Attractive residential locations, a wide choice and low interest rates: property is considered an attractive investment in Switzerland. Have you already been living in Switzerland for some time now and would like to buy your own home? Buying a property for non-insiders is not always easy and involves risks. Caution: Depending on your status in Switzerland, you may need a permit.

Tourismo Zurigo
Photo: Zug Tourism

Switzerland has had rules concerning the purchasing of land and property by people from overseas since 1961. The legal framework conditions have never been entirely uncontroversial: it was partly about the fact that certain segments of the population warned about “selling off the homeland”. There was also a concern that the already high prices would climb even higher. A complete abolition of the law, which is known in Switzerland above all by the name “Lex Koller”, has so far failed to gain majority backing in parliament.

Your own home: does this require a permit?

But what does that now mean in practice? It makes a significant difference whether the respective person still has their place of residence overseas or whether someone has already lived and worked here in Switzerland. With what’s known as the “freedom of movement of persons” between Switzerland and the EU, it should also be noted that certain people – similar to settlement in general – have easier access – including when it comes to buying a house, apartment or plot of land in Switzerland.

Source: Lex Koller Advisor by Engel & Völkers Wohnen Schweiz AG
Source: Lex Koller Advisor by Engel & Völkers Wohnen Schweiz AG

Generally speaking, citizens with a C residence permit are equal to Swiss people. There are no restrictions for them with regard to purchasing property (property for own use, holiday homes, etc.). People from the EU/EFTA area with a B residence permit and a residential address in Switzerland gain access to the property market under certain conditions. It is generally possible for them to buy an individual property to live in themselves (main residence). Since the 1990s, rules have been relaxed for commercial properties: operating facilities, factories, warehouses, shops, hotels, etc., can usually be purchased without restrictions. However, things can also get complicated in specific cases, such as when there is also residential space alongside the commercial space.

“The processes and procedures are also really challenging because various bodies are responsible for inspecting the documents and the cantons each handle the process differently,” adds Anja Beck, Managing Director Residential at Engel & Völkers in Zug.

Buying property: plan ahead and be prepared

Practical tip: Are you interested in living in Switzerland and being settled here over the medium term? Are you considering buying a property? To fulfil the conditions listed above, you first have to be considered a national person and have a residential address here. In practice, that means that people live here for a certain amount of time (initially renting). This can also theoretically be a really short-term solution, such as a furnished apartment or the like.

However, what’s crucial is that you have to be able to show credibly during the checks involved in purchasing a property that your place of residence is in Switzerland (Switzerland as the centre of vital interests). It is naturally irrelevant here whether and at what price you want to purchase something.

Anja Beck’s experience here is: “Before a property purchase is finalised, various formalities have to be clarified.” A confirmation of your residential address (by the municipality or canton) and a corresponding permit of settlement (such as a B permit) are fundamental. There are also various other documents that demonstrate that you do not just maintain an address in Switzerland as a formality. The following criteria are known from practical experience (without them being essential individually or needing to be fulfilled cumulatively):

Buying a house: Switzerland as the centre of vital interests

  • Confirmation of your place of residence in Switzerland and residence status.
  • Evidence of an employment relationship in Switzerland (e.g. employment contract). Or evidence of sufficient financial means (flat-rate taxation).
  • Evidence that the purchaser has given notice of departure overseas and is a fully taxable person in Switzerland (e.g. tax statement);
  • Swiss insurance (personal liability, mandatory Swiss health insurance, vehicle insurance).
  • Evidence of the registration of a vehicle in Switzerland (e.g. registration document); respective transfer of your vehicle.
  • Involvement in a club or gym membership.
  • Consumer spending in Switzerland (mobile phone, electricity, gym membership, doctor’s bill or similar).
  • Household/family: Household with spouse/life partner; living with children under the age of 18.

According to Anja Beck from Engel & Völkers, each case is somewhat different; however, in general, the authorities are sure to take a close look. “If the respective person, for instance, has children under the age of 18 who live abroad, this raises questions and usually requires further clarification.” This could be interpreted in such a way that the centre of vital interests is actually not in Switzerland.

Saanenland Tourism
Photo: Saanenland Tourism

What is considered a holiday property?

The starting point for second or holiday homes in Switzerland is also different. Certain annual quotas need to be noted for the whole of Switzerland and for the cantons. The quota or the total number of holiday properties sold annually to foreigners is thus limited. Before you make specific plans and start dreaming of a great property in the Swiss mountains, you should investigate: Do any quotas apply? What conditions or permits are required?

The cantons sometimes accept certain uses in serviced apartments, in clearly designated tourist spots or grant a permit for special cases. Here, too, as the subject is complicated even for experts and also varies significantly by region, you should seek information in the local area.

It is important to know that many cantons generally permit the sale of holiday homes: These are: Appenzell Ausserrhoden, Bern, Fribourg, Glarus, Grisons, Jura, Lucerne, Neuchâtel, Nidwalden, Obwalden, St. Gallen, Schaffhausen (only for residential units in serviced apartments), Schwyz, Ticino, Uri, Vaud and Valais. The property area must be less than 1,000 square metres and the net residential area less than 200 square metres. The latter include all habitable and heatable rooms, including saunas, swimming pools and hobby rooms, but not balconies, stairwells, cellars and lofts.

Financing: low interest rate

If you want to take out a mortgage for your purchase, you must contact a Swiss bank or a bank with branches in Switzerland. We currently have an unusually low, very attractive interest rate for mortgages (such as a LIBOR mortgage or the new SARON mortgage) here in Switzerland. And property buyers and owners are always welcome customers at banks. As a second argument, certain fiscal particularities need to be taken into account in Switzerland: although you as a property owner can deduct the interest for the bank loan from tax, Switzerland has had a special tax for over 50 years: owners of a property pay tax on what is known as the “imputed rental value” of a house or apartment. Conversely, the following costs summarised here can be deducted:

  • As explained, debt interest for mortgages
  • Ongoing maintenance, repairs, general preservation of the value of the property (but not an increase in value), ancillary costs, etc.

Depending on the use and the price, Swiss banks finance around 60 to 80 per cent of the purchase price via mortgages. In more sought-after and select locations – such as on Lake Zurich or in Zug – financing is sometimes a little lower.

Buying a property: step by step

Use a checklist to ascertain what your priorities are (your budget, the desired location, rooms, architecture, construction, etc.).

Thanks to large public platforms, the prices of available properties are transparent and comparable. Nevertheless, an impartial estimation of market value can be worthwhile.

Ideally, check in advance which conditions need to be fulfilled and which documents you need.

If you are not yet familiar with the situation in Switzerland, you should seek advice (from specialist consultants, relocation companies, lawyers, experienced brokers, family offices, banks, etc.).

It is usually the notary or the land registry who check any permit requirements in advance and request the necessary documents (checking of centre of vital interests in Switzerland, settlement, etc.).

You should check the property itself and all details concerning contracts very carefully and allow plenty of time for this. Here, too, it can be worthwhile to seek professional advice (such as regarding the purchase price and condition of the property).

A financing commitment from a bank must be in place in advance. It goes without saying that the money for the purchase should naturally be verifiably available in an account in Switzerland.

A property purchase must be publicly notarised in Switzerland by a notary (required by law). The notary’s offices and land registries are governed by the cantons in Switzerland.

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