A foreign buyer planning to purchase real estate in Switzerland should be aware that the country’s legislation imposes a number of restrictions on the purchase of residential real estate by non-residents. Switzerland consists of 26 cantons. In addition to the regional law called Lex Koller, which restricts the purchase of real estate by non-residents of the country, the Cantonal Council of each of them also has the right to set their own taxes and regulations that restrict the foreign buyer from purchasing real estate.
Buying real estate in Switzerland by a foreigner
To purchase a home in the canton, a foreigner must first obtain permission from the local authorities. This is not the case for all cantons. In some of them, for example, in the cantons of Geneva, Bern, Zurich, such permits are not issued. In other, usually small resort towns, foreign investment in real estate is welcomed, and a large percentage of offers entering the market require an already issued purchase permit.
However, the purchase of commercial real estate in Switzerland does not have any restrictions.
There are also restrictions on owning only 1 piece of real estate per family. The limit is up to 200 m2 of living space and 1000 m2 of land. The purchase of development land by foreigners is prohibited in all cantons.
The acquisition of real estate in itself does not give the right to obtain a residence permit in Switzerland, but it is a great advantage. And vice versa, having a Swiss residence permit allows you to purchase real estate in the country without any restrictions. Since these two processes are interconnected, it is worth choosing a canton based on all its limitations and advantages. A residence permit issued by a specific canton allows you to buy residential or commercial real estate and reside only in the territory of the canton. That is, if the residence permit was issued by the authorities of the canton of Vaud, then the purchase of housing without additional permits is permissible only in the canton of Vaud.
Without obtaining a residence permit, property owners will be able to spend no more than 183 days a year in Switzerland (or 90 in a half-year).
The process of buying real estate in Switzerland
So, after a potential buyer of real estate has chosen a canton, familiarized himself with its features and found a suitable apartment or house, an agreement of intent to purchase is concluded with the seller in the presence of a notary – Le Promesse de Vente. A deposit is made to the bank account of the real estate agency or notary for the purpose of booking the property. The amount of the reserve is negotiated with the seller and ranges from 5% of the property value. After which the notary double-checks the legal purity of the transaction and sends a request to the Cantonal Land Department for a quota for the purchase of an apartment or house by a foreigner. Review and approval for the purchase can take from one to several months, depending on the selected canton. If the property is sold with an existing permit, or the buyer has a residence permit in Switzerland, the transaction period is noticeably reduced.
After verification and issuance of purchase permission (quota) by the authorities, the main purchase and sale agreement is concluded, and the buyer transfers the entire amount of the transaction to the seller’s bank account. The agreement must be certified by a notary.
Immediately after the purchase, the new owner of the property, in accordance with the Lex Koller law, fills out a declaration that the purchased property is his only property in Switzerland. This declaration must be notarized.
After completing the transaction, the notary prepares the documents and sends the buyer an invoice for payment of the fee for making changes at the Cadastral Chamber and an invoice for payment of the tax on the transfer of ownership. After payment by the buyer, the notary sends a complete package of documents to the Cadastral Chamber to register the transfer of ownership.
Costs when buying property in Switzerland
As we wrote above, each canton of the country has its own tariffs, taxes and restrictions on the purchase of real estate by foreigners on its territory. Accordingly, transaction costs may vary depending on the selected canton. Basic payments that should be included in the purchase budget:
- commission to a real estate agency (may already be included in the price of the property).
- use of translator services and translation of documents (from 300 euros).
- notary services – from 0.02 to 0.7% of the transaction amount.
- The fee for obtaining a quota for the purchase of real estate is from 1000 euros.
- duty and registration of the right to transfer property – up to 0.6% of the cost.
- tax on the purchase of real estate – up to 4% (absent in some cantons).