Throwing money out the window every month for rent?
This is too stupid for many Swiss and they would rather buy a property. But what is really better? Rent or buy? And is rent really "money down the drain"?
In Switzerland, this question is not so easy to answer. In this article you will learn the Advantages and disadvantages of renting and buying real estate in Switzerland and then know what is cheaper in your canton: renting or buying?
Note: This Rent or Buy Switzerland calculator is of course highly simplified and the results may vary accordingly.
Let us therefore now delve deeper into the subject and then also make a more precise calculation.
Few Swiss people are spoilt for choice when it comes to the big question of "renting or buying". Because especially in conurbations like Zurich, home ownership is only really affordable for a few people.
But if we assume for a moment that the necessary small change is available: Is home ownership really cheaper than renting?
The decision as to whether or not to Buy or rent property depends on many different factors.
As Tenant you generally have the advantage that you Financially more flexible and accordingly do not take as many financial risks as would be the case with a purchase.
For this you have as Owner but also more freedomswhen it comes to the Design of the property goes. Often, therefore, the home of one's own is in particular a Lifestyle decision. The sauna in the basement and the Fireplace in the living room? As a tenant, that's not always so easy to do.
What is cheaper in Switzerland? That depends on some factors such as the actual interest rate, the Location and size of the property and, of course, decisively to the Location.
In some regions it is cheaper to buy a property, while in others it is cheaper to be a tenant.
What the Buy or rent graphic SRF shows vividly: Compared to the previous year, the ratio has changed drastically due to the interest rate situation, so it is worth taking a current look:
Chart Rent vs. Buy Switzerland as of November 2023
Let's do a concrete example for Zurich: Rent or buy a flat?
For the following example in Zurich, we take a average flat with 3 rooms and 80 square metres in a good part of town. The rent costs around CHF 27'000 costs, while the Purchase price of the same flat at about CHF 1.2 million would lie.
If all costs are considered in detail for this flat, renting is cheaper than buying.
This means that you have to be Buyers with high equity costs (around CHF 240,000), interest and maintenance. Additional purchase costs and reserves are added to the purchase. As a tenant, you don't have any major expenses during this time and are also a little more flexible with regard to a change of residence.
The above example is researched as an example. Of course, rents and purchase prices in Zurich can differ widely. A look at the SRF graph linked above confirms at the time of the research: as a buyer in Zurich, you pay around 35% more for housing than as a tenant.
You can find good rent or buy calculators for Switzerland here:
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The decision between the Purchase of a property and the Life as a tenant also depends on your personal preferences.
As Tenant you enjoy a Greater flexibility and mobilitybut also fewer freedomswhen it comes to the design of the property.
Straight in the country buying is cheaper than renting, as the chart from SRF shows. Of course, you can also rent a cheap house there, but it is not uncommon for the dream of owning a home to come true here. Also often aspired to: Rent an old house and then buy it by Hire purchase become the owner.
On the other hand Owner more Freedomsbut also More responsibility and financial risks.
As the owner of a property, you have a certain freedom to choose your Home ownership according to your wishes and adapt them. There are, of course, differences to consider depending on whether you are buy a house or a flat would like.
As owner is No approval requiredto make changes, as long as they comply with the applicable building regulations. So your dream of a barrel sauna in the garden and an open kitchen can finally become reality.
Moreover Home ownership a Very safe investment, as the value of the house or flat is likely to increase over time. The big risks are insured. Nevertheless, you naturally put "all your eggs in one basket" and invest a lot of money in A single investment in a single location. If your neighbour obstructs your view of the Alps, the market value will quickly dwindle.
If you decide to buy your own home, you will also need to pay for Additional costs such as repairs and maintenance arise.
Your bank even consciously reminds you to preserve the value of the Portability with 1% for renovation and maintenance calculates. In addition, you must Mortgage interest and the property tax pay.
As a tenant you have more flexibilityas you are not tied to a property.
Are you changing jobs? You want your children to be able to walk to school? As tenants, many people tend to move more quickly because they can less emotionally attached to a flat.
Moreover, it is usually cheaper to rent a flatas you are not responsible for maintenance and repairs. What's more, you don't have to bundle your money into a single Mortgage but can put it Invest broadly in the stock market. In this way, the risk can be spread more widely than in a single property and, in addition, that In the past, shares were more profitable than real estate were.
