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Lex Koller Law – Swiss real estate for Foreigners?
Buying real estate in Switzerland as a foreigner can be a challenge, but it is anything but impossible. In this regard, almost everything revolves around the so-called “Lex Koller”, the law that regulates the purchase of real estate by foreigners. In this episode of “How to Real Estate”, we take a look at this law and show what options are available for foreigners to buy real estate in Switzerland.
The purpose of the Lex Koller, is to prevent the over-foreignisation of the Swiss real estate market. It successfully prevents rich foreigners from buying residential buildings purely as a financial investment, thereby driving up the prices of scarce living space even more. If the Lex Koller would not exist, the number of foreign players on the Swiss real estate market would be many times higher. The law also prevents, shocks that would arise in the Swiss Real Estate market, if foreign investors suddenly withdrew their money as a reaction.
Let us first look at what form of real estate the Lex Koller affects. It explicitly restricts the acquisition of residential real estate – which are single-family homes, two-family homes, apartment buildings, condominiums, etc. – It does not restrict the acquisition of commercial real estate and the acquisition of holiday homes. The latter can be acquired by foreign persons in regions that are pre defined by the cantons. Investing in real estate funds and listed real estate companies is also not affected by the Lex Koller.
What is the situation for people without a Swiss passport? Unless you have a Swiss passport and are also living in Switzerland with a valid residence permit, the Lex Koller clearly defines: You cannot acquire residential property in Switzerland – neither to live in yourself, nor to rent out. The situation is different if you have a residence permit. Citizens of EU and EFTA countries with a B and C residence permit are treated the same as Swiss citizens. Non-EU and EFTA citizens need a C residence permit to make an unrestricted purchase. At the same time, these persons must be able to prove that their day to day life is in Switzerland.
If you are a Swiss citizen, you don’t have to worry about the Lex Koller because no matter whether you live, you can purchase Swiss residential property at any time.
You can buy residential property in Switzerland under the following conditions:
1. You have a Swiss passport.
2. You are an EU or EFTA citizen and have a B or C residence permit and your day to day activities are in Switzerland.
3. You are not an EU or EFTA citizen but have a C residence permit and your life is in Switzerland.
If you do not meet any of these conditions, then the following options remain: The acquisition of commercial real estate, the participation in funds or in real estate companies focused around Swiss residential properties or the purchase of holiday homes – provided they are located in a tourist resort and the quota there has not yet been used up.
The Lex Koller has been the subject of heated debate over the years. In 2007, all major parties were in favour of abolishing the law without replacement. Since 2012, there have been several efforts to reinforce the law. In March 2020, the National Council voted to extend the Lex Koller to commercial properties for 2 years, in order to prevent the sale of business premises of distressed Swiss companies to foreign investors.
The Lex Koller is a decisive factor for real estate buyers and sellers. Foreign Buyers and sellers could go through an arduous process, just to find out its not possible. As a real estate seller, you should always be aware of the citizenship and residence situation of your prospective buyers. This is the only way you can avoid big empty processes right from the start. As always, you can find a blog article on the Lex Koller and everything that needs to be considered in this regard in our blog. Thank you for watching and I look forward to seeing you again next time.
