Buying Property in Switzerland
We have compiled an easy to understand guide to buying property in Switzerland, containing information that you may find useful.
The buyers guide is only to be used as an outline informative guide to the property purchasing process in Switzerland.
The Swiss Economy
Switzerland achieved an economic freedom score of 82.0 in 2020, making it the 5th freest economy in the world. Ranking 1st in the European region, with a score well above the regional and world average.
With a budget surplus of 2.8 billion Swiss francs in 2019, more than double the initially budgeted amount, the 2020 budget proposed by Swiss government expects to maintain trend with a surplus of 600 million Swiss francs.
Public administration in Switzerland experiences the highest public confidence of national government in any of the countries in the OECD. The agricultural sector sees heavy subsidisation from government while labour productivity is high elsewhere. Though there are very few price regulations in Switzerland, agricultural goods prices are maintained through intervention if monopolistic pricing is identified.
The Swiss Property Market
The Swiss property housing market is widely known for its strength with very strong price increases in previous years, in both rental properties and owner-occupied housing. The most rapid expansion has been seen in the ski property sector. The Swiss alps is home to some of the finest real estate in the world, with stunning views and plenty of activities nearby.
Prime ski resorts and major urban areas have seen the most drastic price increases due to the demand for property within these sought-after locations. Meanwhile, housing prices in other locations remain more in tune with inflation rates.
Record low borrowing costs support the high demand for property, while a supply shortage is set to maintain strong property pricing in years to come.
Why Buy Property in Switzerland?
Switzerland is popular among the international community for the sense of reliability, stability and security it offers. Its quality of life, education and construction, and its position in the heart of continental Europe is very attractive. Unsurprisingly, this has led to great demand from overseas for Swiss residences or second homes.
This has led to restrictions of construction of second homes in communes where second homes already comprise of over 20% of housing stock.
New properties that have permits for international buyers ( such as Chalet les Rahâs in Grimentz or Le Montagnier in Champéry) should therefore be a sound investment due to the lack of new second homes available in future. The market will then solely be focused on resale of homes, foreigner to foreigner.
The Purchase Process in Switzerland
Foreign investors & non-residents who wish to purchase property in Switzerland must acquire a permit to do so, issued by federal authorities. All local requirements must also be met, dependant on the cantonal (region) in question. Property purchases in Switzerland are governed by the Lex Koller regulations.
The Lex Koller Regulations
The Lex Koller regulations allow for foreign investors and non-residents of Switzerland to buy property in certain areas of the country. A designated number of property sales is shared between territories within Valais, Fribourg, Vaud, Neuchâtel, Graubünden, Bern and Ticino.
These parts of Switzerland are most widely known for their ski resorts, making investment in these areas highly lucrative. The Lex Koller regulations only apply to those who wish to rent their property out, not to those buying as a main residence. Those who wish their property to serve as a permanent residence must acquire Swiss residency.
A local Swiss Public Notary will act for both the purchaser and vendor to complete the transaction. They are there to protect the interests of both parties and will draw up the deeds and documents required for legal ownership.
Notary fees, land registry fees and Government purchase taxes vary from Canton to Canton, in Valais for example, you will need to budget 3%. The fees are payable by the purchaser, not the vendor. All contracts are carried out in Swiss Francs. Once the purchaser has selected an apartment, the purchasing procedure through the Notary is straightforward.
The Property Acquisition Process
Complete personal details forms and Power of Attorney documentation.
Payment of the agreed deposit to the Notary account.
Signing of the deed of sale.
If the property is being bought by a non-Swiss resident, then the Notary will apply on their behalf to the Cantonal authorities for an authorization permit. The time taken to receive authorization varies from village to village and depends on the current status of permit allowances and allocations in each particular area.
Once the authorization has been received and the property completed, the notary will record the deed of sale with the Land Register.
Off-Plan New Builds
New build off-plan developments are usually paid in stages via the notary. The buyer signs a reservation agreement and pays a deposit. The bank will make the remaining stage payments as the construction proceeds (typically when the foundations and roof are started) with the final payment taking place after a satisfactory snagging inspection has taken place.
New build construction carries a 5-year guarantee for construction defects and 10 years for hidden defects.
When buying a property in Switzerland there are certain regulations that need to be adhered to:
Non-Swiss families can only own one property in Switzerland at any one time and the size of the property can be a maximum of 200m2 internal liveable floor area. For chalets the plot size is also limited to 1000m2. The term ‘family’ can be defined as husband and wife and / or under-age children. Over the age of 20, a child of an owner may purchase one property in their own name, provided they can prove financial independence.
Certain Cantons place restrictions on resale of a property within a set amount of time. These regulations differ from Canton to Canton, but it is not unusual for a buyer to be restricted from resale within the first 5 years of ownership, for example. Once this time has elapsed it is then possible to resell a property to another non-resident quite easily, subject to the Lex Koller law.
An owner can occupy a property for up to six months per year with a maximum stay at any one time of three months.
A property can be rented for a maximum of 11 months and 1 week per year.
EU citizens with a residence permit B and all foreigners with a residence permit C are not subject to the restrictions above.
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