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Can anyone buy Swiss property?

Please note that the content of this article is of a general nature only and you should not act or refrain from acting in reliance on it. You should always obtain independent professional advice on the facts of your particular case. No liability is accepted in connection with this article.

Q. I am interested in buying a property in Switzerland. Are there restrictions on who can buy land there?

A. Yes. There are some restrictions on the purchase of Swiss land by non-Swiss nationals. Although these have been relaxed in recent years, as a non-resident, you will only be able to buy low rental apartment blocks which are tied to below-market rentals for a period of 20 years. Alternatively, if you have a class C resident’s permit, you will be able to buy a holiday home in designated tourist areas. Full residency rights and an EU passport will allow you to buy without restrictions, unless the land is larger than 3,000 square metres in which case permission is required.

Q. Tell me more about these low rental apartment blocks.

A. In order to encourage foreign investment in low value rental property in Switzerland, there are 20 year tax breaks for those who invest in such properties with at least 500,000 CHF capital outlay and the balance financed by way of mortgage. Rents will be around 30% lower than usual and a government subsidy will compensate you for investing in this kind of property. Over the 20 year period the rents will increase, and the subsidy will decease. Foreign investors will be exempt from cantonal and communal taxes for the 20 year period, but not from federal taxes. However, as the landlord you will still be liable for any maintenance and service charges. On sale, you will get capital tax gains breaks provided the property was held for the full subsidy period and is sold to a Swiss purchaser.

Q. Do similar restrictions apply for commercial property?

A. No. The restrictions that apply to residential property do not apply to the acquisition of commercial property in Switzerland. You will need to obtain permission before making a commercial acquisition, but in practice this is usually granted.

Q. Can I obtain a mortgage for the purchase?

A. Yes, you can obtain mortgage finance in the UK or in Switzerland for up to 80% of the value of the property. Interest rates in Switzerland are generally low and at present are around 5% for a 10 year mortgage.

Q. Who will deal with the mechanics of the purchase?

A. This will need to be done by a Swiss notaire who will ensure that the purchase is legal before he proceeds. He will deal with checking that the seller actually owns the land he is selling and that you qualify to buy the land. You will pay the purchase monies to the notaire and it is only after the land has been registered in your name that the monies will be released to the seller.

Q. Can a UK lawyer deal with this for me instead?

A. No, the conveyancing will need to be done by a Swiss notaire. However, we have experience in guiding British buyers through foreign purchases and our clients consider our assistance in doing so invaluable in addition to the tax advice that we offer.