Real estate in Switzerland: Buying a property as a foreigner

Expats can find it difficult to navigate the complex regulations when buying property in Switzerland. From permits and paperwork to mortgages and taxes, buying a home in Switzerland is complex, with some aspects regulated by cantonal and communal laws. Can you buy a house in Switzerland as a foreigner? What conditions must you meet? FGP Swiss&Alps takes a look at the situation:

Property in Switzerland: can you buy a house in Switzerland as a foreigner?

For foreign nationals who are not authorised to settle in the country, the purchase of property in Switzerland is governed by a law known as the LFAIE, Lex Friedrich or Lex Koller (Loi fédérale sur l’acquisition d’immeubles par des personnes à l’étranger – Federal Act on the Acquisition of Real Estate by Persons Abroad).

This law stipulates that foreigners wishing to buy a house in Switzerland must, in principle, obtain authorisation from the competent authorities in the canton where the property is located.

That said, there are many exceptions to this rule, allowing foreigners to buy a house or flat in Switzerland with few or no restrictions.

• Holders of a C licence are free to buy one or more properties, regardless of their nationality. The only condition is that they buy in their own name and that the majority of the financing does not come from abroad.
• The LFAIE law does not apply to EU nationals, as long as they are effectively and legally resident in Switzerland. As Swiss residents, they have the right to buy property under the same conditions as Swiss nationals and C permit holders.
• Non-EU nationals holding a B permit can buy a principal residence in Switzerland without specific authorisation.
• All foreign nationals, regardless of their nationality or place of residence, can buy property in Switzerland for commercial purposes, whether it’s a shop, office, warehouse, workshop, etc.

Buying a second home in Switzerland: how does it work?

Foreign nationals (holding a B or C permit) residing in Switzerland do not need any specific authorisation to buy a second home.

For foreigners living abroad, however, authorisation from the canton is required. It is granted on the basis of a number of legal criteria such as “economic, cultural or scientific interest”, “close relations worthy of protection”, or a contribution of at least 20% of the purchase price, mortgage approval, etc.

Even where these conditions are met, authorisation can only be granted if the property in question also meets certain criteria:

– The maximum net surface area is set at 200 m², sometimes slightly more, depending on the situation.

– The maximum surface area of the plot is set at 1000 m².

– The house must be used exclusively for private purposes, with a possible rental period of 6 to 9 months, depending on the canton.

– The property may not be resold for at least 5 years (except in cases of force majeure)

There are also restrictions on the towns or communes where you can buy a second home. The Lex Weber prohibits many municipalities from classifying additional properties as second homes. Since 2012, the quota has been set at 20%. This means that many tourist areas, such as lakeside towns and mountain resorts, can accommodate very few of these purchases each year.

Buying a home in Switzerland

The best way to look for a house for sale in Switzerland is to contact an estate agent. Their agents can value a property, ensure that every property diagnosis has been carried out correctly and refine your search by pre-selecting houses that meet all your criteria. Buying a property in Switzerland follows a fairly straightforward process, which your estate agent will manage in three main stages.

1. Check Your Eligibility

As explained above, some people are not automatically entitled to buy property in Switzerland. So the first step your estate agent will take is to make sure that your status allows you to buy a property. If this is not the case, they will help you to obtain authorisation by contacting the cantonal authorities on your behalf. They can also advise you on the procedure to follow and the documents to produce in order to obtain a B or C permit.

2. Explanation of the Property Buying Process

Buying property in Switzerland is a fully notarised process. Your real estate expert can direct you to a notary in your area who will be responsible for handling the transaction.

He will begin by drawing up a contract of sale to be signed by the buyer (who will also pay a 10% deposit) and the seller. This will “lock in” the procedure, preventing the seller from accepting new offers.

The notaire then draws up the deed of sale. Once this has been read and signed by both parties, the notary can take care of registering and processing the rest of the payment.

To finalise the sale, the notary transfers the money to the seller and provides the buyer with an extract from the Land Register. This document proves that the property finally belongs to you!

3. Providing Support and Managing Negotiations on Your Behalf

Throughout the process of finding your ideal home in Switzerland and negotiating with the seller, your estate agent will be at your side. They will work with your best interests at heart, turning your dream into reality.

