Introduction -
Switzerland has a lot to offer the potential holiday home owner, second home
owner or buy to let holiday letting investor... great ski chalet resort, crisp
mountain air, beautiful lakeside log cabin and chalets for summer activities
like fishing, sailing, walking. The country has a well establish holiday
market, a very stable economy and a neutral political position. In
addition the Swiss Government is beginning to embrace more foreign property
investment...
The Holiday Home Market in Switzerland -
the Government of
Switzerland is in the process of de-regulating Swiss a series of 1960 federal
property laws (known as the Lex Friedrich), to allow non Swiss domiciled
nationals to buy property in Switzerland as a second home, buy to let investment
or holiday home. In the past there has been a strict limit on the number of
foreign speculators allowed to influence the property market and as a result
Switzerland has enjoyed stable yet gentle growth in property prices
(particularly over the last 20 years). This is due to the incorporation of the
free movement of people laws enforced by the EU. Some restrictions will continue
on the number of properties available for second homes or holiday homes and in
certain ‘cantons’ of Switzerland these restrictions will vary. For instance in
some you may only be able to buy a log cabin chalet and in other areas it might
be restricted to a ski chalet. Additionally, some usage restrictions apply to
prevent quick sales or leaving the property unoccupied. To make understanding
purchasing even more complicated, there is a delay before property title passes
from seller to buyer – these vary by canton... so good local knowledge and
research is essential before purchasing a holiday home. By 2010 these
canton variations will disappear and be replaced by a unified property purchase
process. This loosening of administrative restrictions will create stimulus for
new property development, modernisation of controlled property speculation. The
government will still set annual quotas on non-resident permits looking to buy a
Swiss holiday home. One of the most popular areas is lakeside of Lake Geneva
where over 60,000 Brits live. The reasoning behind the Governments decision to
relax restrictions is to attract foreign investment in residential housing
infrastructure and boost tourism to maintain and boost the economic stability of
the country.
Insurance for a Swiss Holiday Home - Assetsure
can help arrange holiday home insurance for your property in Switzerland
(whether it will remain empty and unoccupied, or used as a holiday or second
home or even holiday let. The risks of flooding damage, landslide and
earthquake in alpine mountainous regions remains a real threat and you should
ensure your purchase is properly protected and insured.
Buying a Swiss Holiday Home
– if you are thinking of buying a holiday home in Switzerland you will need to
consider the local property purchase laws and processes. Your first step will
need to be the employ of a qualified Notary to oversee the contractual elements
such as the “a Promesse de Vente”. The normal deposit is between 5% to 10% and
this must be paid up front. As a non Swiss resident you must receive written
approval from the Commission Foncière to allow you buy the holiday home –
permission takes around 2 months. You should also investigate the purchase costs
usually equate to about 8% of the purchase price made up form the Real Estate
Transfer Tax, Registration Fee, Notary Fee and Estate Agent's Fee.
Renting Out Your Swiss Holiday
Home – as a landlord it is important you are aware of the main differences
in buy to let investments for letting purposes compared to the UK. For instance,
income derived from holiday lets/ tenant’s rental income is not taxable as it is
in UK. Instead local authorities or ‘cantons’ charge a local inheritance tax and
local tax (similar to council tax) for water, insurance and other local
services. As Swiss interest rates have traditionally hovered around 3% to 4%,by
obtaining a Swiss overseas mortgage you must increase your rental yield (compare
to using a British mortgage). However, the loan to value ratio from mortgage
lenders/ banks in Switzerland is only typically around 65% which is much lower
than uk buy to let mortgages form uk mortgage lenders. There are also
restrictions on increasing rent above the published consumer inflation index.
Other tenancy laws for long term holiday letting relate to deposits and tenancy
agreements…. For instance, the security deposit must not be more than three
months rental periods and must be held in escrow to protect the tenant. Tenants
also have rights with regards to the limitations and restrictions in any tenancy
agreement you ask them to sign; in Switzerland you can choose to use either the
‘Specific term contract’ or an ‘Indefinate Duration Contract’. In the first,
notice of termination is assumed to have taken place at the end of the agreed
tenancy period even if the tenant did not provide written notice. In the second,
either the landlord or the tenant must provide written notice to the other to
terminate the contract at pre-agreed intervals. Lastly a disagreement with a
long term tenant which results in eviction proceedings could take up to 9 months
to complete due to the legal implementation of laws which are heavily pr-tenant.
To find out more about tenants and landlords rights and responsibilities please
read the
Swiss Code of Obligations, and the
Rent of Residential Properties.
So if you are seeking an holiday home insurance quote for a property in
Switzeland, why not see if we can help? In addition, Assetsure can help
provide overseas property insurance and holiday home insurance for other
countries including Australia, Austria, Belgium, Bulgaria, Brazil, Canada,
Cape Verde, Chile, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland,
France, Germany, Greece, Egypt, Hungary, Iceland, Ireland, Italy,
Latvia, Lithuania, Liechtenstein, Luxembourg, Malta, Monaco, Montenegro,
Morocco, Netherlands, New Zealand, Norway, Poland, Portugal, Romania,
Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Thailand,
Turkey, United Arab Emirates, United Kingdom (UK) and Venezuela.