So rent is not money out of pocket. Owners invest in their own pockets, but they also pay the opportunity costs. Because as Tenant you have the opportunity, Enter into more lucrative investments than your own home.
Definitely you have it as a tenant easier when something does not work. The heating breaks down? Your landlord has to take care of it and you might get a rent reduction.
A Disadvantage of renting is that you have to know the space in which you live, not so design can, as you would like it. If you want to make major changes, you must first obtain permission from the landlord. In addition, the Rental costs increase over time. So you tend to be at the mercy of your landlord.
The discussion Rent or buy in Switzerland is mostly conducted in unobjective discussions and numbers are rarely looked at closely.
No general statement can be made. And often simplified (one could also say falsified) calculations fuel the discussion.
If someone says "I bought my property 20 years ago for 1 million francs and now it's worth 1.5 million", that sounds great.
But here's the thing:
By the way: a mixed form is also conceivable. A Hire purchase Switzerland-wide is feasible, but not often found. But with a little negotiating skill, hire purchase could be an exciting option for you.
"Intelligent people learn from the mistakes of others".
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Whether you want to buy a property in Switzerland Buy or rent should, depends on your personal circumstances off. If you have a long-term investment and plan a secure future for you and your family, is the Purchase of a property perhaps a good option.
Whether buying is more profitable than renting cannot be said across the board. Often the Home therefore primarily a Lifestyle decision.
If you flexible want to be and No big commitments you want to live as a Tenant better. Especially since you can then invest your money broadly and profitably. You can find out how to do this here in the blog.
Before you make a decision, however, you should think thoroughly about your Financial possibilities, your Living situation and your Future plans think.
In the end, it is important to make a decision that best suits your individual needs and life goals.
Ps. And if you ever hear someone say "rent is money down the drain" again, feel free to send them this post. Because this statement is simply wrong.
Good day,
In my opinion, both the calculator and your article ignore two factors:
1. it is assumed that the rent will remain the same over the entire period - it is possible that I will still be paying the same rent in 30 years, but then probably in a flat with a 30-year-old kitchen/bathroom/floor - if that doesn't bother you, you will actually save money; the more realistic scenario, however, is a renovation with a rent increase or a move to a new/more expensive flat; with the 1% maintenance costs for a home, a new kitchen, a new bathroom or a new heating system is also possible.
2. the tenant's uncommitted equity is invested in the calculations with a return, whereas the monthly savings of the owner are not; in the case of a new building, the maintenance costs are usually very low in the first 10 years - anyone who invests these savings monthly also achieves a return - less than the tenant, of course, but still not negligible.
No matter how many factors you include in the calculation, in the end the most important realisation remains - as you have already written - that owning your own home is primarily a lifestyle decision.
Greetings,
Marco
Hello Marco,
The calculators generally show a snapshot. However, as mortgage interest rates and rents are linked, the two will probably never be far apart in practice.
As far as the opportunity costs (free capital invested in shares) are concerned, I am completely with you. However, it must also be said that the equity in a home typically grows with the development of the property with a leverage of 5 (80% debt capital).
The calculation and comparison are probably always inaccurate in a generalised comparison. However, the critical examination of the topic alone is already valuable and important 🙂
Hello, Eric,
Thank you for the interesting article on renting vs. buying.
I would also be interested in the reverse mix of renting and buying - i.e. when you buy something and rent out part of it (either a flat or a room). Can this be a sensible way of financing your own home? What are the pros and cons of this? Have you ever reported on this or do you have any tips and tricks?
Thank you very much.
Kind regards
Martina
Interesting question, Martina!
There's no article on this yet, but I'll keep the topic in mind 🙂
Dear greetings
Eric
Good day,
How can I find out if there is the possibility of a hire-purchase as a tenant in the flat I am currently living in, or what can you recommend where and how I could get a hire-purchase?
With kind regards
Suleyman Bozkurt
Hello Suleyman
Probably the best way is to talk to the landlord directly. Possibly also through an official tender, but since lease purchases are not that frequent, the personal conversation will probably be a good approach.
Best wishes and good luck!