Guide to buying your own Swiss property
Swiss Franc (CHF)
UK residents are not required to obtain a visa if travelling on business or pleasure, with direct scheduled and low cost flights from all regional and city airports to Geneva. Non residents can reside in Switzerland for up to 6 months. Anyone planning to reside in Switzerland over 6 months or on a permanent basis must apply and obtain a Residency Permit.
This buying guide has been designed to give you a general overview to purchasing and owning your own property in the Swiss Alps.
It is meant to provide you with an insight into the steps you will take as well as answer some of the questions you may have. It is not meant to be the definitive guide to purchasing Swiss Property, but to assist you with some of the knowledge you will need.
The information provided on this page details some of the extensive knowledge we have accumulated during the purchase of our Swiss property as well as working with Notaries for clients purchasing Swiss chalets and ski apartments.
We hope it assists you with your decision to purchase one of the many ski chalets or ski apartments for sale we are marketing on behalf of the agencies, developers and constructors we work with.
Conditions of Property Purchases in Switzerland
The sale of property to those living outside of Switzerland is subject to various laws outlined in the following sections.
The federal law for the acquisition of property for sale in Switzerland by non residents which came into effect in 1985 is commonly known as the Lex Furgler-Koller-Friedrich law.
This law defines the annual quota’s of permits available for sales to foreigners in each of the tourist resorts and regions.
Switzerland currently restricts the sale of second homes to foreigners by imposing an annual quota of 1440 permits available to buy property. This figure is subsequently subdivided amongst the Cantons and further subdivided among the Communes that make up the Country.
Under the Law, it is only possible for foreigners to buy in certain Cantons and in certain tourist resorts. In some areas buyers are also restricted on what type of property and size they can purchase.
Looking at each Canton:
On 1st January 2007, owing to the excessive demand for second homes in certain resorts and the resulting extended waiting times of up to 2 years or more for the foreigner permits, the Canton of Valais imposed a Moratorium for 1 year on foreigners purchasing property in 7 communes, while at the same time, other villages imposed their own Moratorium.
This Moratorium was aimed at reducing some of the backlog of outstanding waiting times for foreigner permits in Valais to allow the backlog to be dealt with. This led to the lifting of the moratorium on the 23rd November 2007 and it’s replacement with the current system, allowing non Swiss residents to once again purchase property for sale in Canton Valais.
Under the new system, if a client is purchasing a new construction or a resale property owned by a Swiss Resident who has owned the property for more than 5 years, the Notary who acts on behalf of the buyer and seller must apply to the Canton on behalf of the buyer for an Authorisation to buy.
Authorisations are allocated every 3 months and once granted, the buyer must sign the Deed of Sale within 30 days. Should the buyer not be able to return to sign the Deed of Sale easily, it is possible to sign via a Power of Attorney.
Swiss owned property for more than 5 years can be sold to Foreigners provided it complies with the regulations documented further in this Advice Section.
For re-sale property that are owned by a Foreigner already, the Permit simply transfers with the property. On completion of the Deed of Sale, the Notary submits the documents to the Canton and transfer of ownership usually takes from 4 - 12 weeks dependant on the resort purchasing in.
All purchases of property in Canton Valais require the owner to keep the property for 5 years unless they can prove extreme circumstances such as divorce, bankruptcy, death of a family member or ill health.
Including the resorts of Leysin, Villars, Les Diablerets and Chateau d’Oex, Foreigners buying in Canton Vaud find it a lot simpler with few restrictions and access to a wide range of properties with Foreigner permits available for both new and resale properties.
As with Canton Valais, you cannot re-sell your property until you have owned it for 5 years.
In the picturesque resort of Grindelwald, foreigners can buy both apartments and chalets, only with prices in excess of 750’000 CHF.
Swiss Residents holding Permits
If you live in Switzerland or have the relevant B, C or L Permit it is possible to buy properties in locations that foreigners cannot and we have a wide range of properties available to choose from, many of which are not listed on the website.
Obtaining Residency to purchase a property
The most common Resident Permit that allows you to buy a property in Switzerland is the Residents B Permit. These are quite easy to obtain, allow you to reside in Switzerland for more than 6 months of the year (up to 6 months for a non resident) and therefore take advantage of the high standard of living, the healthy lifestyle, low crime rates and taxation advantages if you plan to live there for tax purposes.
