Guide to Buying a Property in Switzerland
For most people, when they think about where to purchase a holiday home, their dream location is usually Switzerland. Whether you’re looking for a holiday home or even a permanent residence, Switzerland has a lot to offer.
However, to someone who is planning on buying property in Switzerland, the housing market can be very confusing. As this country is a confederation of 26 cantons and has a highly regulated and complex property market, foreign buyers can often be confused about how exactly to buy property in Switzerland.
This is why we’ve created this guide for anyone whose dream is to own property in Switzerland. Here, you can read everything you need to start your journey to owning a beautiful property in Switzerland.
Why should you buy property in Switzerland?
If you’re looking to purchase new property in Switzerland, now is the perfect time to do so. Here’s why purchasing property in Switzerland is a wise decision.
Stable real estate market
Despite global economic fluctuations, Switzerland maintains a resilient real estate market. The country’s property values are known for their stability, and in some instances, they have seen a significant appreciation, making it a safe investment option.
Quality of life
Switzerland consistently ranks high in terms of quality of life due to its excellent healthcare, education, and a high level of safety and cleanliness. These factors make living in Switzerland desirable, contributing to the demand for residential property.
Strict regulations on new construction
With national quota regulations restricting the construction of new second homes in communes where over 20% of residences are second homes, there is a finite supply of such properties. The scarcity of new developments post-March 2012 implies that the existing properties are likely to retain or increase their value due to limited supply.
Attractive for rental investments
Since many areas in Switzerland are popular tourist destinations, there’s a substantial market for vacation rentals. Owning a second home in such regions could be a profitable venture, given the tourist influx and the preference for rented accommodations over hotels.
Sustainability focus
The Swiss real estate market is progressively focusing on sustainable living, which is increasingly influencing purchase decisions. Investment in a property that adheres to modern sustainability standards can be both an ethical choice and a future-proof investment.
Can foreigners buy property in Switzerland?
The simple answer to this question is yes, but it’s important to note that there are strict restrictions imposed on foreign nationals looking to buy Swiss property. Firstly, unless you’re a Swiss or have a Swiss Residence permit, you can only buy a property in tourist areas, not in big cities like Geneva, Zurich, or Basel.
If you are an EU or EFTA national with a Swiss residence permit currently residing in Switzerland or holding a Swiss C Permit, you have the same rights to purchase property as Swiss citizens. This means you can purchase a primary residence but also investment properties, commercial residences, and holiday homes.
If you hold a Swiss B Permit, however, you’re only allowed to purchase the property you will live in.
If you don’t belong to any of these categories, you might not be able to purchase property, or you may buy it but only if you apply for a license to purchase. This licensing varies from canton to canton, but you have the biggest chance to get approved if you’ve been settled in your preferred canton for five or more years and are looking to purchase a primary residence.
For those looking to live, work, and retire in Switzerland, the easiest way to buy property here is to apply for and secure a residency permit.
What property can you buy?
Foreign buyers can only purchase residential property located in a tourist area. This means you can buy an apartment or chalet for sale in ski resorts located in Cantons Bern, Graubünden, Obwalden, Uri, Vaud, and Valais.
If you’re looking to purchase a holiday home, it can’t have more than 250m2 of living space (this doesn’t include the garage, basement, etc.). The property also can’t be on a land plot larger than 1000m2.
However, it’s worth mentioning that two siblings or a parent and child that’s over the age of 20 and has their own income stream can purchase a larger property together
Also, prior to exploring potential homes or apartments, it’s crucial to establish your financial capacity. When considering the idea of purchasing a new house or apartment, having a clear understanding of the specific type of real estate within your budget is essential
A common mistake is not doing sufficient financial research, leading many to discover they lack the funds for a home they’ve grown fond of. This realization can be quite discouraging, so make sure to make a calculation and determine your net income and the range of house prices you can afford.
What is the process of buying property in Switzerland?
