How to buy real estate in Switzerland

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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.

Swiss Federal laws govern who can buy property in Switzerland, and under what conditions - and different provisions then apply in each canton. Special more liberal rules enable foreigners to purchase property in designated touristic areas, such as Gstaad, which is also among the most scenic and well-loved holiday destinations.

We have set out below the main considerations that apply and, with our experience in working with these laws to assist property purchasers, would be pleased to provide further information, and discuss any questions with you. We can also help potential buyers find appropriate legal professionals - lawyers and notaries - to make the purchase of Swiss property simple and risk-free.

Swiss property law
Swiss property law limits the sale of property to non-residents, whether individuals or companies. The Federal law on the acquisition of property by foreigners, 'Lex Friedrich' (enacted in 1983, amended in 1997), limits the acquisition on Swiss real estate by foreigners, and operates together with cantonal laws and communal regulations. 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 C-permit. Any foreigner wishing to purchase real estate subject to restriction must obtain authorisation from the cantonal authority, whether or not they are purchasing from another foreign owner.

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).

• Foreigners' second homes in touristic areas - Swiss laws also permit foreigners to buy vacation properties more readily in holiday areas, such as Gstaad, designated as 'touristic areas' under cantonal law.

• 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.

When is a property subject to restrictions on purchase?
A property purchase by a foreigner will require authorisation by the cantonal authorities when each of the following three conditions are met:

(i) The property itself is neither the purchaser’s principle residence for their personal long-term occupation, nor intended as a permanent business establishment; and

(ii) The purchase is classified as a purchase of real estate under Federal law, with filing of the purchase on the Land Register together with legal records that grant the right to use of the real estate subject to authorisation; and

(iii) The purchaser, whether an individual or company, is classed as "non-resident" under Federal Law:

(a) Non-resident individuals - include persons domiciled abroad or domiciled in Switzerland without a C-permit. Staff members of diplomatic missions and consulates, and international civil servants in possession of a legitimation card (carte de lÉgitimation) are exempt from the Swiss property law, and can purchase property freely provided they can prove that they have lived in Switzerland for 10 years without interruption (or five years for nationals of countries that have entered bilateral agreements with Switzerland, namely: Germany, Andorra, Austria, Belgium, Denmark, Spain, USA, Finland, France, Great Britain, Greece, Ireland, Iceland, Italy, Liechtenstein, Luxembourg, Monaco, Norway, Holland, Portugal, San-Marino, Sweden and The Vatican.

(b) Non-resident businesses - include companies with their registered office located outside Switzerland, regardless whether they are Swiss-owned or otherwise connected to Switzerland, and those companies whose head office is in Switzerland but are controlled by non-residents (i.e., where foreigners control more than 1/3 of share capital, more than 1/3 of voting rights at the general meeting, or form the majority of Board members or beneficiaries of a private foundation).

To what sort of properties do these regulations apply?
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. An authorisation may be revoked if it was obtained fraudulently or based on incorrect information or supporting documents, or if the circumstances on which it was granted change and severe violations may be punished by a fine or prison sentence.

To what sort of properties do these regulations apply?

• A Swiss property may consist of any of the following dwellings:

• free-standing house (villa) or chalet

• apartment, with cellar and/or attic attached

• condominium (known as propriété par etage (PPE) or ownership by floor, where you own an apartment, garage, cellar and a share of the common areas, and pay yearly maintenance charges

• time-share apartment or apparthotel (part hotel and part residential housing, managed and let by the hotel)

• business or commercial property

What are the various Swiss residence permits?
All foreigners living in Switzerland are given a permit, depending on their nationality and residency status. Each cantonal authority has wide discretion in deciding whether to grant a permit in any case, and we can assist you to obtain professional advice should you consider applying for a Swiss permit:

• Short term residence and work permit for periods up to one year

• B-permit - renewable residence and work permit for stays over one year (special provisions apply to students)

• C-permit - permanent residence and work permit issued to foreigners after an extended period (e.g., usually 10 years, although only 5 years for some nationals, such as US citizens)

• D- permit for diplomatic staff and international civil servants

• Border commuter permit for persons living in a defined border zone just outside 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.

• Note that the spouses of work and residence permit holders, in possession of a residence permit are entitled to a work permit.

How can a foreigner obtain a Swiss permit?
A foreigner can obtain a Swiss permit under a number of categories, depending on nationality, residence and required purpose - we can put you in touch with agents who will assist you to apply for a Swiss permit. The purchase of real estate in Switzerland does not entitle the purchaser to a residence permit.

