How to Buy Property in Switzerland as a Non-Resident

Switzerland is known for its economic stability and quality of life, making it an attractive location for property ownership. This guide provides an overview of the process for non-residents interested in purchasing real estate in Switzerland, focusing on the legal framework and financial considerations.

Eligibility and Restrictions for Non-Residents

Acquiring real estate in Switzerland as a non-resident is subject to specific regulations, primarily governed by the Federal Law on the Acquisition of Real Estate by Persons Abroad, known as “Lex Koller.” This law prevents excessive foreign ownership and imposes restrictions on who can purchase property. A “person abroad” includes non-Swiss citizens without a C permit (settlement permit) and foreign companies. Without authorization, any real estate transaction may be null and void, and the transfer cannot be entered into the land register.

Regulations for a primary residence are strict. Generally, only individuals with a C permit (permanent residency) or, in some cases, a B permit (temporary residency), can purchase property as their main home without significant hurdles. Non-residents typically cannot acquire property for a primary residence unless they first obtain appropriate residency status. The property acquired under these permits must serve as the owner’s principal dwelling.

Non-residents can purchase holiday homes, but with substantial limitations. A national quota, currently 1,500 authorizations per year, restricts sales to foreign individuals. These homes are only permitted in designated tourist areas, with specific cantons receiving portions of the annual quota. A special permit from the relevant cantonal authority is required, and the approval process can take several weeks to months.

Further restrictions apply to the size and usage of holiday homes. The living area is typically limited to 200 square meters, and the land area cannot exceed 1,000 square meters. Owners are usually prohibited from year-round rentals, with only temporary or periodic leasing allowed. Non-residents are generally limited to owning only one holiday or second home in Switzerland.

Commercial properties, such as office buildings, retail spaces, and industrial facilities, are generally less restricted for foreign investors. Non-residents typically do not require a special permit for these acquisitions, provided the property is used exclusively for commercial purposes. If a property combines commercial and residential uses, authorization might be necessary, as the primary use determines the regulations.

Undeveloped and agricultural land face stringent restrictions for foreign acquisition. Agricultural land is highly regulated to preserve Switzerland’s rural landscape. The purchase of undeveloped land by non-residents generally requires a permit, especially if construction of a permitted building is not commenced within one year of acquisition.

Preparing for the Purchase

Before initiating the formal legal acquisition process, prospective buyers undertake several preparatory steps. Identifying a suitable property often involves engaging with local real estate agents, who possess valuable market insights. Online property portals and local newspapers also serve as common avenues for discovering available listings.

Switzerland offers various property types, including apartments, chalets, and single-family homes. When considering an apartment, understanding condominium rules is important, as these properties operate under communal regulations. Thorough investigation of any potential property is crucial. This due diligence involves examining the property’s condition, often by engaging a surveyor to identify structural issues or defects.

Understanding local zoning laws is important to ensure the property’s intended use aligns with municipal regulations. Checking the land register for any existing encumbrances, such as easements or liens, provides transparency regarding the property’s legal status. Switzerland does not have a legally mandated due diligence period before the notarized purchase agreement, placing the onus on the buyer to complete these checks beforehand.

Securing financing is a significant consideration for non-resident buyers, as Swiss banks are the primary providers of mortgage loans. These institutions typically require a substantial down payment, often at least 20% of the property’s purchase price, with a minimum of 10% in cash. While Swiss residents may secure mortgages covering up to 80% of a property’s value, non-residents typically face stricter loan-to-value (LTV) ratios, often receiving financing only up to 50% to 70% of the property’s value.

Swiss banks assess a borrower’s debt-to-income ratio, generally requiring that total housing costs (mortgage interest, amortization, and maintenance expenses) do not exceed one-third of the gross household income. Mortgages are available with both fixed and variable interest rates. Non-resident applicants will need to provide comprehensive documentation, including proof of income and assets, to support their mortgage application.

The Legal Acquisition Process

Once a property is selected and financing is in place, the legal acquisition process begins, mandating the involvement of a notary. The notary plays a central, impartial role, ensuring legal compliance and protecting both buyer and seller interests. Their responsibilities include drafting the purchase agreement, verifying identities, and confirming adherence to all legal requirements, including any necessary Lex Koller permits.

The process typically starts with an offer to purchase, which, if accepted, may lead to a reservation agreement. This agreement often includes a deposit to secure the property, though preliminary agreements not formally notarized may not be legally binding. The notary then drafts the comprehensive purchase agreement, outlining essential details such as property description, purchase price, payment terms, and transfer date. Any conditions precedent, such as a foreign buyer’s permit approval, are also stipulated.

The formal signing of the purchase agreement occurs in the presence of the notary. The notary reads the entire contract aloud, addressing any questions before signing. This notarization is a legal requirement for the validity of the property sale.

Payment for the property is typically structured with an initial deposit followed by a final payment on the transfer date. Funds are often held in an escrow account managed by the notary, ensuring a secure transfer. Ownership is legally transferred to the buyer only upon full payment and subsequent registration in the official Land Register.

The notary handles this registration process. The Land Register, known as the Grundbuch, serves as a public record of property rights and ensures transparency. While there is no single central land register, each canton maintains its own, overseeing the legal documentation of all property ownership within its jurisdiction.

Costs and Taxation

Purchasing property in Switzerland involves various costs beyond the agreed-upon price, including one-time acquisition expenses and ongoing ownership obligations. Total acquisition costs typically range between 2.5% and 5% of the purchase price, varying by canton. Generally, the buyer is responsible for these acquisition-related fees.

Notary and Land Register fees constitute a portion of these initial expenses. Notary fees typically range from 0.1% to 0.5% of the purchase price, while Land Register fees are often between 1 and 2 per mille of the sale price. These fees are determined by cantonal regulations.

Property transfer taxes, also known as stamp duties, are another significant acquisition cost. These taxes are levied at the cantonal level and can range from 1% to 3.3% of the purchase price. Some cantons, such as Zurich, Zug, and Schwyz, do not impose a property transfer tax.

Real estate agent fees are generally paid by the seller, though this can vary by agreement. If the property purchase involves a mortgage, additional mortgage registration fees apply, typically ranging from 0.5% to 1% of the mortgage amount.

Ongoing property ownership entails recurring costs and taxes. Property taxes, which are relatively low, vary significantly by canton and municipality, typically falling between 0.01% and 0.3% of the estimated property value annually. Owners of residential property are subject to income tax on a notional rental value, even if they occupy the property themselves. Maintenance and utility costs are additional expenses. Building insurance is compulsory for all properties.

A wealth tax is levied at the cantonal and communal levels, ranging from 0.1% to 0.9% on net assets, including Swiss property value. When considering a future sale, Switzerland levies a capital gains tax on real estate, typically imposed at the cantonal or municipal level. The tax rate often decreases proportionally to the length of time the property has been held. In specific circumstances, such as reinvesting in a primary residence or changes of ownership due to inheritance, deferral or exemption from this tax may be possible.