Buying property for sale in Switzerland isn’t a quick process, as it can last for three or more months. Wherever you choose to buy property, the process will be the same.
Once you choose your ideal property, the first step is to make an offer after consulting with a real estate agent. After that, the rest of the process can begin.
Securing pre-approval for a mortgage
Before even making an offer, it’s prudent to secure pre-approval for a mortgage. This step verifies your financial credibility and clarifies your budget, enhancing your negotiating position.
Signing a reservation contract
If you’re purchasing a new property or renovating an existing one, you will be asked to pay a small deposit and sign a reservation agreement. This practice also exists for resale properties and is seen as a gesture of goodwill.
The vendor or developer will countersign this contract as well and the property you’ve chosen won’t be marketed to real estate agencies and other potential buyers while you go through the rest of the steps in this process.
Property evaluation and due diligence
While professional surveys are uncommon in Switzerland, conducting one might be a wise precaution. It’s essential to understand the property’s condition, legal status, and any potential liabilities (like unresolved property disputes or environmental issues).
Applying for a mortgage
You can apply for a mortgage to purchase real estate in a Swiss bank, and most banks will lend up to 70% of the purchase price. Keep in mind that it’s best to only work with local mortgage providers who are familiar with the area in which you’re planning on buying a property.
Notary appointed
When you secure a mortgage offer, you will be appointed a Swiss notary who will act on behalf of the vendor and purchaser to manage the sale. As the public notary will act on behalf of both parties, you generally won’t need a solicitor.
Purchase agreement review
After the previous steps, you’ll receive a draft purchase contract. It’s crucial to review this document carefully, possibly consulting with a legal advisor, to ensure all terms, conditions, and legal obligations are clear and fair.
Applying for a foreigner purchase permit
The first thing your notary will do is collect all the necessary information which includes the buyer’s personal info, the key information regarding the property, and the vendor’s personal info. They need to do this so they can prepare an application for a foreign purchase permit and the deed of sale.
When that step is completed, the notary will send the application for the foreign purchase permit to the Cantonal Authorities for ratification. This process usually lasts between two and four weeks, and it can be refused only if you already own a property in Switzerland or if the real estate you’re trying to purchase doesn’t comply with the rules.
Signing the deed of sale
When you secure this permit, you have a deadline of 30 days to sign the deed of the sale. You can do this yourself accompanied by the notary or sign a power of attorney. Your notary will also be in contact with the bank during this process to ensure the registration of your mortgage.
Payment of various fees
Apart from the mortgage, be prepared to cover additional costs such as notary fees, property transfer taxes, and land registry fees. These expenses are mandatory and contribute to the legal transfer of ownership.
Understanding tax implications
As a new property owner in Switzerland, you should be aware of the local property taxes and how they impact your financial obligations. This understanding is crucial for managing your long-term expenses and commitments.
Property insurance arrangement
Securing property insurance is a step often taken concurrently with the purchase process. Insurance protects your investment against unforeseen damages and liabilities.
Final walk-through and verification
Conduct a final property inspection before the complete handover. This step ensures that the property’s condition meets the agreed terms and that all fixtures and inclusions are as per the contract.
Registration and handover
Finally, the sale of the real estate will be documented in the Land Registrar. This is also a process that lasts for a few weeks and the sale is formally complete only when it’s finished.
However, most buyers and vendors will agree to do a handover of keys. You, as the new owner, will be responsible for your new home as soon as the handover is completed.
Connection of utilities and services
After the handover, you’ll need to arrange for the connection or transfer of utilities such as water, electricity, and internet services. This step might require separate engagements with local service providers.
Community integration
If the property is part of a communal living environment (like a condominium), you may need to engage with a homeowners’ association. Understanding and complying with community rules and regulations will be an essential part of your new residential life.
Finding Real Estate Agents
Finding a reputable real estate agency in Switzerland can significantly smooth the process of buying or selling property.