Thanks to the closer ties between Switzerland and the EU, there is also a permit for working and residing in Switzerland that allows you to purchase property. For this you are required to meet one of the following criteria:
- Have a contract of employment with a Swiss company
- Set up your own company
- Self Employed
For the latter two criteria you are required usually to show you are creating an income of above 50’000 CHF per year or providing employment for Swiss nationals
Obtaining one of these permits also has the added advantage of removing restrictions on:
- the size of property you can buy (above 200m2 net habitable and plots greater than 1000m2),
- the number of properties you can own,
- where you can buy
- How quickly you can sell
- allowing you to buy as soon as your Permit is processed.
As Switzerland integrates itself further into the EU, it is now becoming easier for EU passport holders to live and work in Switzerland. For those over 50 who don’t need to work and have the financial means, this is an easy process and B Permit applications are processed within a couple of months.
It is also possible for younger people to obtain residency, with a range of different options to explore without necessarily any negative tax issues, though these applications tend to take longer.
For more detailed information on working and living in Switzerland both EU and Non EU citizens, please visit the Swiss Emigration website or pick up a copy of the paperback Living and Working in Switzerland by David Hampshire.
March 2012 Referendum on Second Homes
In a referrendum in March 2012, Swiss citizens voted in favour of stopping all new construction of second homes in tourist resorts where the the % of secondary residences exceeded 20% irrespective of whether they are for Foreigners or Swiss Residents.
With all ski resorts exceeding this threshold already there are now only a few projects remaining where the building permits were issued prior to the vote and which can therefore continue to be sold and built. Once these properties are sold, there will be no further new construction available in the Swiss ski resorts making them excellent investment opportunities which will only increase in value.
Property Size Restrictions
The Federal Government of Switzerland currently restrict the size of apartments and chalets that foreigners can buy up to 240 - 250m2 net habitable living space (garages, cellars, technical, laundry rooms, etc are in addition) and plots of land up to 1000m2 (some leeway is given for plots that are have a steep slope).
These rules also apply when looking to purchase a Swiss owned property of more than 5 years.
Purchase costs vary from Canton to Canton and between 2.5-5% of the total purchase price. This includes all taxes, notary and land registration fees. In Canton Valais this is approximately 2.5%, Canton Berne approximately 3% and Canton Vaud 5%. No notary fees are paid when you sell.
In Canton Vaud, when signing the Deed of Sale of an off plan property which has not yet begun construction, purchase fees are only paid on the land cost (total if a detached chalet or part of, if an apartment).
Mortgages & Fees
Interest rates have historically been lower in Switzerland than the UK and are the currently the cheapest in Europe running at around 1.5% variable or 2% fixed for 10 years. There are no set up fees or Life Insurance Policy required, only the Mortgage Registration Fee mentioned below.
Having gone through this process ourselves we are happy to recommend the Bank we used, who will be able to arrange your mortgage for you. Owing to our working relationship, mortgages with a LTV of up to 70% are available to clients, depending on your financial circumstances.
Loans of 100% are also possible using other securities such as cash put into the banks investment portfolio and this can be discussed with the Bank directly where applicable.
A Swiss Mortgage (both variable and fixed options available) is effectively an overdraft secured against the property with the borrower paying interest on the capital. Capital repayments on loans can be taken for up to 25 years.
In Switzerland there is also a Mortgage Registration Fee you have to pay and this varies by Canton.
In Canton Valais (4 Valleys, Crans Montana, Champery) this is a flat fee of 1.6%, while in Canton Vaud it’s based on a sliding scale ranging from 0.6% to 0.44% depending on the Loan Value
Legal Restrictions on Purchase
There are a number of additional legal restrictions that have to be considered when looking to buy property for sale in Switzerland.
- Only one property per family (husband and wife) may be purchased in Switzerland by non Swiss residents. Children over 20 who can prove their own financial independence may also purchase one property in their own name.
- An owner or his family may occupy their property for up to six months per year without requiring a residency permit.
- Your property cannot be rented on a full annual basis the maximum being 11 months and 1 week, as you, your family or friends are supposed to use the property for at least 3 weeks of the year.
- It is not possible for a Foreigner to purchase a property in the name of a Company.
To purchase larger properties in excess of 240 - 250m2 it is possible for two siblings or parent/child (over 20 with own income stream) to purchase together. Under these circumstances the Notary will apply for 2 Authorisations.
Annual Running Costs
Varying from Canton to Canton, these include:
The Property Taxes:
- National Defence
- Tourist (2.10 CHF per adult/night)
Local Tax Advisors are on hand to assist you with your liability. During this process owners have the choice of completing a Tax Declaration of their worldwide assets (majority of ownwers take this option) or being assessed just on the basis of their income on their property in Switzerland.
