Background

On June 18, 2015, Hans Egloff, former National Councillor and President of the Homeowners' Association, submitted a parliamentary initiative with the aim of preventing abusive subletting. Specifically, Article 262 of the Code of Obligations is to be amended and supplemented. Parliament passed a corresponding bill in the 2023 fall session. The Tenants' Association has launched a referendum against this bill on which the electorate will have the final say in on November 24, 2024.

Current legal situation

The current provision on subletting stipulates that the tenant is entitled to sublet the property in whole or in part with the landlord's consent (Art. 262 para. 1 CO). The landlord can also give his consent implicitly. The landlord may only refuse consent if one of the reasons stated in para. 2 applies:

1. if the tenant refuses to disclose the conditions of the sublease to the landlord (whereby all significant contractual contents such as rent, identity of the subtenant, purpose of use, duration, designation of the subleased part must be disclosed) (lit. a);
2. if the terms of the sublease are abusive compared to those of the main lease (the reason behind this is the prevention of excessive profit through the sublease) (lit. b); or
3. if the landlord suffers significant disadvantages from the subletting (e.g. if the apartment is overcrowded) (lit. c).

The tenant is liable to the landlord for ensuring that the subtenant does not use the property in any other way than is permitted. The landlord may directly require the subtenant to do so (para. 3).

Criticism of the current regulation

Landlords criticize the current regulation because the concept of subletting is regularly abused.
The central points of criticism are in particular:

• Lack of consent: The landlord is often not notified of the sublet, i.e. consent is not obtained. The landlord often only finds out about the sublet after receiving information from neighbors (increased fluctuation, noise complaints, etc.).
• Permanent subletting: Landlords take the view that subletting is not intended to be permanent. Rather, subletting should enable the tenant not to have to give notice in the event of a temporary absence, such as during a year abroad on business, but to return to their apartment afterwards.
• Abusive profit motives: Furthermore, landlords want to defend themselves against cases of perpetual subletting, where a tenant benefits from favorable conditions without the intention of living there and makes an abusive profit from the sublet. In long-term tenancies, rents can be lower than the rents charged for advertised apartments. This can provide an incentive to sublet the accommodation instead of terminating the tenancy.
• Difficult to provide evidence: The burden of proof for the party obliged to provide evidence proves to be complex under the current law. The courts grant the landlord the right to refuse consent to subletting if the tenant has no intention of using the rented property himself again at a later date. Practice shows that the tenant's mere assertion that he will use the rented property himself again later is sufficient to reverse the burden of proof. The landlord must then prove that the tenant has no intention of returning. Landlords rarely succeed in proving an internal fact.

Content of the bill

The partial revision adopted by Parliament divides Article 262 CO into six new paragraphs. In principle, full or partial subletting is still permitted. The revised Article 262 CO specifies and codifies existing provisions on subletting on the one hand and extends the article on the other, as explained below.

If the tenants intend to sublet all or part of the rented property, they require the written consent of the landlord (para. 1).

In future, consent must be obtained by means of a written subletting request from the tenant, unless otherwise agreed in writing (para. 2). The law now codifies the content requirements for the subletting request: The names of the subtenants (lit. a) as well as the contractual conditions, in particular the sublet property, the purpose of use, the sublease rent and the sublease term (lit. b) are mandatory.

If the information provided in the subletting request changes during the subletting relationship, the tenant is obliged to inform the landlord accordingly (para. 3).

The grounds for refusal (para. 4) are largely based on the existing regulations. Compared to the current law, which contains an exhaustive list of grounds for refusal, there should now be room for additional grounds that are not expressly mentioned in the law. The tenant's refusal to disclose the necessary contents of the subletting request in accordance with para. 2 and para. 3 continues to constitute a ground for refusal of consent by the landlord (lit. a). Furthermore, in line with the current provision, abusive conditions of the sublease compared to the main lease may entitle the landlord to refuse consent (lit. b). As previously provided, the landlord must not suffer any significant disadvantages as a result of the sublease (lit. c). A new reason for refusal is a subletting period of more than two years (lit. d).

Paragraph 5 corresponds to the current Art. 262 para. 3 CO.

The landlord should now be entitled to an extraordinary right of termination in the event of subletting without the landlord's consent and in the event of false information provided by the tenant and non-communicated changes in the subletting request after an unsuccessful written warning (para. 6). This provision entitles the landlord to sanction such misconduct by the tenant with an extraordinary termination of the tenancy with a notice period of at least 30 days.

With regard to the presentation of evidence, it should be recalled that internal facts such as an alleged intention to return simply cannot be proven. Against this background, the written subletting request with the obligation to state the subletting period, the tenant's obligation to provide information about changes and the new reason for refusal in the event of an intended subletting period of more than two years should serve to prevent abusive subletting and balance out the dysbalance in the presentation of evidence asserted by the landlord.

Whether the electorate takes these concerns into account will be decided at the ballot box on November 24, 2024.

If you have any legal questions or require further legal information on this topic, the members of the VISCHER  Real Estate Team  will be happy to assist you.

Author: Florian Fallegger