015.
Losses on the renter side were likely at least as high in 2016 as in 2015, as the average interest rate on mortgages was lowered even further. Looking at Switzerland as a whole, renters pay between 8 and 9 billion francs more per year than owners.
Editor's tip: The rental deposit resp. Rent deposit is also always a consideration when selecting a solvent tenant. In this regard, rental deposit insurance companies in Switzerland offer a "pre-confirmation" that can be attached to the application file, attesting to the fact that one has a positive credit report.