Deferred Maintenance or Disguised Renovation ? The Federal Court Decides
In ruling 1C_70/2024, the Swiss Federal Court rejected the appeal of property owners challenging the requirement to obtain a permit for works they considered to be deferred maintenance.
A., B., and C., owners of an apartment in Geneva, undertook painting, carpentry, and electrical renovation works in 2016, after the tenant vacated the premises. The total cost amounted to CHF 17,611. Following the works, the annual rent increased from CHF 9,600 to CHF 14,700.
In 2022, the Geneva Department of Territory concluded that the works required a permit under the LDTR/GE (Geneva's Law on the Demolition, Transformation, and Renovation of Residential Buildings), as they constituted a disguised renovation. It ordered the rent to be reduced to its previous level, mandated the reimbursement of CHF 14,950 in excess rent collected, and imposed an administrative fine of CHF 3,000.
Upon appeal by the owners, the Administrative First Instance Court annulled the Department’s decisions, holding that the works carried out in 2016 were purely maintenance in nature and therefore not subject to permit requirements. However, the Court of Justice overturned that ruling and reinstated the Department’s decisions.
The owners appealed to the Swiss Federal Court.
The Federal Court reaffirmed that the LDTR/GE seeks to preserve existing housing and prevent its loss in favor of more expensive units. While routine maintenance does not require a permit, deferred works bundled together following a tenant change may qualify as a renovation subject to approval. In this case, maintenance over more than ten years was deemed insufficient: only CHF 3,107 had been invested over a twelve-year period. The 2016 works thus represented nearly 90 times the average annual investment. The bundling of these interventions, their cost, and their extent—affecting nearly the entire apartment—pointed to a lack of regular upkeep.
The Federal Court also noted that the 53% rent increase was a strong indicator of a qualitative change to the apartment, even without significant comfort improvements. This increase far exceeded the former indicative 20% threshold proposed by a minority of the Grand Council. It was irrelevant that the cost of the works represented only 10% of the property’s insurance value or that the works were prompted by the tenant’s departure: the scale remained significant in light of established case law.
Finally, the High Court emphasized that the obligation to reimburse the excess rent aligns with the LDTR/GE’s goal of maintaining affordable housing. The owners’ claim of acting in good faith was rejected, given the well-established jurisprudence on deferred maintenance.
Article by Me Ludovic Jordan