Step 2 - Check "LAFE" Eligibility (what can you buy?)
The purchase of property in Switzerland is restricted by a federal law known as “Lex Koller” (originally called"Lex Friedrich"). It strongly recommended to find out right from the beginning if your are eligible to buying Swiss real estate.
Besides the federal law there are cantonal regulations, referred to as the "LAFE" (Commissione sulla Legge federale sull’acquisto di fondi da parte di persone all’estero)", that restrict the permission of persons from abroad of becoming the owner of a property in Switzerland. The "LAFE" is actually the Cantonal Law `executing` the "Lex Koller" Federal Law. When you purchase a property make sure you make it subject to "LAFE"approval. The procedure is complex and it recommended to take a local lawyer to handle it for you. Overall the "LAFE" approval process can take up to several months to complete. Only the following persons are not subject to the "LAFE":
- Swiss citizens, even those with multiple nationalities
- Citizens from European Union and EFTA (European Free Trade Association) countries that are legally domiciled in Switzerland
- Citizens from other countries with a current Swiss residence "C" permit
An authorization to purchase a holiday home which is located in a tourist area, as defined by the Canton, and with a "net" living area of no more than 200 m2 (including kitchen, entrance, bathroom(s), in-door swimming pool, sauna, but excluding the cellar, any balconies and the staircase) and the total property being no more than 1'000 m2, is typically granted. Real estate (such as dwellings, private houses, city apartments, tenements, etc.) in "non tourist" locations are subject to a very stringent approval process, and in practice this approval is seldom granted if you are a non-resident.
Additionally a maximum of 1/3 of the gross square metres in each property may be sold to foreigners and the cadastral value of the acquired property must be at least CHF 300.000,-. This typically corresponds to a selling price of CHF 700.000,-.
Furthermore you should be aware that a quota system is applied to the number of holiday homes sold to foreigners each year. Once the specific quota is exceeded to may need to wait for an approval in the following year.
As part of the "LAFE" process, a foreign non-resident must highlight "exceptionally close links" to the location where you plan the acquisition. For example, the fact that you have spend your summer holidays in the location since your childhood is recognized by the canton as a valid reason for granting approval. Once the canton has granted approval, the federal approval is typically a formality.
Please take the "LAFE" approval very seriously. Details (in Italian, German and French) can be found in the following article by the Swiss Federal Office of Justice: "Acquisition of real estate by persons abroad"
Last but not least, owning a property in Switzerland does not automatically imply than you can become a permanent resident.
Latest News (8 July 2011): As we last understood it the Federal Council of Switzerland still thinks that the Lex Koller is not needed any more but the abolition is not yet ripe for decision and doesn't have the necessary support in Parliament. The Authorities believe the Spatial Planning Law will give better opportunities and will be a more appropriate solution than the Lex Koller regulations, because it will be largely immaterial whether vacation homes are in the hands of Swiss Nationals or people from abroad.
In principle everyone seems to agree that the Lex Koller is not needed any more to restrict the foreign ownership, but they want more gripping measures against real estate speculation and the prevalence of building up second homes (the so called “cold beds”). Especially the introduction of a minimum period of residence has been requested by Parliament in order for foreign nationals to acquire property.
Currently we do not expect the abolition to take place in the next couple of years awaiting the revised Spatial Planning Law taking effect. The current applicable law can be found on the web site of the Swiss Federal Office of Justice.
Latest News (June 2010): The Lex Koller is likely to be abolished sometime in the future and articles on this have been circulating on the web for the past 5 years. The abolishment date is tied to the execution of the revised Spatial Planning Law. Changes to the current "LAFE" procedure are NOT expected for at least another 6 months. Once the law is abolished the cantons will probably instate other restrictions that are likely to include a maximum percentage of summer residences compared to the overall availability of homes and/or a quota on the number of holiday homes that can be sold to foreigners per year.
Latest News (16 December 2010): A new legislation on second homes has been approved by Parliament. The revised Law on Spatial Planning kills two birds with one stone: It is the indirect counterproposal to the initiative "to put an end to the endless construction of second homes" and in addition, it is a supportive measure to help abolish the Lex Koller, the legislation governing the sale of real estate to persons from abroad.
Latest News (22 July 2011): Our contact at the Federal Department of Justice and Police (FDJP in Bern) informed us that on 14 April 2011 a motion was filed to abolish the Federal Law (known as "Lex Koller") that is limiting the purchase of real estate by persons from abroad. The Federal Council is committed to submit to Parliament the message about the abilishment of this Law. This motion has not yet been treated.
The Federal Council had already submitted a proposal to abolish the law to the Swiss Parliament on 4 July 2007. In 2008 the National Council and the Council of States have returned the proposal to the Federal Council, making it subject to the following three requirements:
- examination of the introduction of a minimum length of stay in Switzerland as a condition for the acquisition of real estate;
- consideration of measures to solve the problem with second homes ("cold beds"), especially in tourist areas;
- examination of solutions that support the "Save the Swiss territory" initiative.
Meanwhile, the Parliament adopted the revision of Article 8 of the Law on Spatial Planning and the relevant transitional provisions. This revision indirectly supports the "Stop the uncontrolled construction of second homes" initiative. The most important point of requirement has therefore been met. The deadline for a referendum for the revision of the Law on Spatial Planning expired unused on April 7, 2011. The way is therefore free to decide again on the final abolishment of the "Lex Koller" Federal Law.
Latest News (11 October 2011): We assume that the motion will be treated in Parliament at best in the winter session. More likely is going to be the spring session.
