Buying property in Switzerland: rights and obligations for foreign nationals

Author: Bernhard Bircher-Suits

First of all, the good news is that citizens of EU or EFTA countries (Iceland, Liechtenstein and Norway) who are already living in Switzerland have the same rights as Swiss citizens when purchasing property and do not require a permit to buy an apartment, house or plot of land.

Attorney Urs Haegi from law firm Vischer AG says: “Your legal and actual place of residence must be in Switzerland. The authorities will check your actual place of residence in particular. It’s not enough to have a permit but permanently reside abroad.” However, the decisive factors are nationality, residency status and the intention to use the property. It’s important to understand that buying a house, apartment or plot of land in Switzerland does not entitle you to a residence permit. 

Swiss law distinguishes between the following groups:

• EU/EFTA nationals
• Third-country nationals, such as those from the United States, Canada, China, etc.

These groups are treated differently under the law. It also matters whether you already have a place of residence in Switzerland or are planning to move there. If you don’t have a Swiss passport or your company is based abroad, you can’t just buy a property in Switzerland.

This is governed by the “Federal Act on the Acquisition of Immovable Property in Switzerland by Foreign Non-Residents” – also known as the “Lex Koller Act”, which came into force in 1983. This nickname refers to former Federal Councillor Arnold Koller. The Lex Koller Act restricts the acquisition of real estate in Switzerland by foreign non-residents in order to “prevent the excessive ownership of Swiss territory by foreign nationals”. For this purpose, property purchases are generally subject to a permit from the relevant cantonal authority.

Case 1: You want to relocate your main residence to Switzerland

If you’re planning to move to Switzerland permanently, you have a good chance of being able to buy property.

Buying residential property: straightforward for EU and EFTA nationals

As a citizen of an EU or EFTA country – such as Germany, France, Austria, Italy, Norway, Iceland or Liechtenstein – you can generally buy your own home in Switzerland if you have a valid residence permit, such as a B permit (residence) or a C permit (settlement).

With a C permit, you are treated largely the same as a Swiss citizen in legal terms, which means that you can buy property for your own use or as an investment – without requiring any additional permits from your canton of residence. This regulation is based on the Agreement on the Free Movement of Persons between Switzerland and the EU/EFTA, which facilitates access to the labour market, housing and property purchases. 

Buying residential property: it’s harder for foreign nationals with a B permit

EU/EFTA citizens with a B permit are allowed to buy a main residence for their own use, but not additional holiday or investment properties. This is illustrated by an example from the canton of Aargau. Foreign nationals with B permits may purchase a main residence (apartment or single-family house) without a permit – provided that it is only one residential unit.

EU/EFTA nationals who work as cross-border commuters in Switzerland (cross-border commuter/G permit) can purchase a second home in the area where they work without a permit, but may not rent it out during the period in which they work as a cross-border commuter in the region. This rule also applies to British nationals who benefit from the Agreement between Switzerland and the United Kingdom on acquired citizens’ rights.

More hurdles for third-country nationals

Third-country nationals from countries such as the United States, Canada and China are generally allowed to purchase property, provided they move to Switzerland and receive a residence permit. Attorney Urs Haegi from law firm Vischer AG says: “However, the purchase must always be approved by the relevant authority.”

Once you have a permanent residence in Switzerland as a third-country national and have made it your home, you can buy property as your primary residence – but not as a holiday home or investment property. You must live in your property yourself; renting it out is prohibited. Once you have received your settlement/C permit, you can also make further purchases (e.g. a second home or investment properties).

Tip: If you wish to buy a property before you move, you may need a special permit or may have to postpone the transfer of ownership to a later date. The Federal Office of Justice provides an information sheet on its web page “Acquisition of property by foreign non-residents”.

Case 2: The property is to be used solely as a second home or holiday home

If you don’t have a Swiss passport and don’t live in Switzerland, you’re only allowed to buy a holiday home or apartment under certain conditions – and even then, not everywhere. According to the Lex Koller Act, holiday homes are clearly classified as “properties subject to approval”.

Here are the most important conditions:

• Only holiday homes subject to a permit: the property must be located in a tourism area (e.g. Zermatt, Davos, Verbier, Engadin). The cantons keep lists of these municipalities. In cities such as Zurich, Basel and Geneva, purchases are generally not permitted.
   
• Max. 200 m² of living space per buyer: according to current enforcement practice, the living space must not exceed approximately 200 m². If this is the case, the purchase may be refused or an exemption permit may be required.
   
• Letting: long-term rentals are not permitted; short-term rentals may be restricted or require a permit depending on the municipality.
   
• Only one property per person or married couple is permitted.
   
• Purchase only with approval: you need a cantonal purchase permit in accordance with the Lex Koller Act. 

Financing: what do you need to bear in mind?

Buying property in Switzerland is expensive – especially in urban centres and popular holiday regions. As a buyer residing abroad, special rules apply to you when it comes to financing.

Capital requirements of mortgage institutions

Most Swiss banks require the following:

• At least 20% equity – often as much as 25–40% for foreign nationals
   
• At least 10% of this amount must be contributed as “hard equity” (i.e. no pension fund assets or other pension assets)
   
• You must show proof that these funds are available in a Swiss account
   
• If you live abroad, banks will check the origin of the funds particularly carefully to prevent money laundering.

Mortgages for foreign non-residents without a Swiss passport

• Many Swiss banks will not finance property purchases for people residing abroad – or will only do so with restrictions
   
• Banks often require a higher proportion of hard equity and additional collateral for purchases by people residing abroad
   
• Other specialised institutions (e.g. international banks headquartered in Switzerland) offer solutions, but often at higher interest rates
   
• A Swiss bank account is almost always required

Summary: It is possible for you to purchase property in Switzerland from abroad – but with certain restrictions and conditions. If you want to move your main residence to Switzerland, the purchase is straightforward. However, if you only want to buy a holiday home or a second home, you will need an official permit and will have to consider many details.

You should therefore seek advice from local property experts, financing partners and, if necessary, solicitors at an early stage. This will help you avoid legal pitfalls – and enable you to realise your dream of owning your own home in Switzerland safely and predictably.