Property buying process in Switzerland

Probably the most difficult thing about the buying process in Switzerland - if you're not a Swiss citizen or a permanent resident - is finding out where you can buy a home.

That's because, as a small country that's very attractive to non-resident investors, Switzerland has taken precautions to ensure the supply of property to local buyers. The Lex Koller (Koller Law) says non-residents can only buy in a designated holiday zone, such as the ski resorts, Lake Lugano, and the area around Montreux. And wherever you buy, you'll be limited to 200 m2 of living space per person.

Otherwise, you can only buy if you have permanent residence (permit C), though EU and EFTA citizens can also buy if they have a temporary B residence permit - a small advantage.

Now that's already made your life difficult. But okay, you've found an area where you're allowed to buy. At this point your life gets more, not less, complicated.

That's because a second law, Lex Weber, prohibits new building for second homes in communes with over 20% of second homes. That means most ski resorts are already up to the limit, so there's little new building. You'll be restricted to the resale market in most cases - very different from buying in a French, Spanish or American ski resort for instance.

This means the market can run rather slowly and you may need to take a good while looking for the right property. Building relationships with agents is very worth while, as many agents have off-market properties that they may show to the right potential buyers but aren't advertising openly.

Swiss property buying guide

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Now you have time to get a couple of things done first. Get your Swiss bank account opened - remember you'll need to provide evidence of where the funds come from (eg long term savings, inheritance or sale of a property or business) as well as showing your passport.

And you need to check all the costs and taxes for the canton in which you're looking for a property. Because Switzerland is a confederation, each canton has extensive power to set its own taxes; even notary fees vary by canton. You'll need to work out your budget for fees depending on where you want to buy.

Individual communes also have powers over planning, resale and rentals. For instance, there may be a minimum holding period before you can sell. In Lauterbrunnen, a local law limits non-Swiss residents to buying 50% of apartments in any one block, while in Grindelwald, non-Swiss can only buy properties over CHF 750,000 in value. Make sure you know exactly what the position is in the canton and commune you have targeted. If you were looking in one commune and a dream property comes up in the town next door, don't assume the rules will be the same.

buy property in switzerlandBuying process

Once you've found your property, life becomes a bit simpler, as Switzerland has a well oiled system for property transfer. It's notary based, as in France; the notary is a state official, who works to ensure an orderly handover, rather than for the vendor or the purchaser. Usually, the agent will suggest which notary to use.

One big advantage of a notary system is that the notary will hold any deposit in escrow. If things go wrong, you are sure to get it back.

Once you've found your property and agreed a price, the first step is a Promesse de Vente, an agreement the notary will draw up. At this stage you'll pay a deposit, normally 10% of the purchase price. (For a new property, you'll make a reservation agreement, and pay a deposit. But reservation agreements don't go through a notary; they're not binding. And your money is paid to the developer, not a notary, so you're taking a bit more risk.)

The agreement will be made conditional on your being given a permit to buy the property. Getting that permit can take from a few weeks to three months. In exceptional circumstances, if the commune where you want to buy has used up its annual quota, you may have to wait for the beginning of the next year. Usually, the promesse de vente will have a stated time limit - discuss with your agent and with the notary whether it is going to be long enough.

The notary will administer the process of applying for your permit. You'll need to fill in a civil status questionnaire with your personal details, so you can apply for the permit.

Note that if you are moving to Switzerland, and both buying a main home and applying for a residence permit at the same time, you can only finalise the purchase once the permit comes through.

notary switzerlandOnce the buying permit comes through, you now have thirty days to sign the notary's deed of sale - either in person, or by power of attorney - and to pay the rest of the purchase price together with any taxes and fees due. If you need a mortgage, you'll find most mortgages in Switzerland are arranged directly with banks. Swiss banks demand at least a 20% deposit and as a foreign buyer you might be asked to put up more (30% of even 40%). Mortgages can last up to 25 years, and interest rates are among the lowest in Europe. For higher loan-to-value mortgages it's quite common to split the loan into a low interest 65% and then a higher interest tranche going up to 80%.

Ideally get your mortgage sorted out before you make your offer. You'll then need your notary to liaise with the bank for registration of the mortgage. There will be a cost associated with this (we itemise costs below).

Once you've got your buying permit through, the notary has to register the sale with the land register before you're the official owner. That can take a few weeks. But many vendors will hand over the keys once the signing has occurred, even though it is not formally complete. And you're expected to pay on handover, too.

The whole process can take from 2 to 6 months. Purchase costs are actually quite cheap for Europe; you can often keep them below 4%, though the exact figure will depend on the canton in which you purchase. Note, though, that it's the buyer who pays the estate agent in Switzerland.

What are the expenses when buying a home in Switzerland?
Expense% of purchase price
Transfer tax0.2% to 3.3% depending on canton
Registration fee with Land Register0.25%
Notary feesTypically 0.1% - but depends on canton
Estate agent's fee3-5% plus VAT at 7.6%
Mortgage registration feeSliding scale up to 0.7% of mortgage amount

If you want to buy in Switzerland, you'll need to appreciate that it can't be done in a hurry. But on the other hand, the system, once you activate it, should run like clockwork, and you're buying into a stable economy, a legal system which gives you secure property rights, and one of the most beautiful countries on earth.