What you need to know about purchasing in Switzerland
Buying a home may be a stressful experience at times. If the property is located in a foreign country, this might be emphasized even more. It might be difficult for foreigners relocating to Switzerland to understand the Swiss property market. Foreign ownership laws and Swiss mortgage regulations might lead anybody to lose their cool. You may learn how to purchase property in Switzerland whether you are an expat or a Swiss citizen by reading this guide.
When you’ve agreed to purchase a house, you’ll first need to hire a notary public. The notary must be registered in the canton where the property is located in order to represent both the seller and the buyer.
It is common for a sales agent or developer to recommend a notary who is both efficient and proficient in English as part of their service. The notary is often picked because of their familiarity with the paperwork from a prior transaction.
The Foreigner Permit
The notary’s most critical job is securing a buyer’s permission for non-citizens. In certain resorts, the local commune refuses to provide any licenses for foreigners to purchase the property. In Zermatt, foreigners must get permission to purchase a second property, whereas, in Verbier, they are free to do so. If the foreigner is a citizen of an EU country, they may be entitled to purchase property in Zermatt if they are a Swiss resident. It isn’t straightforward!
Foreigner permits come in two flavors: general and specific.
A “contingent” general permission must be obtained if the project is new. In most cases, a second-home permit would allow for 15 of the new flats to be sold to foreigners out of a possible 20.
Afterward, they’ll require special permission to sell unit X to buyer Y. The notary only has to apply for a particular permission if a foreigner already holds the property. The cantons provide the licenses, but the Federal government must also authorize them in Bern before they can be implemented.
The architect must split the legal title into distinct titles for each unit when building a new structure or converting an existing property or hotel into several properties. They’ll draft a contract that specifies how much of the total building’s expenses each unit is responsible for paying and how the building’s owners and administrator will collaborate.
This document is referred to as a PPE in French-speaking areas and an SWTE in German-speaking areas. It might take weeks or even months to complete and register these papers. As soon as this has been completed and registered, the notary may apply for both the general and particular permits at the same time in order to expedite the process.
The notary will want a copy of the buyer’s passport and information from them on the foreigner application form.
Agreement for Reservation
You may be asked to sign a reservation agreement and pay a deposit if you purchase a property from a developer. You’ll often have to pay to an agency or a dealer since the notary isn’t allowed to collect a deposit until your foreigner permission arrives.
Only properties less than 200 square meters in net livable area and less than 1,000 square meters in the total land area are allowed to be sold to foreigners. A “Bestatigung,” a certification that the property conforms with the m2 regulations, may be required even if a foreigner already holds it.
If the property is particularly large, built from scratch, or converted into a hotel, the notary may also require the seller and buyer to sign the drawings. The parties will also sign a technical description outlining the grade of finishing included in the selling price if the home is new construction or recently refurbished.
Your mortgage should be completed while you are awaiting the foreigner’s permission. Swiss banks have unique lending requirements and processes, so you need to check beforehand what are the particular requirements.
Now that you’ve secured a mortgage, it’s time to sign the paperwork. In certain cantonal and smaller Swiss banks, the borrower must sign all of the paperwork in person. Several foreign banks enable you to sign in person or even online, depending on where you are in the world.
The Deed of Sale
You have 30 days to sign the notary’s sales deed once the notary obtains the appropriate foreigner permission. The notary must apply for a fresh permit if it is not signed within that time frame. The buyer may pay the deposit and stage payments to the notary after the contingent for new construction has been received.
The sale deed must be completed in person before a notary; however, sellers and buyers may now sign electronically instead of in person.
The Completion Date
The parties can agree on a “completion” date, which might be when the buyer has paid in full or when the property has been completed in the event of a new construction or renovation. If you’re buying anything used, it’s common for the sales contract to stipulate that payment for the remaining amount must be made within 30 days of signing it.
The seller must give an electrician’s certificate that the electrical system has been evaluated and authorized before selling you a resale property older than 20 years. Sellers in Switzerland have additional legal requirements and assurances related to the willful concealing of faults.
Keys and Money
Vendors and purchasers commonly think that the deal is “finished” when the keys are handed over to each other. For non-Swiss buyers and sellers alike, this isn’t always the case in the country.
If the buyer is a foreigner, the Federal government (Bern) has 30 days to appeal to the canton’s permission. So, until the 30-day time has ended and the change of ownership has been recorded in the land registry, the transaction has not “finished.” The cantonal authorities manage many land registries, and it can take weeks to register a change of ownership. Valais currently needs six to eight weeks to process.
The seller will frequently agree to give over the keys to the property once the buyer has paid in full since these two stages are only formalities.
There is a delay in receiving money from a transaction if the seller is a foreigner because of all the legal paperwork (if the buyer is a foreigner). To guarantee that any outstanding taxes are paid, the notary will hold 5% of the selling profits even after the recorded property transfer. They’ll release the last 5% after they’re satisfied that everything has been paid.
What Else Would You Like to Know?
Additionally, keep in mind that the date of sale recorded in the Land Registry will reflect the day the sales deed was signed, not the date the property was sold (not the date the land Register processes it). If you ever decide to resell the home, this will be an essential consideration since, in Canton Valais, a foreign seller cannot do so until they have held the property for five years.
An application for special approval from the notary to sell your property before the five-year limit may be made. In the event of bankruptcy, divorce, or illness, you will be granted this, but you will not be allowed to resell it for a profit.