Obtaining a mortgage in Switzerland

Before making an offer, buyers who need one should apply for a mortgage directly from a bank or through a mortgage broker. The latter allows buyers to leave the negotiations with the seller and lender to a professional. Brokers can even sign contracts on behalf of their clients, representing those who cannot attend in person, such as foreigners living abroad.

As an applicant, you are expected to make a down payment of at least 20%, which includes the 10% deposit. That said, the banks will estimate the purchase price independently, sometimes settling on a lower amount than the vendor.

It is important to note that in Switzerland, there are no general assistance programmes to help cover the costs of buying a property, except for first-time buyers who may be eligible for lower interest rates in certain cases. In general, without a 20% (minimum) contribution towards your mortgage, you are unlikely to find a bank that will give you a loan.

Investing in real estate in Switzerland

Swiss property is a safe, stable, profitable and high-quality investment. The market is dynamic, allowing property buyers to sell quickly at a higher price.

That said, buying property in Switzerland for real capital gain requires strategic calculations. You will need to take into account not only the price of the property itself, but also the cost of the potential mortgage, maintenance costs, taxes (including capital gains tax), and so on.

Before you take the plunge, be sure to seek advice from industry experts who can steer you towards profitable projects and help you avoid potential pitfalls.

What taxes do foreigners pay when they buy property in Switzerland?

Real estate taxes in Switzerland have certain implications for those who decide to buy a house and settle in the country.

Under the Swiss tax system, anyone with tax resident status in Switzerland must declare and pay tax on worldwide income and wealth. Tax rates are progressive and vary in each municipality, and taxes are levied at the municipal, cantonal and federal levels.

Maximum income tax rates range from 20% to 42%. Personal property and real estate in Switzerland are subject to wealth tax. These taxes are levied on net assets, which means that any loan or mortgage is deductible from the value of your assets.

Note that buying a property in Switzerland means that you have to pay a property transfer tax. This tax varies from canton to canton, but generally amounts to between 3% and 5% of the purchase price of the property.

How do you find your dream home in Switzerland?

Buying property in Switzerland as a foreigner can be daunting, and with supply not keeping pace with demand, frustration often ensues for those trying to enter the property market on their own. Fortunately, the right strategy will give you a better chance of finding the home of your dreams.

Draw up a clear budget

Your financial plan can be clarified with the help of your estate agent to refine your search according to your priorities. Although there may be some room for negotiation, it’s always best to target homes within your budget. One of the best approaches is to contact your bank beforehand, so that your budget is already pre-approved. This will save you a lot of time when it comes to finalising the transaction.

List your needs and desires

Be open about your criteria when considering properties to buy as a primary residence or holiday home. A slightly longer commute, for example, might be a worthwhile compromise for some, but out of the question for others. Having a clear idea of your dream home can help your agent locate suitable properties and eliminate unnecessary property viewings.

Find an estate agency you can trust

Property portals offer vast collections of properties advertised by various agencies specialising in real estate in Switzerland. Because of these extensive listings, many people assume that these portals are the best place to look. That’s where the problem lies: you’ll have to search thoroughly and hope that when you finally find a house or flat that interests you, it hasn’t already been sold.

How can an estate agent help you avoid this? Estate agents have access to exclusive properties before they officially hit the property market. If they know of a house that matches your criteria, they can show it to you before it’s even added to a platform, giving you a significant head start.

Your special relationship with your real estate agent can make all the difference at every stage of the home-buying process, and this is even more crucial in the case of luxury real estate.

At FGP Swiss & Alps, we understand the value of this connection. We believe that rare and prestigious properties need custodians who understand the value of their heritage and weave their own story with it.

From luxury flats in the heart of Geneva to sublime country villas and impressive mountain chalets, our carefully selected collection is appreciated for its exclusivity and authenticity. It reflects our values and philosophy, embodying true luxury.

We invite you to explore the luxurious world of Swiss real estate. Present to assist you as you put down roots in Switzerland, FGP Swiss and Alps values and understands your needs. Whether you are looking for a home that will become your sanctuary or want to be part of a community that shares your lifestyle and interests, we give substance to your vision.

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