NEWSLETTER
 
BYING A PROPERTY IN SWITZERLAND

 

With 26 independent cantons, buying a holiday home  in Switzerland is a different matter than in the rest of Europe. In Switzerland it is not that evident that as a foreigner one can buy anywhere. The market for vacation homes in Switzerland is regulated by the Lex Koller law and in addition there again plenty of cantonal and municipal regulations that can have a significantly impact on the purchase and sale of a (holiday) home in Switzerland.

 

Furthermore, there is also the Swiss Franc (SFr) to take into consideration, as a result of this local currency, the sale prices converted in Euros can fluctuate daily. 

 

 

ADVICE ON BUYING A HOLIDAY HOME IN SWITZERLAND

 

DID YOU KNOW:

 

THAT as a non-Swiss resident ("foreigner") you cannot buy a house in Switzerland everywhere?

 

THAT the number of licenses for houses for sale to foreigners is limited and numbers about 1,500 a year?

 

THAT for the sale of a holiday house owned by a foreigner to another foreigner No new license (Ausländerbewilligung) is required?

 

THAT a foreigner can only purchase up to 1,000 m2 of ground and 200 m2 of living space in Switzerland?

 

THAT every municipality in Switzerland can itself have their own regulations which can have direct impact on the buying and selling of a holiday home?

 

THAT in Switzerland there is no provisional deed to be signed?

 

THAT a Swiss deed usually contains no suspensive conditions as for example a mortgage or a building inspection?

 

THAT the only suspensive condition is if you do not getting the Ausländerbewilligung?

 

THAT in Switzerland a holiday house can be financed up to 60% of the purchase price? This may be increased if additional collateral  is provided to the bank.

 

THAT the mortgage rate in Switzerland on average is 2% lower than in most European countries?

 

THAT in Switzerland there is no transfer tax levied on the purchase of real estate

 

THAT the "buyer's costs" in Switzerland are 2 to 3% of the purchase price?

 

THAT a holiday house of a foreigner in Switzerland can only be resold after a holding period of five years?

 

THAT recently in Switzerland a new law was passed putting a ceiling to holiday houses to 20% of municipal ownership? This law is currently being finalized.

 

THAT in Switzerland the purchase and sale of a holiday home is different from elsewhere in Europe?

 

In summery, if you are seriously considering in buying or selling a house in Switzerland, make sure that you are well advised and informed. We will gladly assist you!

 

 

  ESTATEMENT -  conseil international real-estate  M :  +31 (0)6 418 050 67 -   F :  +31 (0)8 778 454 12  -  
Skype:  estatement  - www.real-estatement.com (click to view)

   

ADVICE/INFORMATION FOR BUYERS

 

1) What makes the investment so attractive ?

The demand for self-catering accommodation continues to grow for foreign tourist.
You can rent your French home yearly, monthly, weedly, daily, whith excellent results, you can expect an annual net income of about 5-9% of the full value for most properties.
Since France is the world's top destination in terms of numbers, the French gorvernment has come up with a number of investment plans such as Lease Back.

 

2) Should I use a lawyer to purchase property in France ?

No, a notary (Notaire) is the authorized official who presides over the transaction and registration of new ownership. But it depends on your personal situation if you need a lawyer or not.

 

3) How much time does it take to close a sale and transfer the ownership title of a property in France ?

A notary generally takes 2/3 months to complete and register the change of ownership.

 

4) Must I have a French bank account to buy property in France ?

No

 

5) How do I open a bank account in France ?

It is easy to open a bank account in France. A non-French citizen must fill out an application form and present a valid passport.

 

6) What is the "loi Carrez" ?

Since 1996, most preliminary agreements relating to the purchase of a property must state the exact square meters of the property being sold. This measurement is calculated in a national law, "loi Carrez", wich defines what is livable surface and what is not.
For example, space under a ceiling (180 cm), typical in roof top apartments, cannot be measured as livable space. To measure a property, a real estate agent or a certified expert is required.
If there is a difference between the stated surface in the contract and the actual surface of the property, the buyer has up to one year to contest. In this case the seller is legally bound to pay the difference in purchase price.

