Swiss Property Rental
Switzerland has been well known as one of the strongest property markets in world, with house prices rising steadily in previous years.
The largest price increases have been seen in central urban areas and the major ski resort locations due to their rising popularity. With a large demand for housing in the key Swiss areas, and low borrowing costs, the property rental market is projected to maintain its upward trajectory for the next 5-10 years.
The Swiss Attraction
Switzerland is well known for being a highly desirable place to visit or even as a permanent residence, for good reason. With a seemingly endless list of activities to take part in, places to explore and sights to see, the Swiss lifestyle appeals to the masses.
The Swiss landscape is responsible for much of Switzerland’s success as an iconic destination. Extreme sporting activities like skiing have made Switzerland a must-see for thrill seekers. While the jaw dropping landscape and traditional Swiss lifestyle attracts all ages and interests.
The greatest increase in demand for property has been seen in ski resorts where new developments are underway. This has been influenced by the creation of new ski facilities opening such as ski lifts and cable cars in Grimentz & Champéry.
Buying to Rent in Switzerland
Many investors seek a buy-to-rent option for their Swiss properties. this allows them to take advantage of the massive demand for ski chalets and apartments for holiday purposes. Those looking to rent apartments and chalets in ski resorts often look for traditional stays which maintain Swiss styles throughout whilst maintaining a luxury feel. These type of stays have become iconic for skiing holidays in Switzerland.
With such a large market for property rental in ski resorts, buying property with this intention can represent an excellent investment opportunity.
What Are The Running Costs
Particularly with apartments, each purchaser acquires a share in the Propriete Par Etage (PPE), which means co-ownership by floor. The total annual costs of an apartment building are shared between the individual apartment owners, proportioned according to the size of each apartment. As an example, the annual running costs of a 2-bedroom apartment of 110m2 in Les Rahâs in Grimentz is around 5’500CHF per year, and 6’500/7’000 CHF for a 3 bedroom apartment of around 140m2.
Typical running costs include:
Electricity, water and heating
Common space maintenance
How Can I Rent My Property?
Alpine Lifestyle Partners works with Mrs Miggins to provide our property owners a personalized rental program to generate a rental income.
Mrs Miggins will be in contact with the new owner of the property. They will advise you regarding the prices on the market, the owner use & availability you wish to put on the rental market, as well as the gross amount you wish to generate per year. Mrs Miggins does not oblige you to rent for a minimum period, the owner is free to rent as much or as little as they want, or occupy their property as much as they like.
The only restriction to this is Swiss law. Your property cannot be rented on a full annual basis, the maximum being 11 months and 1 week. And you, your family or friends are supposed to use the property for at least 3 weeks of the year.
The apartments and chalets managed by Mrs Miggins are popular on the rental market as Mrs Miggins provides its own ‘hotel style’ services on site for guests and owners.
Swiss Property Investment
Once you have purchased a property, if you are interested in an option to rent it out, Alpine Lifestyle Partners will offer you the opportunity to do so via the international group of agents and tour operators of Mrs Miggins. Each project has a reception and management desk run by Mrs Miggins to provide services and a presence on site, all year round.
Your Investment Return
Your apartment will be on the rental market all year round. It will be rented mostly during the Winter Season (December to April) and then the Summer season ( June to September) but it will also be available for stays in low season.
The return on investment mostly depends on two variables: the size of the apartment selected and the owner’s use.
Once you have selected an apartment and provided the number of weeks you plan to use per year, Mrs Miggins will be able to design a personalized business model with expected gross rental income.
The design of your apartment and the features are also an important point, for instance a hot-tub on the terrace or fire place in the living room are very much appreciated by guests. Contact us to receive a personalized business model at firstname.lastname@example.org.
Is It Possible to Purchase Property In a Company Name?
Due to the regulations put in place by the Swiss government, it is not possible for a foreign person to purchase a property in the name of a company. The Lex Koller regulations state that someone of foreign residence can only purchase one property in Switzerland at any one time. For more information regarding buying property in Switzerland see our guide, here.
Mortgage rates in Switzerland
Those who wish to get a mortgage in Switzerland are often taken aback by the borrowing rates offered by some mortgage lenders. This can be as little as 1%, a significant drop from previous years where mortgage rates were between 4% and 5%.
2018 saw a slightly retracement of this, however rates fell once more in 2019. Making for a five year average of only 1%, and a ten year average of 1.35%.
When acquiring a mortgage in Switzerland it is worth contacting various lenders to make comparisons. rates can vary from bank to bank, so it is always best to shop around for the best deal to suit you. Rates offered are heavily dependant on your financial history and personal circumstances at the time of application.
How Do Swiss Mortgages Work?
Local banks will lend up to 70% of the property value depending on your financial circumstances. Higher percentage loan-to-value (LTV) is possible if you invest your assets with the bank.
You have to first 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 for ten years at fixed rates below 2%.
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.
Apartments at more than CHF 2 million are considered as lux investments. This involve a max LTV of 60% and capital repayment at a minimum of 3%.
Capital repayments can be made for up to 25 years and are paid annually.
Purchase Costs in Switzerland
Costs of purchase vary depending on the Canton (region). In Valais, where we have all our ski properties, you will pay around 3% of the property fee. 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.
Taxation in Switzerland
Property Tax: Sometimes known as land or real estate tax, this is a cantonal or communal tax on land and buildings. It is payable by persons who are recorded in the land register as the owners or users of a property. The rates range from 0.05% to 0.3% on the full taxable value of the property, i.e. without taking account of any related debts or mortgages. The property is taxed at its location irrespective of where the owner lives.
Swiss Tax on Rental Income: Rental income is taxable. Nevertheless, administration costs invoiced by third persons, necessary maintenance and improvement costs, as well as interest payments in respect of loans, are deductible. This type of tax can also apply to non-residents.
Rental Value Tax: All homeowners in Switzerland must pay an income tax on their home. This tax is called the Rental Value Tax and is calculated by determining how much rent the home would theoretically yield if rented out. At the same time, you can deduct mortgage interest payments and other costs for the upkeep of the property.
Capital Gains Tax: Profit on the sale of a property is subject to a capital gains tax to reduce speculation. The rates are usually progressive and the longer the property is owned, the lower the tax rate. A shorter owning period means a higher tax. The computation for the taxable gains is the selling price, less acquisition costs and costs of improvement. Therefore, it is very important to keep all the receipts you have relative to your property as they may save you money in the future!
Double Taxation: If you live outside Switzerland, then normally you should not pay tax in your country of residence on a property situated in Switzerland. This however depends on the Double Tax Treaty between Switzerland and your country of residence. The principle normally followed is that property is taxed in the country where the property is situated.
Inheritance tax: All properties are freehold and therefore can be passed to direct descendants. In Canton Valais there is no inheritance tax payable, though you will be liable to your local country rate of taxation.
Property Buyers Guides
Get to know the alpine property market and gain an understanding of the buying process with our property buyer guides.
Learn More >
Learn More >
Learn More >