Property in Switzerland is not cheap, although the property market is stable and Switzerland continues to be seen a good country to invest in. Over the past 5 years, the average property price in Switzerland has risen by about 40% although growth is expected to slow in the near future. Capital gains tax reduces from 30% to 13% after 10 years, and then down to 0% after 22 years, making it an attractive country to buy in for those looking for long term property investment.

However, there is one problem with investing in Swiss property – there are very complex property regulations surrounding overseas property investors with different rules in each of the 26 cantons, and further rules in many of the communes. Sales can also take months to complete, and it is very hard for foreigners to buy properties with interior square footage of more than around 22 square metres.

Under pressure from the EU, the Swiss are relaxing the rules for foreign buyers and 1,500 permits are being issued annually to allow foreigners to buy properties outright in the country – the majority of these permits are handed out in the popular tourist areas. The permits are handy because they allow you to buy and sell properties whenever you wish. It is still possible to buy properties without a permit however the ownership of the property you buy will remain in with the property builder until you obtain a permit – an event which may take years.

Read our free guide to buying a property in Switzerland here.

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If you are looking for a property in western Europe that offers spectacular scenery, tasty food and a diverse culture, Switzerland may just be the place to buy.

Legal
Switzerland is not a member of the EU however citizens of the EU do not need a visa to visit the country – all that is required is a valid passport. Non-residents are allowed to stay in the country for up to three months at a time. When this period is up, you must leave the country for a month before returning and you are not allowed to spend more than six months per year in the country.

The Buying Process
Property ownership rules are fairly complex and it is recommended that you get a good solicitor to help you out. If you are a permanent or short-term resident, you should have the same rights to buy as a Swiss citizen.

If you do not have residency, it get a little more complex – you first must apply for a permit, and these permits are controlled by the federal government through a strict quota scheme which sees just 1,400 permits issued per year – and the majority of these are allocated to the main tourist areas. Many areas such as Geneva and Zurich will not allow foreign investors to buy second homes.

If you are a non-resident, it is possible for you to move your main residence to Switzerland. If you wish to go down this route, you will need to apply for residency and establish that a permit is not required for the property purchase at the same time.

The actual buying process varies slightly from canton to canton so it is advisable to seek professional advice when buying in Switzerland. However, the basic process is that you agree terms with the vendor and arrange your property finance first. Then, you need to book an appointment with the local notary public who will check that the property transaction is legal – they will check that the vendor really does own the property and is free to sell it, that you have the right to buy the property, and that you fully understand what you are buying. The money is then transferred to the notary who will release it when the change of ownership process has been completed – this involved the property being registered with the land registry and then with the canton.

Fees and taxes will again vary from canton to canton. A good rule of thumb is to budget 4-5% of the property purchase price for fees and taxes.

Mortgages
Switzerland is famed for it’s banking establishments so it makes sense to get a mortgage in the country. Switzerland has a stable currency and a very low interest rate – it is possible to take out a mortgage in the country for as little as 2.5% so it often makes sense to take out a mortgage there than to get one in your home country. The minimum amount they will lend is normally around $300,000 with a maximum loan value of around 70% of the property value. Terms of up to 35 years are common.

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Seven communes in the canton Valais area are party to the ban on foreign sales. The federal law – the ‘Lex Koller’ – already limits the number of holiday homes bought by foreigners. This currently stands at 310 units for Valais.

All of the seven communes which have been hit by the ban have between 3 and 6 year waits for actual sales to go through. The ban is meant to protect buyers from the ‘legal insecurities’ whilst they wait for the sale to complete – under Swiss law, a buyer does not become the owner of a property when contracts have been exchanged; they only become legal owners when the sale has been recorded in the land registry. Because of the recent quota system, the number of deals waiting to be registered in the Valais region has gone up by 500% – from approximately 200 to nearly 1000 deals.

The major point of contention is that locals feel the communes hit by the ban have been unfairly singled out. With foreigners unable to buy, they will look to other ski resorts such as Villars which means that local business may be hit, and the populartity of the resort may wane over time. It is also said that it is not foreign buyers who are fueling the property boom in the area – many of the buyers are Swiss nationals and foreigners already resident in Switzerland. These people are not covered by the Lex Koller so the ban will probably not have the desired effect.

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