Home ownership and rent control in Switzerland

Abstract

This paper discusses the reasons for two intriguing characteristics of the Swiss housing market: the small demand for owner occupancy in spite of high per capita income and the survival of a viable private rental sector after decades of rent control. The low rate of home ownership seems to be the result of the high cost of owning caused by the taxation of imputed rent and capital gains, and the lack of financial incentives to save for a down payment. The survival of private renting as the dominant housing sector, on the other hand, was made possible by the permissive second‐generation rent control regime which succeeded in maintaining the continuing profitability of private investments in rental housing. The main effects of rent control in Switzerland appear to be the reduction of housing costs of long‐standing tenants and the prevention of abuse through arbitrary eviction and exploitation of temporary shortages.

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