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Swiss regulations for buying property

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Buying properties in Switzerland, especially a house or a commercial property is not as easy as is sounds, as the Swiss real estate market is highly regulated. Owning a house in Switzerland is not something as usual. More than 60% of the people living in Switzerland usually rent their residence. Property ownership is higher in rural areas and lower in larger cities such as Basel, Zurich or Geneva, due to the constant growth in urban population over the last 50 years and the high demand of businesses looking for properties to establish a registered office in Switzerland. High prices in combination with the high demand lead to expensive and hard to find properties.

On the other hand, like in most sectors, the Swiss real estate market is highly competitive, which means that property owners receive a large number of applications for tenants, thus increasing their price for rent. Therefore, it is worth considering buying property in Switzerland instead of renting, but it is equally important to consider all options before making a decision.

Renting vs. buying property in Switzerland

Switzerland has strict regulations regarding property purchasing by foreigners. EU or EFTA nationals, holding a Swiss residence permit or persons holding a Swiss C permit are allowed to buy property.

In both cases, the respective persons have the same rights as Swiss citizens, which means they can buy business premises, investment properties or holiday homes, all in addition to the primary residence.

Persons who are in the possession of a Swiss B permit are allowed to purchase a home, but only to live in it, therefore to use it as a primary residence.

Non – resident foreigners, foreign residents without work permits or workers on a short – term or season work permit are not allowed to buy property, but they may apply for a license to purchase. The licensing criteria vary from one Swiss canton to another, but it usually favors applicants who want to purchase a primary residence and who have settled into a canton for at least five years.

Persons who are interested in working in Switzerland should consider buying property in neighboring countries, such as France or Germany, if they work in cities close to the borders. However, this option should be considered only if they hold work permits that allow them to work as cross – border employees for Swiss companies.

Steps to buy a property in Switzerland

Just like in many other countries, most properties are listed online, in the main newspapers and with local agents. 

Zoning regulations are important in Switzerland. Persons who are not working in the agricultural field may buy existing properties on agricultural land, such as farms and houses. There are strict regulations for new constructions, extensions or in some cases repairs to buildings that are not required for agricultural work.

Detached houses and apartments often come with annual charges for services, such as maintenance services, car parking, private roads etc. Usually, these charges have a rate of 1% of the sale price annually, if the current owner presents no other information.

Local taxes vary on cantonal and communal level; therefore, it is important to request information about the level of taxation on properties.

In order to cover the costs, it is necessary to make an application with a mortgage provider. Mortgages are in most cases arranged directly with the lender, usually a bank, and less with mortgage brokers.

Usually, the minimum deposit for a mortgage is 20% of the sum, of which a least 10% should be in cash. Considering that prices are high for some properties in certain areas, this deposit may be quite prohibitive.

A notary handles Swiss property transfers. The notary will draw up the contract, hold the buyer’s funds in escrow, register the change of ownership for the property and offers advise regarding the legality of the transaction.

The notary’s fees should be considered somewhere around 5% of the sale price. These fees include the property transfer tax, registering of the deed with the land registry office and the notary’s own fees.

These fees may be split between buyer and seller, depending on the regulations of each canton, but in most cases, they fall into the responsibility of the buyer.

Entrepreneurs interested in buying a Swiss properties for local company offices, should consider renting and office in a Swiss business center, as they can benefit from all the facilities provided by it, with lower costs.

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