Buying a property in Switzerland can offer wonderful advantages – whether as your personal home, retirement home, vacation property for personal use and rental income, or as an investment, now and for the future.

Why should you invest in a Swiss property now ?

• It is a unique investment into your health and happiness: in winter and in summer, the fresh mountain air and nature’s quiet harmony ensure a marvellous sense of well-being.

• Switzerland offers more value for money.

• An investment in the rock-solid Swiss Franc is one of the best imaginable.

• A property in a good location is extremely easy to rent if you so desire, further increasing your financial advantage.

• The possibility in the UK of SIPPs (Self Invested Personal Pension) which can give you now the freedom to determine your own pension portfolio.

• The favourable Swiss mortgage possibilities up to 80% with extremely low interest rates give you an investment opportunity that’s hard to beat.

General Information

The law restricts the acquisition of real estate in Switzerland by foreigners, by foreign-based companies or by Swiss-based companies controlled by foreigners. A “foreigner” is defined as any person who does not have the right to take up residence in Switzerland – that is, a person who does not possess a B or C permit.  As a rule, these categories of persons need an authorisation from the competent cantonal authority. It does not matter whether the real estate is already in foreign hands or not; neither does the legal cause of the transfer (purchase, exchange, donation, etc.) have any bearing on the application of the law.

Responsibility for enforcing the federal law on the acquisition of real estate by persons abroad (“Lex Koller”), falls primarily upon the canton in which the real estate is located. The authority designated by the canton will decide whether or not a legal transaction requires authorisation and is also responsible for granting or refusing that authorisation. Authorisation is granted only if the conditions set out in the federal law and, if applicable, in cantonal implementation legislation, are met. In particular, authorisation to purchase a holiday home (single-family dwelling or owner-occupied flat) may be granted under certain circumstances to persons abroad.

It must be stressed, however, that ownership of real estate in Switzerland does not entitle a foreign person to a residence permit.

Real estate that is used for professional, commercial or industrial activities (with the exception of real estate acquired for the building, sale or rental of housing) may be acquired without authorisation.

The following persons do not require authorisation to purchase real estate in Switzerland: Nationals of a Member State of the European Community/European Union (EU) or of the European Free Trade Association (EFTA) who are domiciled in Switzerland (as a general rule holding a B EC/EFTA permit (resident foreign nationals) or a C EC/EFTA permit (settled foreign nationals)), other foreigners entitled to settle in Switzerland (holding a C settlement permit) and Swiss-based companies controlled by persons holding the above rights of residence or settlement.

Legal Restrictions

The Swiss have for a long time restricted the sale of property to foreigners.The Federal government set an annual quota of permits wishing to purchase property there. These permits are only available to foreigners in certain Cantons and, even then, are often restricted to those considered to be tourist resorts. Foreigners will not normally be permitted to buy more than one property in Switzerland.

Foreigners may only buy one property of maximum 200 square meters of “liveable space” (approx. 260 m2) per family in Switzerland : family defined as husband and wife and/or under-age children. After the age of 20, the son or daughter of an owner may purchase one property in his/her own name, provided he/she can prove his/her financial independence.

 

The accommodation cannot be rented on an annual basis (maximum 11 month and one week) as an owner is “supposed” to use his property for at least three weeks of the year.

 

 EU citizens with a permit of residence B and all foreigners with a residence permit C can buy as many properties as they want.

Ownership of real estate in Switzerland in no way confers residence entitlement to the owner.

The Purchase Procedure

The process of acquiring property in Switzerland is quite straightforward. Only a notary, who is responsible for ensuring that the purchase contract is accurate and conforms to the law, and who registers the transaction with the land registry (“Registre Foncier”). A notary is a government-licensed official who performs official tasks, such as certification, upon payment of a fee. The notary fee for the purchaser includes covering land tax (approximately 2.3% of the purchase price) is payable at completion of the sale.

The first step in the process is to sign a declaration of honour. The notary will use this to obtain the permit and also to have all the clients' details for the deed of sale. The purchaser will either need to appear in person before the notary for the document signing or give power of attorney to representative by means of a “Procuration” drawn up by the notary. A 10% deposit is required at the same time of signing. An agreement to buy the property (a “Promesse de Vente”) is drawn up by the notary. The deed of sale is conditional on permission for the sale to the foreigner being granted by the Cantonal authorities and on any necessary financing being obtained.

A permit can take three months to up to two years to obtain, depending on which area of the Canton you are purchasing in.

Then, the notary will then record your ownership of the property on the land registry.  Finally, the purchase price including applicable taxes will be payable either directly to the vendor or, more usually, via the notary public who will release the funds only once the change in ownership has been effectively registered.

We can help you find appropriate legal professionals – lawyers and notaries – to make the purchase of Swiss property simple and risk-free. See our Executive Property Search Service and our Relocation Services.

