Indexed rent or fixed rent: which clause should you choose in your lease in 2025?

Indexation to the CPI, stepped rent or fixed rent: the clause chosen in a Swiss lease determines who bears the risk of inflation over the years. In 2025, in a context where prices have seen marked turbulence since the pandemic, this choice is no longer a simple administrative formality. Before signing, it is best to understand exactly what each formula implies, for the landlord as well as for the tenant.

The Swiss legal framework: what the Code of Obligations says

In Switzerland, the lease agreement is governed by the Code of Obligations (art. 269 and following), which sets out a founding principle: the rent must not allow abusive returns nor result from coercion. Any change in rent, whether it stems from a contractual clause or a unilateral decision by the landlord, is regulated and must be notified using the official cantonal form approved by the Cantonal Council.

Within this framework, three main families of clauses coexist in practice: the classic fixed rent, the rent indexed to the Swiss consumer price index (CPI) and the stepped rent. Each follows a different logic and applies in distinct contexts. Commercial leases are often indexed, while residential leases more frequently use fixed or stepped rent.

A point often overlooked: for an indexation or stepping clause to be valid, it must comply with strict legal conditions. A poorly drafted clause can be declared void by a judge or a conciliation authority, which exposes the landlord to having to refund amounts collected unduly.

Fixed rent: stability and simplicity, but watch out for inflation

Fixed rent is the most common formula in residential leases in French-speaking Switzerland. The amount is determined when the contract is concluded and does not vary automatically. To change it, the landlord must invoke a legally recognized ground: an increase in the reference mortgage rate, general cost-of-living rises, additional charges or value-adding works.

Advantages for the tenant

- Total predictability of the housing budget over the term of the lease.

- No surprises linked to fluctuating economic indices.

- Protection against unanticipated temporary inflation.

Advantages for the landlord

- Freedom to set the initial rent at market level.

- The possibility to adjust during the lease if the legal conditions are met.

- A rental relationship that is often more serene, since revisions remain exceptional.

The downside for the owner is clear: if inflation runs high over the long term and the reference mortgage rate does not move, the real value of the rent erodes without any automatic compensation mechanism. This is precisely what has pushed some institutional owners to favor other formulas in recent years.

Rent indexed to the CPI: a risk-sharing logic

Indexed rent is tied to the evolution of the Swiss consumer price index (CPI) published by the Federal Statistical Office. When the CPI rises, the rent can be increased proportionally; when it falls, the tenant can request a reduction. It is a symmetrical mechanism, which is often forgotten by landlords.

Conditions for the validity of an indexation clause

Under article 269b of the Code of Obligations, an indexation clause is valid only under two cumulative, mandatory conditions: the lease must be concluded for a firm term of at least five years, and the reference index must be exclusively the Swiss consumer price index. A clause based on any other index would be void. To this are added the general requirements of form: the clause must appear expressly in the contract and the increase must be notified on the official cantonal form.

- The lease must be concluded for a minimum term of five years (a mandatory condition that cannot be modified by agreement of the parties).

- The reference index must be exclusively the CPI; any other index renders the clause void.

- The indexation clause must appear expressly in the contract.

- The increase cannot exceed the variation of the CPI since the last setting of the rent (legal cap: 100% of the CPI variation).

- Any adjustment must be notified on the official cantonal form, with 30 days' notice before it takes effect.

In practice, long-term commercial leases, office space or industrial premises are the natural ground for indexed rent. For a residential lease, this formula is less common but entirely legal if the conditions are respected. Care should be taken: an indexation clause that does not meet the legal criteria is void as a matter of law, which exposes the landlord to a conciliation claim and to refunding increases collected unduly.

An indexed rent is not a guarantee of growing income for the landlord: the CPI can stagnate or fall. It is a tool for neutralizing inflation risk, not a mechanism for automatic appreciation.

Stepped rent: scheduled visibility

The stepped lease provides for rent increases at dates determined in advance, written into the contract. From the moment of signing, the tenant knows that the rent will rise, for example, from 1800 to 1900 francs on a specific date, then to 2000 francs on a later, also fixed, date. This transparency is its main quality.

To be valid, each step must be defined precisely: exact date and new amount. The formula cannot be combined with indexation to the CPI for the same lease (art. 269c CO). In French-speaking Switzerland, it is frequently found in new-build projects or major renovations, where the owner wishes to gradually amortize their investments.

Points of attention for the tenant

- Check that the steps are compatible with the foreseeable evolution of their budget.

- Make sure the final rent reached stays within the limits of the local market.

- Understand that stepped rent never decreases automatically, unlike indexed rent.

A practical comparison: which profile for which clause?

The choice between these formulas is not universal. It depends on the type of property, the desired term of the lease, the profile of the parties and each side's economic expectations. Here are some concrete benchmarks to guide the decision.

For a private owner renting an apartment in Lausanne or on the Riviera

- Fixed rent remains the norm and limits the risk of dispute.

- Stepped rent may be suitable after a renovation, to gradually recover the investment.

- Indexation is rarely justified for a home, except for a very long-term lease with an institutional tenant.

For an investor or owner of commercial space

- Indexation to the CPI is often preferable on leases of five years or more.

- It protects the real value of the rental income without requiring periodic renegotiation.

- Stepped rent can be combined with a rent-free period at the start of the lease to ease the commercial tenant's move-in.

For a tenant looking to settle for the long term

- Prefer fixed or stepped rent over indexation, to keep control of your budget.

- In the case of stepped rent, negotiate the future amounts before signing, not after.

- Systematically check that the planned increases do not exceed the customary rents of the neighborhood.

Common mistakes and pitfalls to avoid

In the field, Homewell regularly comes across avoidable situations that arise from a poor understanding of these clauses. A few mistakes come up systematically, on both the owners' and the tenants' side.

On the landlords' side

- Introducing an indexation clause in a lease of less than five years: it will be void as a matter of law (art. 269b CO).

- Basing the clause on an index other than the CPI: the clause will likewise be void.

- Forgetting to notify the increase on the official cantonal form before it takes effect.

- Applying an indexation without checking that the net return on the property remains admissible under the anti-abuse rules.

- Combining indexation and stepping in the same contract, which is prohibited by article 269c CO.

On the tenants' side

- Signing a stepped lease without calculating the impact of the final rent on their budget.

- Failing to contest, within the deadline, a rent increase notified irregularly: the contestation deadline is 30 days from receipt of the increase notice.

- Believing that a fixed rent can never increase: a rise in the reference mortgage rate can justify a revision, even on a fixed-rent lease.

In 2025, what is the right reflex before signing?

The economic context of 2025 calls for caution. After several years of rising interest rates, then a gradual easing, the reference mortgage rate has stood at 1.25% since September 2025. The outlook for the CPI and the reference rate remains uncertain. In this context, the golden rule is simple: never treat the rent clause as a secondary line of the contract.

Before any signing, it is recommended to have the contract reviewed by a professional who knows Swiss tenancy law precisely. A poorly structured lease can be costly to correct once signed, especially if the tenant is already in place. An independent management agency like Homewell can audit the rent clause of an existing contract or assist in drafting a new lease suited to the profile of the property and the parties.

The best clause is not necessarily the one that maximizes short-term return. It is the one that balances the interests of both parties over time and that withstands a conciliation review. In real estate as elsewhere, the strength of an agreement often lies in the clarity with which it was concluded.

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