"Three-Thirds Model" - The City of Zurich supports Zurich's Commercial Sector through Rent Contributions

The regulation is in force and can be read here (in German). In total, the City of Zurich will provide CHF 20 mio. for the payment of rent contributions. A similar model already exists for the Canton of Basel-Stadt (the necessary information and documents can be found here; in German).

Specifically, this support means that the rent for the period from December 1, 2020 to April 30, 2021 will be divided by three: (i) the City of Zurich, (ii) the business tenants, and (iii) the landlords will each assume one third. In this way, the City of Zurich intends to relieve the business tenants financially; however, it will assume a maximum of CHF 8,333 per monthly rent.

The following requirements apply:

1. The leased property is a business premises in the city of Zurich.
2. The landlords and tenants have agreed that the tenants will pay only one-third of the net rent for at least one month in the period from December 1, 2020 to April 30, 2021.
3. The tenancy is not terminated or, in the case of a fixed-term tenancy, continues at least until December 31, 2021.
4. There shall be no legal or economic dependence between the parties. They must not represent the same beneficial owners and they must not be related parties.
5. The tenant is a business company (sole proprietorships, simple partnerships, limited partnerships and general partnerships as well as legal entities regardless of their legal form),
   a. who had to close its business during the period from December 1, 2020 to February 28, 2021 due to corona-related regulatory orders (direct impact); or
   b. which has suffered a corona-related loss of sales of at least one third in the period from December 1, 2020 to February 28, 2021, compared with the corresponding prior-year period (indirect impact).
6. The tenant is not in liquidation or bankruptcy proceedings.

Procedure for submitting the application

The application can be submitted online by means of an application form and an agreement form by the landlord. The forms are available here (in German). The application must be submitted by April 30, 2021 at the latest.

Conclusion

Both rental parties can benefit from the rent assistance contributions: the landlords receive (only but still) two thirds of the rent and at the same time support their tenants to remain capable of doing business. In addition, this support is intended to motivate tenants to seek discussion with their landlords.

Since only a limited amount of CHF 20 mio. is available, we advise submitting the application as soon as possible. If the amount is not sufficient, the City of Zurich will prioritize the applications according to the date of receipt. It is yet unclear whether the amount shall be increased in case the CHF 20 mio. should not suffice.

If the parties are not yet able to reach an agreement for the entire period from December 1, 2020 to April 30, 2021, we recommend to have the following addition to item 6 of the pre-formulated agreement form: Requests for a rent reduction due to a lower reference interest rate and requests for further months under the present agreement are reserved.

Our team is happy to advise you on any questions regarding rent reduction in connection with the Coronavirus crisis. We look forward to hearing from you.