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In considering an overview of property for sale in Switzerland,
the most striking fact associated with real property
in Switzerland is the fact that overall the costs
associated with real estate in Switzerland is higher than
any other country in Europe. In addition, the cost
of living in Switzerland is generally higher than any
other country in Europe at the present time.
Historically, Germans have been the primary group
of foreign nationals that have taken to purchasing real estate in Switzerland.
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The sale of real estate to a non-Swiss citizen is subject to several laws. The actual law is named Lex Friedrich. Each canton has an annual quota of properties authorized for sale to non-Swiss.
An authorization must be obtained from the Cantonal Authorities and from the Federal Department of Justice and Police, through a notary (who are public officers in Switzerland ).
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Once the client has chosen a chalet or apartment, the procedure is as follows:
- Complete a civil status questionnaire
- Complete a declaration of honour
- Complete a Power of Attorney which states the following: Name and address of the purchaser Location and name of the property Number of the parking space (if applicable) Detailed selling price Schedule of payments, as a percentage of the total sale price
- Produce a copy of his/her passport, signed.
The signature on the Power of Attorney and on the copy of the passports must be legalized. (i.e. witnessed by a notary) The above documents are normally completed with our help and then forwarded to the official Swiss notary who begins the purchase procedure. Once the notary has received all the completed and signed documents, plus the deposit, he will take the following steps:
- Proceed to the signing of the deed sale
- Apply for the authorization to purchase on behalf of those who are not resident in Switzerland.The administrative time taken to obtain the authorizations is usually two or three months from the date of submission of the application. It may be slightly longer depending on the area where the property has been purchased.
Once the authorization has been received, the notary will duly record the deed of sale in the Land Register
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An official Swiss notary will act on behalf of both the purchaser and the vendor. He draws up the deeds and documents required for legal ownership. He is there to protect the interests of both parties. It is a notary of the district who will act on behalf of the vendor and the purchaser.
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Non-Swiss may only buy one property of maximum 200 square metres of liveable space per family: a family is defined as husband and wife and / or under-age children. Over 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.
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It is now possible to resell an apartment after its acquisition to another non-resident, subject to the restrictions under the Lex Friedrich. All applications must be made through a notary's office, once a buyer is found.
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Under Swiss Law, an owner or his family may occupy their apartment for up to six months per year (Maximum stay is three months per visit).
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The accommodation cannot be rented on an annual basis (maximum 11 months and 1 week).
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No authorization is required for the purchase of a principal residence if the buyer has a residence permit B (i.e. work permit for non nationals), except if the land exceeds 2,000 square meters.
EU citizens with a residence permit B and all foreigners with a residence permit C (i.e. residence permit for a non-Swiss national) can buy as many properties as they want. They are considered as Swiss citizens
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When considering the options for a mortgage on your overseas
property there are a couple of choices to consider;
- Do you consider raising finance on your existing property
in the UK to cover the whole cost of your purchase abroad?
A good idea if the interest rate in the country in question
is a lot higher than it is here in the UK as you will
pay a lot less in monthly repayments.
- Do you secure a mortgage against the property from a
local bank in the country of purchase? This can be a wise
option especially if the interest rate is lower than our
current UK interest rate. Most overseas mortgage / bank
lenders will require upto 30% deposit on mortgages. However,
you will need to give some thought to how you will service
your mortgage payments each month especially if you are
not living or earning in that country as you may well
lose out on exchanging money each time to cover monthly
expenses. Check out our Foreign
Currency page to see how you can save money in this
example
- Some Builders and developers may well offer their own
mortgage facilities on their properties for sale. This
can be beneficial to both parties depending on the logistics
of the mortgage or loan facility. Always check and compare
with the two options above before making your final descision.
For more details on Mortgages
in Switzerland visit our Mortgage page in the Switzerland
section.
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The Propriete Par Etage (PPE) means co-ownership by floor. The co-ownership is a legal right that consists of two inextricably linked elements:
- a share of the whole building and its integral parts (totality of the property / walls / balconies / fences / concrete and floor / roof covering and plumbing / common parts, etc.).
- an exclusive right to use your defined parts of the building (your apartment and garage if applicable)
The building is divided into shares and measured in thousandths.
The administrative control of the PPE co-property is exercised by the co-owners' annual general meeting.
Property Abroad always recommends using a Solicitor
or Lawyer
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Annual Expenses
1. Co-ownership charges (about 0.8% to 1% of purchase price p.a.)
It is commonly estimated that the annual running costs of a building are about 0.8% to1% of the purchase price. These costs are divided up proportionally between the owners, according to the size of the apartment.
These expenses include:
- Caretaker / social security contributions
- Maintenance of building and materials
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Water / gas / electricity and heating
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Insurance and various taxes
- Gardening and maintenance of roads
- Administration fees and various expenses
- An allocation to the building's renovation fund
2. Taxes
Taxes amount to about 1.3% of purchase price p.a.
Taxes are paid to three bodies:
- The Swiss Government
- The Canton
- The Commune
For individuals the only taxable property and income is from that located in the Canton Valais. All other properties and income is taxable at the place of residence of the owner. However, all such holdings must be declared to the relevant tax authorities. However, if you decide to take a mortgage you can offset the mortgage interest against the rental income thereby minimizing the tax payable.
Cost and Legal Formalities
The purchase of a chalet becomes valid once the owner is registered at the Land Register. The purchase fees amount to a total of 2.5% (Notary and registration fee)
By Power of Attorney, the future owner entrusts the appointed notary's office with the duty of ensuring that all the legal formalities are respected, particularly the registration of the deed in the Land Register and releasing the acquired apartment from any previous mortgage.
At the preliminary payments (i.e. deposit) must be made to the notary, deposit into his client account.
Construction guarantee (for new buildings only):
The federal construction guarantee is:
- Five years for construction defects
- Ten years for hidden defects.
For resale properties, there is no guarantee
Death duties
In the event of death there is no inheritance tax for the specific case of direct descendants in the Valais region of Switzerland , which means the property goes to the next of kin.
Financial and Legal Consideration
Taxes and profit from real estate (Capital Gains tax)
In the case of resale, the property is subject to an appreciation tax. As the purchase price is not indexed to the cost of living in Switzerland , the taxable profit is the difference between the sale price and the purchase price.
The purchase price means:
- The actual purchase price
- Purchase fees
- Possible added value (e.g. renovations)
- Any commission due to real estate agents
- Other costs
The rate of Capital Gains tax decreases according to the years of ownership.
Returns
T
o date the principal source of profit for foreign investors has been the currency hedge of the Swiss Franc.
It has allowed the initial capital:
- to be protected from depreciation
- to increase in value (profit speculation)
- to protect itself against inflation
- to be self-managing by net-returns.
Finally, the most important and less quantifiable return is the pleasure you will have from using your property and the enjoyment gained from the security and tranquillity of Switzerland.
Financing
The standard loan granted by Swiss banks for purchases is about 66% of the sales price (incl. parking space). This loan is usually granted in the form of a debit to a current account and only the apartment qualifies as security.
T
raditional financing through a mortgage can also be arranged. The interest in this case is lower but the account is not as flexible in its use as the current debit account.
The rate of interest is fixed in stages and can vary depending on the state of the Swiss economy. A larger mortgage can be arranged on the basis of additional security/guarantees (shares, gold, etc.). Further information on mortgages can be obtained from AM Services SA
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SWITZERLAND