As a Swiss property-owner, can I leave the country and change my place of residence?
A purchaser of Swiss property can later adopt a new place of residence without being required to sell their Swiss property, and may continue to use it as they wish - as a second home, holiday home or for rental. However, persons who purchase property in Switzerland must intend to live in the property for a significant period of time - it is not permitted under Swiss law to purchase numerous 'residences' simply to avoid the need for authorisation.

Are mortgages available to foreign nationals to purchase Swiss property?
A foreigner buying property in Switzerland may be eligible for a mortgage of between 60% and 80% of the purchase price or bank-appraised value (which ever is lower).

Can property to be used as business premises?
Yes, infact if you purchase a property that owned by a company rather than an indiviual, no permits apply.

Can a property be purchased as a holiday or second home?

• Holiday homes - A foreigner may be authorised to purchase a holiday home or an apartment in a condominium that is located in a "tourist resort", as defined by each canton. A purchaser can rent out their holiday home, although leases must be shorter than a year.

• Second homes - A foreigner may also purchase a second home in an area where you can demonstrate strong ties that need to be maintained, such as to protect important economic, scientific or cultural interests. However, a "strong tie" cannot be justified by temporary interests such as holiday visits, spa or medical treatment, study or family relationships with Swiss residents. Second homes cannot be rented out, and must be sold within two years if no longer used as such.

What property purchasing activities are prohibited in Switzerland?
Swiss law prohibits purchase of a property by a foreigner in the name of a Swiss national. It is also prohibited to purchase property with money gained through illegal activities (money laundering). The ownership of property must be in an individual or a swiss registered company.

What is the transaction process in purchasing a property?
Once you have decided upon a property, you may make an offer to the seller or his agent (in Switzerland, this is usually 10% +/- than the asking price). At this point, it is advisable to enter an agreement ("convention") with the seller and pay a deposit of about 10% of the purchase price in cash to confirm your offer - this gives you a legally binding option to purchase the property, and usually gives you the right to take up residence in the property. You will then arrange financing, if applicable, and ensure you have a valid residence permit. At this point, the notary public will review the purchase transaction, the vendor’s title to the property and your entitlement to purchase the property, confirm your understanding of the transaction, and then request the Government to issue a certificate to confirm your entitlement. The notary will then record your ownership of the property on the Swiss real estate register. 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. The entire process can be completed in around two months.

What is the role of the notary?
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 4% of the purchase price) is payable at completion of the sale.

What conditions apply to resale of a Swiss property?
You may sell your property at any time to any purchaser who is authorised to buy (i.e., any Swiss national, or any foreign national who meets the requirements).

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. In most condominiums, time-share apartments and some apartment buildings, a resident concierge or manager will be present to maintain the property.

What conditions apply to Swiss property upon decease of a foreign owner?
A Swiss property owned by a foreigner can be bequeathed to the owner’s heirs, regardless of the heirs' nationality or residence. Statutory heirs are exempt from the authorisation requirement for ownership of Swiss property, but remain responsible for any charges payable related to the property ("statutory heir" is defined by Swiss law as those who acquire property through an estate, the ancestors or descendants of the deceased and their spouse, brothers and sisters of the deceased who are co-owners or joint-owners of the property, and condominium owners. By contrast, a "testamentary heir", who is not also a statutory heir, and is not otherwise eligible to own property in Switzerland, must sell the property within two years of inheriting it.

What tax considerations apply to purchase of Swiss real estate?
Upon purchase of a Swiss property, you will be required to pay .. tax, plus the notary public tax of 4% of the purchase price. During your occupation of the property, you will be subject to the normal Swiss property taxes... Upon final sale of the property, a capital gains tax of 18% will be payable upon the profit between purchase and sale price.

What are the history and current conditions of the Swiss housing market?
The Swiss housing market is currently very interesting for foreign purchasers and investors. A speculative housing market slowed dramatically in the late 1980's, and prices have been steadily rising espcially in the resorts, making an investment in the property market very attactive at this time. Market gains can be anywhere for 5%-15% per annum in a resort such as Gstaad and Verbier, depending on the property.

What are the benefits of purchasing property in Switzerland? Is Swiss property a good investment?
Buying real estate in Switzerland is attractive due to the political stability, high ethical standards and particular promise of quality that is the hallmark of 'Swissness' and last but no least, the attractive interest rates create additional benefits.*The Swiss government has recently also released legal obstacles for the purchase of properties bought by foreigners in Saanenland and Pays D’Enhaut you may now buy up to 200 m2 living surface without restriction.

Notary's Offices Gstaad ->

Source: swiss-alps-resorts


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