Berne: Municipal council reorganises building lease charges
The Bern City Council has adopted new principles for the transfer of municipal land under building law. In the future, non-profit housing associations will have advantages over yield-oriented investors.
In the future, Bern will differentiate between market-rate building lease holders and non-profit housing developers, according to the city council. In the case of standard market building lease charges, the interest rate for the standard market land value will in future be based on the 20-year average of the interest rate for federal bonds with a 20-year term. Building lease agreements are concluded for a period of 60 to 80 years. After taking into account specific property characteristics, the target interest rate is in the range of 3 to 4.5 percent. The building lease rate is adjusted every five years, taking full account of the national consumer price index (CPI). The reversionary payment, with which the buildings are compensated on expiry of the building lease, is generally between 60 and 90 percent of the market value, depending on the buildings on the property in question.
In the future, Bern will have a model building lease agreement for building leases to non-profit housing developers. Unlike the levies to yield-oriented investors, it is not the market value of the land that is decisive here for determining the building lease charge, but the investment cost limits set by the Federal Office of Housing. From this, depending on the quality of the location and the utilization, a land value share of 15 to a maximum of 20 percent is calculated, on which interest is charged at a minimum rate of 3 percent. This results in an annual building lease charge of between CHF 17 and 24 per square meter of chargeable floor area (gross floor area). The building lease charge is adjusted after five years, as is the case with standard market building leases, although only half of the inflation shown by the LIK is taken into account. Depending on the building, the reversion compensation is also between 60 and 90 percent of the current or condition value.
The fact that non-profit housing developers receive better conditions than yield-oriented investors when granting building rights is understood as a contribution to the promotion of non-profit housing construction in the city of Bern, the municipal council says. In return, the housing developers taking out building leases would have to meet requirements, such as the principle of cost rent for apartments. Furthermore, provisions regarding the selection of tenants (income situation, residence obligation) or occupancy (minimum number of persons) must be fulfilled, which will be stipulated in the building lease contracts in the future.
