Alpine countries are generally popular to buy a holiday home and so is Switzerland. This popularity is mainly because a holiday home in Switzerland is attractive in both summer and winter.

This obviously also applies to rental properties. As a result, good returns can be achieved despite the higher price level. If you are going to buy a house in Switzerland, you would do well to get well informed. This country dossier can be a good start.

Can I buy a house in Switzerland?

Foreigners are only allowed to buy property in a tourist area. So unless you are Swiss or hold a Swiss residence permit, you cannot buy property in Geneva, Basel, Zurich, Zug or any of the other cities in Switzerland. Foreigners are allowed to buy chalets and flats in most Swiss ski resorts, for example, as they are located in tourist areas.

The Lex Koller (Koller’s law) has established a licensing system so that only certain plots of land are eligible for foreign ownership. Also, the sale of property with a habitable area of more than 200 m2 net to foreigners is restricted. There are occasional exceptions, but this is a good rule of thumb.

More recently, the Lex Weber (the Weber Act) has prevented building permits being granted for second homes in all municipalities where second homes already account for 20% of the property stock. There are a few notable exceptions, for example, where pre-Weber permits (before 2013) are still valid or where a special dispensation has been granted by the municipality.

Since 2013, only second homes may be licensed that have a rental concept with hotel service. These are usually projects with 50 or more interconnected properties and facilities such as a reception, catering and wellness.

Financing terms: What can you expect?

For foreigners looking to finance a second home in Switzerland, only Swiss banks are allowed to provide mortgages. The percentage that can be financed usually varies between 50% and 70% of the purchase price, depending on the bank’s assessment. Interest rates are low compared to many other countries and are usually between 1% and 2%, depending on the agreed fixed-interest period. This offers buyers a stable and inexpensive way to finance their purchase.

Financing a house in Switzerland

Tax benefits: Interest deduction on rental income. An additional advantage is that mortgage interest in Switzerland is deductible from the rental income generated by the property. This significantly reduces the tax burden on this income, which can be attractive for investors who want to rent out the property while seeking tax optimisation.