Remission of business rents due to the Covid 19 pandemic

As the Covid-19 numbers increase, so does the pressure on the economy. This became all the stronger last Wednesday when the Federal Council again took measures to contain the pandemic. There is no doubt that the measures are slowing down the economy and are increasingly leading to financial bottlenecks for the companies affected by the measures. Parliament is now planning a change in the law in order to help the businesses affected by the measures by means of rent reductions.

The so-called Covid 19 Business Rental Act would retroactively lead to tenants and leaseholders affected by the Federal Council’s measures having to pay only part of the rent for the period from 17 March to 21 June 2020. It is envisaged that the stores affected would only pay 40 percent of the rent and the remaining 60 percent would be paid by the landlord. Excluded from this rule would be tenancies where the monthly net rent exceeds CHF 20,000. It should also be possible, by mutual consensus, to waive the rent waiver.

From a legal point of view, the planned change in the law is very much in a grey area. It is mainly controversial, since this adjustment would retroactively affect contractual relationships under private law. The opponents of the bill describe it as disproportionate and unconstitutional. However, the question of unconstitutionality cannot be answered easily. The rights affected that are protected by the constitution would be the guarantee of property, economic freedom and, in some cases, competitive neutrality. Furthermore, the regulation would undoubtedly violate the constitutional prohibition of retroactivity. 

Proponents of the bill argue the opposite. Whether the bill is now unconstitutional ultimately depends on whether the bill is proportionate, legitimized by public interests and necessary. In my opinion, the bill is undoubtedly unconstitutional.

The above-mentioned bill was narrowly retained in the National Council by 91 votes to 89. Thus, the bill goes back to the National Council commission that had made the preliminary consultation. The matter will be submitted to the Council of States in the winter session.