Here are some tips to ensure you engage with a reliable real estate agency:
- Utilize professional associations: Seek agencies affiliated with recognized entities like the Swiss Real Estate Association (SVIT) or the Swiss Union of Real Estate Professionals (USPI Suisse). These associations typically uphold high standards for their members.
- Experience and local knowledge: Opt for real estate agents with robust experience and a deep understanding of the local Swiss property market. An agency’s familiarity with the area’s property trends and regulations is invaluable.
- Check track record: Investigate the agency’s past transactions to assess their expertise in handling properties similar to what you seek. Satisfied clients and successful deals are positive indicators.
- Communication and accessibility: Good real estate agents will maintain open lines of communication, responding promptly to your inquiries and keeping you updated throughout the process.
- Services offered: Ensure the agency provides the comprehensive services you require. This might include property valuation, legal guidance, or negotiation assistance.
- Seek recommendations: Personal referrals from friends or family members can be incredibly reliable. They can share their personal experiences and their level of satisfaction with the services received.
- Read reviews and testimonials: Online reviews and client testimonials offer insight into the agency’s reliability and customer service. Be mindful of consistent trends in feedback, either positive or negative.
By following these tips, you can find an agency that meets your specific needs and ensures a transparent, efficient property transaction process in Switzerland. If you’re interested in buying property in Switzerland, such as in Verbier, Schraner Luxury Realty is at your service.
What are the purchase costs?
Photo by Claudio Schwarz on Unsplash
Even though the property itself is usually rather expensive, the total purchase costs in Valais are a maximum of 3% (2.5% of purchase tax and land registry fees, and 0.5% notary’s fee).
The mortgage registration fee varies from canton to canton and it’s charged on a sliding scale. If you want to buy real estate for sale in Verbier which is located in Canton Valais, the sliding scale starts at 1% until 200k CHF, 0.8% until 500k, and approximately 0.7% over 1m CHF. This will determine the cost of your Verbier property.
It’s also possible to avoid the mortgage registration fee if a mortgage already exists on the property you’re purchasing. In that case, the mortgage can be transferred to you.
What taxes will you pay?
As a foreigner owning a property in Switzerland, you will need to pay taxes to three different bodies: the Federal Government, the Canton, and the Commune. The main taxes you will have to pay include:
- Income tax: As a property owner, you will be taxed on a notional income for the right to use your property. This tax will be calculated based on the property itself and the state of the local rental market.
- Wealth tax: This tax is calculated based on all of your assets and is levied at a cantonal level. The wealth tax on your property will be based on its tax value which is determined by a range of assessment criteria.
- Property tax: Each canton has a different annual property tax that is based on the tax value of the property.
- Capital gains tax: Any profit made from selling a property is subjected to capital gains tax, which is levied by the relevant canton. It’s calculated based on the original purchase price and the agreed sales price minus the cost of improvements and renovations.
- Inheritance tax: If you inherit or are gifted property in Switzerland, you will be subjected to paying inheritance tax. However, keep in mind that there is NO inheritance tax in Canton Valais, which is great news for everyone who wants to move to Valais and buy property here.
Property for sale in Verbier
There are numerous reasons why you may consider buying property in Switzerland, including the quality of life, private holiday accommodation, relocation, business purposes, or investment and security. No matter the reason, we have a number of apartments and chalets you can choose from.
For discretion and our clients’ privacy, we have not published all of our listings online. In fact, what we have listed is just a tiny part and we have many more properties that will catch your attention. If you can’t find a property that fits your meets your requirements on our listings, feel free to contact us for a full list of Verbier properties for sale
Depending on your requirements, you can look for a bigger or smaller property, different styles, located in different places in Verbier, and so on. Apartment, penthouse, or chalet for sale – you name it, we have it. We also offer villas in other locations.
We update our list on a weekly basis to match your wishes and requirements. We are currently accepting new homes to include in our sales portfolio. Get in touch with Schraner Luxury Realty today for a commitment-free discussion.
