Property rules could get simpler for foreigners

Keystone

Purchasing property might get a lot easier for non-resident foreigners if the Swiss government gets its way and lifts restrictions on sales.

The cabinet announced on Wednesday that there was nothing to fear from foreign buyers, but that the cantons would have to decide themselves how to avoid speculation, especially at popular ski resorts.

The government decided the law restricting property sales to foreigners – known as the Lex Koller, after the former justice minister who oversaw its introduction – should be abolished.

It believes there is no reason to fear that foreign interests would gain too strong a foothold in Switzerland and that current restrictions inhibit the development of a totally free market.

If parliament accepts the cabinet proposal, the procedure for purchasing a property will become much simpler for foreigners.

Anticipating concerns that removing restrictions will lead to an increased demand for secondary residences in tourism regions, the government is also proposing a change to the country’s land management legislation.

“We will not lift restrictions without appropriate accompanying measures,” said Justice Minister Christoph Blocher.

The cantons will have to state in which areas restrictions will still have to be imposed. They will have three years after the rules are eased to introduce any measures needed to restrain development of secondary residences.

Cold beds

The tourism industry and the cantons are particularly concerned about the so-called “cold bed” phenomenon. Many secondary residences remain empty for much of the year and are only used by their owners for a few weeks.

This means there is a lack of accommodation in some resorts despite thousands of beds remaining empty. With nowhere to stay, tourists are moving on and infrastructure such as ski lifts is unused.

High land prices also mean it has been more tempting to build expensive holiday homes for wealthy foreigners than hotels.

Demand for secondary residences has also been so high in canton Valais that the cantonal government decided late last year to freeze new constructions in seven communes, including jet-set destination Verbier, until further notice.

Mixed response

Reactions to the government proposal have been swift. Franz Weber, Switzerland’s most prominent environmentalist, said the country would be covered in concrete if restrictions on property purchases were lifted.

The Greens also criticised the decision, saying it gave the cantons too much freedom.

The centre-left Social Democratic Party on the other hand welcomed the proposal, but added that more should done to avoid a construction boom in the Alps. The number of holiday residences has tripled since 1970 and the trend is not weakening according to a party spokeswoman.

The centre-right Christian Democrats and Radicals, as well as the rightwing Swiss People’s Party, also hailed the idea of ending sales restrictions. They pointed out that it would be good for the economy, especially the construction sector, and the development of a free market.

The Valais economics director, Jean-Michel Cina, said the canton had been preparing for the planned changes. He warned though that any federal legislation that might restrict communal and cantonal autonomy would be unwelcome.

Cina added that if the restrictions were dropped by the federal authorities, the freeze on new constructions would also be lifted.

swissinfo with agencies

Purchasing property

The law restricts the acquisition of property in Switzerland by foreigners, by foreign-based companies or by Swiss-based companies controlled by foreigners. As a rule, they need an authorisation from the competent cantonal authority.

This is only granted if conditions set out in federal and cantonal legislation are met. An authorisation to purchase a holiday home may be granted under certain circumstances to a person living abroad.

Property ownership in Switzerland does not entitle a foreign person to a residence permit.

Nationals of the European Union or of the European Free Trade Association zone living in Switzerland with a residence permit, other foreigners entitled to settle here and Swiss-based companies controlled by anyone with the appropriate resident or settlement status do not require an authorisation.

Tough rules

Property purchases by non-Swiss living abroad have been restricted since 1961 to avoid speculation and rising prices. The cantons are in charge of applying the law.

In 1972, sales were temporarily suspended because the market was considered to be overheating.

In 1974, conditions become stricter and the federal authorities have more oversight, but the freeze on sales is lifted.

The number of authorisations in tourism zones is restricted in 1979, a measure confirmed by voters in 1984.

In 1995, voters refuse to restrict authorisations to holiday residences, real estate brokers and investments.

Since the late 1990s, the law has become less strict, with fewer criteria having to be met by foreigners or foreign firms.