"Living the Swiss Dream, Real Estate developments in the Swiss Alps and future trends" VIPWorld Magazine Oct 2011-April 2012
Peter Bloemsma of Buy a Holiday House in Switzerland discusses the general purchasing process for non-residents acquiring property in Switzerland and the latest real estate trends in the Swiss Alps.
Switzerland has always been attractive for tourists, travelers and those looking for a holiday residence. The broad range of outdoor activities Switzerland has to offer in the mountains or around its lakes span all seasons and continue to convince nature and sport-fans alike. Add to that the charms of a rich cultural life, the economic, financial and social stability it enjoys, as well as its excellent accessibility being located in the geographic centre of Europe and it becomes easy to understand why more and more people have set their eyes on Switzerland when looking to acquire a holiday residence abroad.
In times of economic and financial uncertainty, this trend is only going upwards.
However, some restrictions exist for non-residents to acquire a property in Switzerland.
Buying restrictions non-residents
- Acquisition of Swiss properties by non-residents is regulated by the Lex Koller law, which says that acquisition by non-residents is subject to prior authorisation. Such authorisation can be granted if the property is acquired as a holiday residence and is situated within certain areas designated by the cantonal authority as tourism zones. It also says that non-residents are allowed to own only one property in Switzerland.
- If you are not in possession of a “B” or “C” permit (allowing you to live long-term in Switzerland as a foreigner) and are not planning to apply for one, you’re allowed to reside in your property for a maximum of 180 days per year with a 3 month maximum term per stay.
- Your property is limited to a maximum size. Depending of the canton this is between 200m2 and 250m2.
Purchase Process for non-residents
The Purchase Process is fairly straightforward, with some canton-dependent variations and the following documents must be submitted in front of a Swiss notary.
- Document with all details of the buyer(s)
- 2 x copies of a passport of the buyer(s)
The following documents have to be signed:
- The sales contract
- Declaration of Honour – Acknowledgement the buyer does not own another property in Switzerland
- Construction Description – Acknowledgement of the specifications of the property, only for new build
- Plans – These show the site plans, floor plans, square meterage etc.
The notary will send this dossier to the legal department of the Land Register. A certificate will be issued confirming that the dossier is complete and that all the prerequisites for the permit are fulfilled.
The buyer must then wait for the permit. How long that will last is difficult to predict and depends on a number of factors. A quota of permits is delivered per year, per canton and per commune and the governing bodies only convene periodically. During this time, the buyer must make the agreed payments.
The property acquisition becomes official when the owner is registered in the land registry.
Depending on the canton the average costs for the legal procedure including the Notary Fees, Land Register and Permit applications can range between 2.3 % and 4.8 % of the purchase price.
- Existing property; a small down payment will be required before submitting the paperwork to the Land Register. The remaining amount has to be paid upon the issuing of the permit. .
- New property; dependent on the building company, but a general scheme looks like:
- 33% Approval Permit
- 33% Reaching the roof
- 33% At hand-over of the property
Latest trends in real estate in the Swiss Alps
Real estate prices in the Swiss ski resorts have gone up steadily over the last decade.
Swiss interest rates are low (5 years around 2%) and the paid interest is tax deductable, also for a holiday house. (You pay an asset tax on your property in Switzerland.) This makes it very attractive to finance your holiday house with a local Swiss bank and most banks will finance up to 60-70%.
As real estate prices adapt to the relative shortage of quality locations and an ever- increasing demand, project developers are beginning to recognise the opportunities for new projects. For example, the world-famous ski resorts of Davos, Lenzerheide and Flims LAAX are located in Switzerland’s largest canton, Graubünden. Here, the average price per square metre ranges between 11’000 CHF and 16’000 CHF, and has increased over the past five years between 25 and 50 percent.
In the fashionable ski resorts of St Moritz, Zermatt and Verbier, prices are even starting at 22’000 CHF and have nearly doubled over the past five years.
In some areas second homes are only used for a short period every year. During the peak weeks (3-4), the villages have to cater for all its visitors. During the remaining weeks, the villages only cater for its permanent residents and the weekend tourists.
Switzerland is trying to avoid these “ghost” villages by implementing a range of regulations/initiatives:
- Building restrictions in the ski resorts. In some ski resorts they have cut back the project developments to 1/3 of the normal building effort, to avoid the Alps being ‘overbuilt’.
- More and more mountain regions offer a wide range of bi-seasonal activities to attract more tourists during winter and summer.
- Most cantons limit the amount of permits given to non-resident buyers.
- To increase the supply of holiday houses, there is a trend to develop “Buy to let“ projects.
An investor buys an apartment and will have restricted use of his property. During a specified number of weeks there is an obligation to let the property out. Most of these apartments are attached to an infrastructure with a range of facilities like reception, wellness, restaurants, kids clubs and ski school; services most of the owners/renters see as a must-have when selecting their property. Often these projects are being built on superb locations close to the ski lifts and shops. Tour operators are responsible for the marketing and the bookings for these apartments. These “Rent Investment” projects are also referred as “Warme Betten” (Hot beds).
There are various advantages of this Rent Investment model:
- Non-residents do not need a special permit and are exempt for the Lex Koller law.
- The price is related to the expected rent income, which results in a maximum purchase price that is considerable lower than the “normal “ market price.
- The ski resorts will get more tourists
- The buyers will get a Return on Investment, which could pay for their own holidays…Some projects are even offering a guaranteed ROI for the first years…
Under influence of all these developments, it has become more difficult for non-residents to acquire a holiday house in Switzerland, especially if they don’t want to rent it out.
We have built our business around these challenges and are assisting clients to buy their holiday house in Switzerland. Our company is able to find your perfect retreat, with or without a rental obligation.
In some cases the construction company pays us for our services, and our services come for free. You might also choose to ask us to conduct your personal search action. For VIPWorld readers we offer a 10% discount.
For more in information about our services, please contact us at firstname.lastname@example.org.
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