Real Estate in Switzerland: Buying Property as a Foreigner

Expats may find it difficult to navigate the complex regulations when purchasing real estate in Switzerland. From permits to paperwork, mortgages, and taxes, acquiring a home is complex, with some aspects regulated by cantonal and communal laws. Can you buy a house in Switzerland as a foreigner? What conditions do you need to meet? As a non-Swiss national, here is what you need to know before buying property.

Real Estate in Switzerland: Can You Buy a House in Switzerland as a Foreigner?

For foreign nationals who are not entitled to settle in the country, the purchase of real estate in Switzerland is governed by a law known as 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 states that foreigners who wish to buy a home in Switzerland must, in principle, obtain authorisation from the relevant authorities in the canton where the property is located.

That being said, there exist many exceptions to this rule, allowing foreign individuals to buy a house or apartment in Switzerland with little to no restrictions.

• Holders of a C permit may purchase one or several properties freely regardless of their nationality. The only condition is that they buy it in their own name and that the financing does not come predominantlyfrom abroad.

• The LFAIE act does not apply to EU nationals, so long as they effectively and legally reside in Switzerland. As Swiss residents, they are entitled to the purchase of real estate in the same capacity as Swiss nationals and C permit holders.

• Non-European nationals who hold a B permit may purchase a primary residence in Switzerland without a specific authorisation.

• All foreigners, regardless of their nationality or place of residence, may purchase real estate in Switzerland for business purposes, whether it’s a shop, office, warehouse, workshop, etc.

Buying a Holiday Home in Switzerland: How Does It Work?

For foreign nationals (B permit or C permit holders) who reside in Switzerland, purchasing a secondary residence requires no specific authorisation.

For foreigners who reside abroad, however, a canton-issued authorisation is mandatory. It is granted based on a number of legal criteria such as “economic, cultural, or scientific interest”, “close relations worthy of protection”, or a downpayment of at least 20% of the purchase price, mortgage approval, etc.

Even when these conditions are met, the authorisation can only be granted if the property in question complies with certain criteria as well:

•The maximum net floor area is set at 200  sqm, sometimes a little more, depending on the situation

• The maximum land area is set at 1000 sqm

• The home is to be exclusively used in a private capacity, 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 as to the towns or cities where you may purchase a second home. The Lex Weber bans many communes from classifying additional properties as secondary residences. As of 2012, the quota is set at 20%. This implies that many tourist-friendly areas, such as lakeside towns and mountain resorts, can only accommodate very few of these purchases each year.

Buying a House in Switzerland

The best way to look for a house for sale in Switzerland is to reach out to a real estate company. Their agents can estimate a property, ensure every property diagnosis has been carried out appropriately, and narrow down your search by pre-selecting homes that match all your criteria. The purchase of real estate in Switzerland follows a fairly straightforward process, which your real estate company will handle in three main steps.

1. Verifying Your Eligibility

As explained above, some individuals are not automatically entitled to purchase real estate in Switzerland. The first step your real estate company will take is therefore to ensure that your status allows you to buy property. If it does not, they will help you obtain your authorization by contacting the cantonal authorities on your behalf. They can also inform you as to the procedure you must follow and the documents you must produce to be granted a B permit or a C permit.

2. Explaining the Real Estate Buying Process

Property buying in Switzerland is an entirely notarized process. Your real estate expert can point you to a notary in your area who will be in charge of managing the transaction.

They will start by drawing up a sales agreement to be signed by the buyer (who will also pay a 10% deposit) and the seller. This will “lock” the proceedings, preventing the seller from accepting new offers.

The notary then draws up the deed of sale. Once the latter has been read and signed by both parties, the notary can take care of the registration and process the rest of the payment.

To finalise the sale, the notary transfers the money to the seller and provides the buyer with a Land Register extract. This document proves that the property is finally yours!

3. Providing Support and Handling Negotiations on Your Behalf

Throughout the entire process of looking for your ideal home in Switzerland and negotiating with the seller, your real estate company will be right by your side. They will work with your best interests at heart, turning your dream into a reality.

Getting a Mortgage in Switzerland

Before making an offer, buyers who require it need to apply for a mortgage directly from a bank or through a mortgage broker. The latter solution allows buyers to let a professional handle negotiations with the seller and lender. Brokers can even sign contracts on their client’s behalf, representing those who cannot be there in person, such as foreigners who live abroad.

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

It’s important to note that in Switzerland, there are no general assistance programs available to help with the costs of purchasing a property, except for first-time home buyers who may be eligible for lower interest rates in some cases. Broadly speaking, without a 20% contribution (minimum) towards your mortgage, you are unlikely to find a bank that will grant you a loan.

Investing in Real Estate in Switzerland

Swiss real estate constitutes a secure, stable, profitable, and high-quality investment. The market is dynamic, allowing property buyers to quickly resell at a premium.

That being said, buying real estate in Switzerland to obtain a 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 taxes), etc.

Before venturing into it, be sure to seek out advice from industry experts who will be able to point you towards profitable projects and help you avoid possible pitfalls.

What Taxes Do Foreigners Pay When Buying Property in Switzerland?

Real estate taxes in Switzerland have certain implications for those who decide to purchase a home and take up residency in the country.

According to the Swiss taxation system, any person with the status of fiscal resident in Switzerland must declare and pay taxes on worldwide income and wealth. Tax rates are progressive and vary in each commune, and the taxes are levied on a communal, cantonal, and federal level.

Maximum income tax rates range from 20% to 42%. Movable assets and real estate in Switzerland are subject to wealth taxes. 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 real estate in Switzerland implies that you must pay a property transfer tax. This tax can vary from canton to canton but typically amounts to 3% to 5% of the property’s purchase price.

How to Find Your Dream Home in Switzerland?

Buying a property in Switzerland as a foreigner can be daunting, and as the offer doesn’t meet the demand, frustration often ensues for those who try to venture into the real estate market on their own. Thankfully, the right strategy will give you better odds of finding your dream home.

Establish a Clear Budget

Your financial plan can be clarified with the help of your real estate agent to narrow down your search based on your priorities. While there may be some room for negotiation, it is always best to target homes within your budget. One of the best approaches is to reach out to your bank beforehand, so your budget is already pre-approved. This will save you ample time when finalizing the transaction.

List Your Needs and Wants

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

Find a Real Estate Agency You Trust

Real estate portals curate extensive collections of properties advertised by various agencies specializing in real estate in Switzerland. Because of these extensive listings, many assume that portals are the best place to look. This is where the issue lies: You will need to look thoroughly and hope that when you finally find a house or apartment you would like to know more about, it won’t have already been sold.

How does a real estate agent help you avoid this? Real estate agents have access to exclusive properties before they officially make it onto the housing market. If they know of a home that matches your criteria, they can show it to you before it is even added to any platform, giving you a significant head start.

Your privileged relationship with your real estate agent can make all the difference at every stage of the home-buying process, and it 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, prestigious assets need wardens who understand the worth of their legacy and will weave their own history into it.

From luxury apartments in the heart of Geneva to sublime countryside villas and awe-inspiring mountain chalets, our curated collection is prized 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. There to assist you as you set new 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 seek to take part in a community that shares your lifestyle and interests, we give substance to your vision.

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