The Service Charges:
- Buildings / contents insurance,
- TV / Broadband
- Private utility usage (water, electricity, heating),
- Communal charges (heating, service, administration, renovation fund, gardening, snow clearing).
Communal charges in apartment buildings are calculated based upon the size of the apartment (PPE) as a proportion of the total cost. The local administrator (appointed yearly at the annual meeting) for the building will handle all of your communal payments, arrange snow clearing, grass cutting and maintenance as part of their service. These costs will be collected from the owners quarterly, 6 monthly or yearly.
For a 3 bedroom apartment you can expect to pay between 5000 - 6000 CHF service charges or typically between 0.5 - 0.75%. For chalets these are cheap to maintain.
Taxation of rental income obtained from a Swiss property owned by a non Swiss Resident, is not payable in Switzerland, unless you are a resident. You may however be liable to pay tax in your country of residence and should check this before making any purchase.
As a rule of thumb for annual running costs and taxes budget between 1 - 1.2% of the purchase cost
Payment Terms and Construction Guarantees
For those new build off plan constructions still available you will be required to pay at key stages which vary slightly between apartments and chalets as well as developers. The basic rule of thumb applies:
- 5% reservation deposit
- 5% signature of the contract at the Notary.
- 20% break ground
- 30% completion of the roof
- 30% kitchen installed or plastering begins
- 10% within 10 days prior to completion
- 100% cost of plot within 30 days on signature of the Deed of Sale at the Notary.
- 30% chalet cost on breaking ground
- 30% chalet cost on completion of the roof.
- 30% chalet cost kitchen installed or plastering
- 10% chalet cost within 10 days prior to completion
If you are purchasing part way through construction, on signing the Deed of Sale you will be expected to pay up to the point of construction in one lump sum and then the appropriate stages from there.
For those buying a new build off plan construction, there are federal construction guarantees which protect you. These take the form of 5 years for construction defects and 10 years for any hidden defects.
For those buying a resale property, as is the case in France there are no guarantees the property is sold as seen.
Tax on Profit from Sale of your property (Capital Gains)
Property in Switzerland is subject to an appreciation tax where the taxable profit is the difference between sale price (after deduction of sales commission) and total purchase price (includes fees and any renovations and improvements made).
Capital Gains Tax is banded and decreases each year of ownership (30% year one down to 1% if owned for 25 years).
With the new Law banning any further second home construction in the Swiss ski resorts, it is widely expected property prices will rise steadily as there will always be a demand to own a ski property in these places.
Rental of your property
Should you wish to rent your property there are a wide selection of local and larger international agencies with offices in the resort that will manage your property for you. Renting when you are not using it yourself can provide sufficient income to cover the annual running costs of the property.
This is a relatively straightforward process. As each property is Freehold, unless the purchaser is a Swiss Resident, the property passes directly to his or her heir in accordance with English or other European Country Laws.
It is advised to have a will specific to your Swiss property registered with one of the local Swiss Notaries such as the Notary that handled your purchase and who is familiar with your circumstances.
Owing to the dual taxation treaty, while In Canton Valais there is 0% inheritance tax, you will be expected to pay the relevant UK or Country of residence amount.
In Canton Vaud the tax varies from 1.8% to 4.3% for property valued up to 500’000 and over 500’000 CHF respectively. Property valued over 1’000’000 CHF pay a tax currently just over 5%.
For property registered in multiple names, tax is paid on the share of the deceased only.
Please note these details have been prepared as a guide only. Each Canton applies different rules and regulations pertaining to the purchase and sale of both re-sale and new build off plan constructions and it is not possible to cover every single circumstance in these notes.
We recommend you take further advice with the Notary handling your purchase, Accountant, Tax Specialist or Rental Agency on anything you wish clarified before signing any contract of sale as we cannot be held legally responsible.
For more information on our properties for sale in the 4 Valleys (Les Collons, Veysonnaz, Haute Nendaz, La Tzoumaz & Verbier), Crans Montana, Anzere, Leukerbad, Ovronnaz, Champery, Morgins, Champey Lac, Chateau d’Oex, Leysin, Les Diablerets, Gryon, Villars, Barboleuse, Val d’Anniviers (Vercorin, St Luc, Grimentz, Zinal & Chandolin), Grindelwald, Wengen and Murren please visit our properties for sale.
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