A safe haven for the elite

Switzerland is considered to be among the most liberal of European nations. A famed banking system, delectable confectionery, precision timepieces and breathtaking scenery that attracts film crews from around the world, have lent it an ideal image of purity and relaxation.

But dig through the snow and look past its picture-postcard landscapes and you’ll find layers of  bureaucracy that no one can escape. When it comes to buying a house, brace yourselves for the most cumbersome of European processes. And the Swiss are proud of this. It’s also perhaps why the United Nations chose to adopt French-speaking Geneva as its home.

The cost of living is high, with everything from dining out to obligatory health insurance priced for those with “moderate” wealth, or in simpler terms, enough dispensable savings.

And if you’re looking to share evening tea and muffins with friendly, next-door neighbours then we suggest you spend considerable time studying each of Switzerland’s 26 cantons (states). While residents of certain cantons prefer to stick to themselves, it is the predominantly Catholic cantons that bring great verve.

There is a vast cultural divide between the German-speaking cantons of central and north-east Switzerland, the French cantons of the east and the Italian-speaking cantons of the south. It is this diversity in history, political patronage, architecture and law that makes Switzerland a fascinating country.

On the whole, its neutrality, well-structured business sector, low unemployment and political and economic stability, have long made it a safe haven for investment. It also helps that the Swiss take their real estate seriously. Effective, responsible governance has lead to guarantees on construction that only enhance the financial performance of investments linked to bricks and mortar.

Since we know skiing in the Alps is something few would give up, we’ll attempt to break down the ridiculously frustrating property purchase process in this landlocked alpine country of nearly eight million people. In Switzerland, acquisition of property by non-residents is regulated by the Lex Koller law. Unless property is purchased for a permanent business establishment and practise, acquisition of property by non-residents is subject to prior authorisation.

This authorisation is granted only if the property is acquired as a holiday residence and is situated within certain areas designated by the cantonal (local government) authority as tourism zones.

Every year, the federal government grants a new quota of authorisations, which are allocated between the cantons depending on the importance of their respective tourism zones. The cantons of Vaud and Valais, for example, receive more authorisations for foreign property ownership, making it easier to buy there than in other cantons.

This is mainly because these are popular tourist destinations. Typically, you may buy only one property, of maximum 200 sq m metres of liveable space per family.

Subject to Lex Koller restrictions, it is possible to resell a property after its acquisition to another non-resident. In the most popular cantons where non-Swiss residents purchase property, resale is possible immediately.

However, in the cantons of Grisons, Ticino, Valais and Vaud, it is only permissible after five years. Under Swiss law, an owner or their family may occupy the property for up to six months per year and the maximum stay is three months per visit. If you wish to stay longer, you must apply for a permit. On June 1, 2002, a bilateral agreement between Switzerland and the European Union came into force, giving citizens of EU countries several options to reside in Switzerland.

Here, the purchase of a property becomes valid once the owner is registered at the Land Registry. Purchase fees include cantonal and communal transfer fees, notary and registration fees. By Power of Attorney, you can entrust the appointed notary’s office with the duty of ensuring all the legal formalities are respected. All preliminary payments (ie, the deposit) must be made to the notary, deposited into his/her client account.

Depending on the property, running costs include local property taxes, service and co-ownership charges for properties in development, insurance, utilities and management fees. The frustration for buyers, however, is the amount of time completing a purchase in Switzerland can take.

The requisite procedure results in usual administration time to obtain an authorisation swinging from two to 24 months from the date of application, depending on the type of property (ie, new build or resale property), and the area in which it is situated.

Only once the authorisation is received will the notary then record the deed of sale at the Land Registry. As for finance, it is usually recommended that buyers take an overseas mortgage in Switzerland. The standard loan granted by Swiss banks for purchasers is around 66 per cent of the sales price, including parking space. However, it is also possible to be granted up to 80 per cent loan to value. The loan is usually granted in the form of a debit to a current account and only the property qualifies as security. Traditional financing through a mortgage can also be arranged. The interest in this case is lower but the account is not as flexible in its use as the current debit account.

The rate of interest is fixed in stages and varies on the state of the Swiss economy. A larger mortgage can be arranged on the basis of additional security/guarantees (shares, etc). Current interest rates are approximately 3.1 per cent fixed for five years and 3.9 per cent fixed for 10 years. Flexi-mortgages start from around 2.5 per cent.

When you scout Switzerland for property, you are most likely to narrow down on Valais. The demand and interest in property here has been so high, local authorities were forced to pass regulations in November 2007.

The aim of the regulations was to control, at the cantonal level, the allocation of the quota of authorisations received every year from the federal government. The new rules for the allocation of the annual quota (330 authorisations) within the canton are distributed among projects of cantonal interest, tourism and holiday residences for example, and to reduce the existing waiting list. However, it is still possible to purchase a property in Valais. If you buy within a development that qualifies as a project of cantonal interest there will be pre-allocated authorisations available for foreigners and non-Swiss nationals.

If the property you purchase does not qualify as a project of cantonal interest, you will not be able to complete your purchase until you receive a guarantee of authorisation from the cantonal authority by joining the waiting list. No matter which canton you eventually settle for, be rest assured the government secures your investment. It is one of the few countries to offer a federal construction guarantee for new buildings.

With a five year guarantee on construction defects and 10 years on hidden defects, developers are forced into an excellence that ensures quality. Just like their time pieces.

Resources

-REAL ESTATE 

Pure International International House 1-6 Yarmouth Place London W1J 7BU United Kingdom T +44 (0)20 3031 2860 www.pureintl.com  

-BANKS

Credit Suisse Private Banking Claude Morand T +41 (0)27 329 74 20 www.credit-suisse.com

-TAX AND RESIDENCY CONSULTANCY

Fiduciare Fidag SA (cantons Valais/Vaud) Laurent Tschopp T +41 (0)27 485 99 66 elaurent.tschopp@fidag-sa.ch www.fidag-sa.ch

-FOREIGN EXCHANGE 

Hargreaves Lansdown Chris Saint T +44 (0)117 980 9962 epure@hargreaveslansdown.co.uk www.h-l.co.uk/currency

 

On the market

Rocksresort, Two bedrooms, Dh1.63 million

Featuring an exclusive minimalist interior made from high-quality, regional materials, this apartment also boasts bathrooms equipped with a steam bath and rainforest shower with Dornbracht mountings and fittings. There is a first-class dining area with designer lighting, fully furnished kitchen, and the living room features stylish Cassina decor. It is situated at the bottom of a ski lift in the Laax resort.

Shangri-La, Eight bedrooms, Dh25.6 million

The mother of all luxury. An eight-bedroom chalet only five minutes’ drive from the ski lifts of the much sought-after village of Villars in the Alps. Spread over three levels with traditional chalet architecture, the home features a library, two kitchens, large indoor swimming pool, Turkish hamam, snooker room, cinema, garage for up to 10 vehicles and panoramic views.

 

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