Property Purchase Process
Purchasing a property can sometimes be a daunting process. This can be emphasised further if the property is in a foreign location. Here at AlpLifestyle we ensure all of our clients are assisted every step of the way with their property purchase. This includes all relevant assistance required for investing in a property with the view to earning a rental income.
Swiss Property Regulations
The Lex Koller regulations govern the purchase of homes in Switzerland by foreign investors, these rules are regulated by Swiss federal law.
Non-residents of Switzerland are required to meet all the required criteria of these regulations and the rules local to the cantonal (region) they are purchasing property in. This is usually in the form of a permit from the federal authorities and the relevant cantonal.
The Lex Koller regulations allow for the purchase of property in the main cantons of Valais, Fribourg, Vaud, Neuchâtel, Graubünden, Bern and Ticino. These cantons are designated a limited number of property sales per year (currently 1,440). Therefore, it is possible to buy property in the main ski resort locations, these areas represent the best investment opportunity.
The Lex Koller regulations do not apply when a non-resident is purchasing their Swiss property to serve as their main residence.
What Is The Process For Purchasing A Swiss Property?
All foreigners are obliged to apply for a permit to buy a holiday home in Switzerland. The purchase process of the property is governed by the Lex Koller regulations, these apply to all purchases in Switzerland unless the property is to serve as main residence for the buyer.
A local Swiss Public Notary will act for both the purchaser and vendor to complete the transaction. He is there to protect the interests of both parties and he 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 process is as follows:
Complete personal details forms and Power of Attorney documentation.
Payment of the agreed deposit to the Notary account.
Signing of the deed of sale.
The Completion of the 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.
Purchasing Off-Plan New Builds In Switzerland
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.
What Are The Purchase Costs?
Costs of purchase vary depending on the Canton. In Valais (Where AlpLifestyle ski properties are located) you will pay 3% comprising of notary fees, land registry fees and government purchase taxes. In addition, there is a mortgage registration fee payable. In Valais this is 1.6% of the loan value.
Local banks will lend up to 70% of the property value depending on your financial circumstances. Higher percentage LTVs are possible if you invest your assets with the bank.
You have to pay the 30% deposit and then the bank will release the mortgage.
Interest rates are the lowest in the developed world and banks will lend over 50 years at fixed rates (5-15 years) below 2% per annum.
A Swiss mortgage (both variable and fixed rates available) is effectively an overdraft secured against the property with the borrower paying interest on the capital every quarter.
Apartment at more than CHF 2 million are considered as lux investments. This involve a max LTV at 60% and capital repayment at minimum 3%.
Capital repayments can be made for up to 50 years and are paid annually.
The Final Stages of Purchase
To avoid a property being owned by two people at the same time, The buyer and seller of all associated properties must come to an agreement on when contracts will be signed and when moving in will take place. Once mortgages have been confirmed by the chosen bank you will be invited for a meeting with the notary, along with the seller. This is when contracts will be discussed and agreed upon.
The cost of the notary will be a percentage of the cost of the property. This may be divided equally between the buyer and seller depending on the canton.
You are free to choose any notary or legal advisor you wish. This means you are not obliged to accept the notary which is recommended to you. Your notary will take care of the paperwork associated with the purchase, including property transfer tax and land registry deeds.
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