Buying in Switzerland - Rules, restrictions, complications & solutions

Switzerland has been our best-selling market for years now, and the turbulence this year has only reinforced the popularity of property in the Swiss Alps. The combination of fresh mountain air and the solidity of the Swiss Franc have been key factors in the enduring popularity of the country as a second home destination.  
 
However, Switzerland has earned a reputation as a complicated country for property buyers. With a plethora of rules and regulations and numerous levels (from the Federation, to individual Cantons and local Communes), that reputation is well-deserved. We have done a full overview on the topic here and answered many more questions here.
 
The complicated rules shouldn’t put you off buying in Switzerland though, as they are very practical & solution-oriented by nature in Switzerland and there are more often than not solutions for problems posed. But, you should be prepared for the situation to be more complicated than you think and you should prepare to take the advice of experts, notaries etc who can guide you through the process.

In this article we give a flavour of some of the special cases and situations we have come across over the last 12 months or so. The moral of the story? Don't hesitate to contact us as we can find answers and solutions.
 


We were recently asked by a client who has a Swiss residence permit to find him a property in Zermatt. He had been informed by his company lawyer in Geneva that although foreigners are not usually permitted to buy in Zermatt these restrictions would not apply to him as he has a B permit. Working with a local notary, we checked the situation and found that as the client has an Australian passport he could not buy a second home status property in Switzerland even though he is resident there. He can buy a primary residence where he is based and paying taxes, but not a holiday home in a ski resort. He could only buy a second home if he originally came from an EU or EFTA country. This rule is buried in a federal law so his lawyer can be excused for assuming that all nationalities would be treated the same but our notary (who deals with such cases all the time) spotted it immediately. He also came up with a solution – our client should make Zermatt his primary residence and live and pay his taxes there.
 
Another example, was a client who recently enquired about leveraging her L permit to buy a Swiss only property. This is possible with B & C permits, so it’s a reasonable thought. However, after discussion with a notary, we were able to confirm that the L permit does not open up the opportunity to buy Swiss only property and – if anything – makes the purchase process more complicated for the buyer than simply proceeding with a purchase through the normal foreigner purchase permit route. So we advised the client it would be best to focus on properties available for foreigners and to leave the L permit out of the purchase process.
 
Another common presumptions of buyers is that they can buy in the name of a company in Switzerland. It isn’t possible in most cases. Foreigners also can’t buy property in cities such as Zürich or Geneva without a residence permit. Foreigners can only purchase in designated touristic areas (the villages or towns in valleys below ski areas tend to fall outside).
 
While rules such as this are hidden away in the federal legislature, many rules come at a regional (Cantonal) or even a local (Communal) level. Rules that are created by the commune are often lesser known, as they only apply to the immediate area in question.


 
For example, in Wengen they have a rule that only a maximum of 50% of any building may be sold to foreigners. This is calculated by m2 not the number of apartments. We always have to check who owns the other apartments, what was their status when they bought (Swiss passport holder/Swiss resident/foreigner) and how many m2 are all the apartments. Only then are we able to confirm that they may sell to a foreigner.
 
In most of the resorts in the Valais, a Swiss owner may sell to a foreigner irrespective of how long they have owned the property. In some, like Saas Fee a Swiss owner may only sell to a foreigner after they have owned the property for 5 years. They may sell to another Swiss but not to a foreigner so we always ask to see the extract of the land register in these cases.
 
Another classic (mentioned above) is that property cannot be bought in Zermatt by foreigners. We often hear from clients who think they have an inside track or a way around these rules. They usually don’t.
 
Then there are restrictions and rules around securing finance, which adds another layer of rules and regulations to the mix. If you are applying for a mortgage from Gibraltar, the Channel Islands or the USA you may well be turned down. Mortgage providers do not generally deal with US citizens (domiciled anywhere) or clients domiciled in the Channel Islands or Gibraltar. There are a couple of exceptions or ways around these issues, so you shouldn’t completely give up hope, but prepare for things to be tricky. Similarly, Australian citizens have a lot more hoops to jump through (and more paperwork to complete) than purchasers from inside Europe, so you should bear this in mind and prepare for some (lazy) mortgage providers to turn you down for a mortgage. Again, we have found solutions for these clients before and will do so again!


 
And what about the problems posed by travel restrictions in 2020?
 
Well on this front, things are not so complicated, as the legal aspects of property purchase can all be completed remotely with key documents including a power of attorney all eligible to be sent via post/courier.

The problems you could face when completing a purchase from overseas are more likely to relate to some mortgage documents which, more often than not, must be signed within Switzerland. However, once again, resolutions have been found for buyers in UAE, Hong Kong and elsewhere with some signatures able to take place with global branches of banks that are HQ’ed in Switzerland.
 
Switzerland can be complicated so if you have a question about who may buy what please ask us. If we don’t know the answer, we know a local expert who will!