ZURICH - The Cantonal Council voted 98 to 62 on Tuesday to allow higher building density within 800 metres of S-Bahn and tram stations. The reform, debated for fourteen months, overrides municipal height restrictions in designated zones and requires developers to set aside 25 percent of units for moderate-income households.

Construction director Silvia Steiner told councillors the change was necessary to address a vacancy rate that has hovered near 0.3 percent for three consecutive years in the city. Families are leaving the canton because they cannot find apartments large enough, she said during the final session at the Rathaus.

Who benefits, who pays

Suburban municipalities including Dietikon, Wallisellen and Duebendorf stand to see the most new building permits. In the city itself, areas around Hardbruecke and Zurich Oerlikon station are earmarked for mixed-use towers up to 22 storeys, subject to local design review.

The Zurich Tenants' Association welcomed the affordability quota but said it would not prevent rent increases in established neighbourhoods. Landlords in Enge and Seefeld know demand exceeds supply. Density rules in Oerlikon do not change that arithmetic, association president Markus Kaegi said.

Links to federal policy

The vote comes as the Federal Council published its climate framework, which includes incentives for cantons that retrofit older buildings. Steiner said Zurich would apply for federal grants to upgrade heating systems in pre-1980 housing stock. National vacancy data released later in the week, in our shortage report, show why the canton is in a hurry.

Financial analysts note that mortgage rates remain elevated following the ECB's latest decision. Public consultation on the first batch of building applications opens on 1 October.