Swiss Property Buying Guide01 November 2019
When purchasing a property in Switzerland, the process for international buyers is considerably different from the process for Swiss nationals. International buyers must meet certain conditions and follow the following procedures.
- Switzerland authorises the acquisition of a secondary residence per household (including spouses and dependent children under 18 years of age) for international buyers.
- The surface of the property purchased cannot exceed 200 square metres, unless special permission is given. In addition, it is not possible to combine two apartments to make one. However, on occasion some larger properties may be authorised for international buyers.
- Properties can only be purchased in the buyer’s name, not through a company.
The declaration of intention by the buyer
‘The declaration of intention’ confirms that the buyer wishes to proceed with the purchase of the property. The buyer must fill in a form containing the personal details about the buyer that will be required when sending the deed to the authorities, subject to the Federal Law on the Acquisition of Real Estate by International Buyers (LFAIE). A finance plan will have to be put in place (or almost) before sending the declaration of intention.
Processing time by the cantonal authorities
Once the declaration has been sent, the authorisation in principle is granted after two to three weeks.
Signature of the deed of sale
The buyer then has a period of 30 days to sign the deed of sale. This period is non-negotiable and non-extendable. This is why it is crucial to have a financing plan before you even send the letter of intent because the deadline is not flexible. The notary and the responsible authorities will verify that the buyer has a financing plan when their declaration of intent is assessed.
It is within this period of 30 days before the signing of the deed that the buyer will need to pay 20% of the property price to the notary’s account. This means that a guarantee deposit is not needed in this case.
Payment of fund calls
Once the deed is signed and the first 20% paid, payments are made according to the following schedule:
- 20% to be paid to the notary’s account before signing the deed within 30 days after the approval of the declaration of intent.
- 30% when foundations are completed
- 30% when the roof and windows are in place
- 20% at delivery
Legally, the buyer will be considered as the owner upon delivery of the project when they will be registered in the Swiss Register of Owners.
Payments must be made from an account registered in the name of the buyer, preferably from a Swiss account. Though not prohibited, payment from an international account is not advised. Accounts from European countries are generally better off than those from non-European countries, but it is still advisable to open an account in Switzerland when buying a property. We can, of course, guide you through this process and recommend some banks.
Unlike in France where one can purchase an off-plan property through a company or financial structure, this is not permitted in Switzerland. Off-plan property purchases can only be made in its own name.
The standard SIA118 guarantees the quality of a project’s construction. This warranty covers possible construction defects in property for the first five years, such as faults in the foundations or interior finishes.
In addition, thanks to the schedule outlined above, the notary releases only a portion of the funds to the developer. The act specifies that the notary will release only 30% of the funds to the builder until the delivery of the property. This limits the risk for the buyer. The remaining funds remain in the account of the notary until the delivery of the property.
For this reason, it is also recommended that you take the progress of the construction into account. The more advanced the project is, the more likely it is to materialise. For some projects, financing is also provided by a bank, such as Credit Suisse, which provides the buyer with an additional guarantee on the project.
Unlike the French system, the buyer buys a Property By Floor (PPE) which grants them the right to enjoy their property and its annexes (cellars, ski lockers, parking, etc.) and communal areas of the building . Condominium fees apply to each PPE share unless the communal elements belong to a separate entity. These expenses are annual and are determined by the owners association.
The acquisition costs depend on the exact final price but they represent approximately 2.3% of the purchase price and are payable at the time of delivery. Plus, a further 0.6% is payable at the signature of the deed which covers the notary fees.
Like in France, homeowners in Switzerland will be subject to property tax. The amount of tax depends on the profile of each buyer and the exact amount can be determined by one of our partner tax specialists. It is calculated on the tax value as well as the tax on the potential rental value of the property.
The entire purchasing process is overseen by a Swiss notary and our in-house team will be happy to assist you in your efforts.EXPLORE SWISS PROPERTIES