Legal Cost

The legal costs of purchasing in the Canton of Valais are approximately 2.3 % of the purchase price, inclusive of notary's fees and registration fees. These costs are borne by the purchaser.

The purchase of an apartment becomes valid once the owner is registered at the Land Register.

By Power of Attorney, the future owner entrusts the appointed notary's office with the duty of ensuring that all the legal and reglementary formalities are respected, particularly the registration of the deed in the Land Register and releasing the acquired apartment from any previous mortgage. All the preliminary payments must be made to the notary (i.e. the reservation deposit) into his « clients »  deposit account.

Financing

If required mortgages are readily available through local Swiss banks (such as UBS, Crédit Suisse, BCV, Raiffeisen). In general, mortgages are available for 66 to 80 % of the total purchase price and the term is from 20 to 100 years. However, mortgages up to 100% of the purchase price may be obtained if there are additional securities such as cash value life insurance policies or pension funds.

Mortgage interest rates are lower than in the UK and are currently (early 2006) around 3.25% for a second home (holiday home). The actual rates charged are negotiable and will depend on the status of the borrower.

We can help you with tasks such as finding a mortgage and opening a swiss bank account. We will help you pick the most appropriate bank, get the best financing package for your needs, and coordinate the provision of documents necessary to meet the deadlines of the contingency clauses. We will walk you through the pre-qualification process, schedule meetings with banks, and facilitate the mortgage-application process. Contact us for more information.

When can a Swiss property be purchased without authorisation?

• Nationals and C-permit holders – Swiss property may be purchased freely by Swiss residents living in Switzerland and abroad, dual nationals living abroad, and foreign nationals with a valid C-permit who are resident in Switzerland.

• Foreigners’ and B-permit holders’ principal residence - Swiss property laws allow foreigners to purchase a single residence property, without authorisation, as their principal residence, provided that the purchaser lives at the property and uses it personally and exclusively for themselves, their family and close relatives. For so long as the property is classed as a principal residence, rental is not permitted.  While there are no restrictions on habitable area, the surface area of the land purchased should not exceed 3000m² (for larger areas the authorities must verify that the purchase is not subject to authorisation).

• Business properties - A property can be purchased without authorisation if it is intended as a permanent business establishment for trading, manufacturing or certain commercial industrial activities or for use by craftsmen of self-employed professionals. This applies whether the property is used by the purchaser’s company or rented to a third party as a business establishment. Note – property intended for the construction or commercial leasing of dwellings that are not part of a hotel or condominium is not a permanent business establishment under Swiss law.

How can I obtain authorisation to purchase a property?

You need to obtain authorisation from the cantonal authorities before you can validly complete a purchase of property in Switzerland, and we can help you with this process.  A purchase made without authorisation is void, and contractual obligations are unenforceable.  Authorisations remain valid for a period of three years.  

 

What are the various Swiss residence permits?

• All foreigners living in Switzerland are given a permit, depending on their nationality and residency status. We can assist you to obtain professional advice should you consider applying for a Swiss permit:
• Standard 1 year Permit (B Permit): For a specific job, valid for a limited period, usually one year, and renewable. The B-EC (for European citizens) is valid for 5 years and is renewable.
• Permanent Residence Permit (C Permit): Entitles the holder to choose and work freely in any occupation (except law and medicine). These permits may only be applied for by a person already holding a B Permit in Switzerland for 5 or 10 years, depending on nationality.
• Short Term Permit (L Permit): Issued on presentation of an employment contract running less than a year; the validity of the permit to be the same as the length of the contract. The permit can be extended or renewed without the holder having to leave Switzerland.
• European Community nationals have the right to reside and work in Switzerland, and must be treated in a non-discriminatory manner.  EC nationals may stay in Switzerland for three months without a residence permit, after which they must submit an application to the appropriate cantonal authority.

How do I ensure the maintenance of the property from abroad?

We can help you to take care of the maintenance of your property, including security, plumbing and electrical work, gardening, painting, cleaning, decorating and housekeeping.  We can also manage short or long-term holiday rentals of your property to carefully vetted applicants.

See our Renting Your Property Section and our Executive Property Management Service for more information.

Construction Guarantee

Under Swiss law all new buildings are guaranteed for 5 years against defects. If the defects are not visible to the eye (hidden defects), the guarantee is extended to 10 years.

The guarantees are provided by the developer and continue after resale or inheritance

You have further questions? Our consultants will be pleased to assist you.

Please do not hesitate to contact us with any questions you may have arising from these notes, or indeed any more general points which you may need clarifying. Our staff are always willing to help and offer further information and advice. These notes are produced as a guide only. We always recommend that clients take professional advice from their legal adviser and accountants before committing themselves contractually.

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