 

7) Is it possible for me to get a loan from a French bank to buy property in France ?

Yes, once you have a bank account with a French bank it is a very straightforward process to obtain a loan... 

 

8) How long does it take to approve a loan ?

3 to 4 weeks.

 

9) What is a hypotheque ?

A French "hypotheque" is similar to a mortgage. It is a form of legal charge over French realty.
It is registered at the French land registry as a guarantee against third party challenges

THE PURCHASE AND CONTRACT

 

10) What is the "compromis de vente" ? (preliminary agreement or promise of sale).

Before the purchase of French property can be legally binding, a document is signed "avant contrat".
This preliminary agreement is called a "compromis de vente".
This step is most important, as all the legal aspects of the sales agreement are fixed at this time.
If you require financing, it must be shown when making the "promesse de vente".
This financing requirement can be included as a safeguard, or "get-out" clause.

Legal Protection :
A new law passed in France gives protection to all individuals buying a residential property.
This law offers a protected period of 10 days in which the buyer can withdraw from the acquisition of a residential property.
During this time period, only a certifide agent or a notary is authorized to receive funds before the legal delay expires.

The signed contract is sent by registered mail or by the equivalent to the buyer. The 10-day withdrawal period starts on the day after reception of the signed contract.

 

11) Is there a deposit ?

When you sign the promise of sale, the buyer generally pays between 5 to 10% deposit, which is kept by the notary during the legal and financial transaction.
This security deposit guarantees the buyer's commitment. The deposit is restitued if their is no sale.

 

12) Who prepares the "compromis de vente" ?

A notary or a real estate agent prepares the preliminary agreement, but only a notary is qualified to counsel the clients and prepare contracts, at no extra-charge.
The buyer and the seller both sign it.

 

13) The final sales agreement : "acte authentique or Acte de Vente"

Once the promise of sale has been signed, the notary must the collect various documents, such as property titles and mortgage documents to verify that all the paper work is in order.
Collecting the documents and verifying them may take between two and three months.
After the notary has collected all the documents, the final sales agreement (deed) is signed. It is called "acte authentique" and is virtually indisputable in court.

 

14) Can a contract be written in English ?

All the contracts in real estate must be drafted in French, the use of a foreign language is illegal.
However, some notaries with an international practice may translate the agreements for their clients

Or a translator is requested.

 

15) How much do you have to add on top of the selling price for closing costs ?

After the purchase price, the buyer must also pay the notary fees.

This amount includes :

The registration tax.

The cost of different documents necesary to complete the transaction (mortgage statement, survey (cadastre)...)

The norary's fee.
 

The total amount cost about 6,5 to 7,5% of the purchase price.

 

16) What laws apply to French property ?

French law and only French law can be used for the buying and selling and or any questions pertaining to French real estate.

French property laws are based on the "Code Civil " and on Case law.

 

17) What is the cost of real estate ownership taxes ?

Being a real estate owner in France requires the annual payment of several taxes :

The real estate tax (TAXE FONCIERE) :
It has to be paid by all owners whether they are private individuals or companies.

The local taxes or residential tax (TAXE D'HABITATION) :
It has to be paid by whoever lives in the property.

 

18) Do I have to be present at the annual general meeting for the co-owner cooperative management ?

The owner can be represented for a vote by another co-owner. A simple proxy with the owner's signature must be sent ahead of time to the management.

 

19) SAFER what is that?

 

The French land agency 'SAFER' has a right of first purchase on a great deal of rural property in France, so what are the rules that apply?

SAFER (Société d'aménagement foncier et d'établissement rural) is a body you will certainly come across if you are seeking to buy property in the French countryside.

This government agency has the right of first purchase on most rural property that comes onto the market in France.

So although you may think you have sealed the deal when you sign the sale contract with your seller, in fact the property is not quite yours until SAFER have had their say.

The right of first refusal by SAFER is called the droit de pre-emption.

This is effectively a right of substitution, in which the original buyer of the property is obliged to give way to the public agency.

In the process of purchase of the property, ‘purging’ of the rights of SAFER is carried out by the notaire, whose responsibility it is to write to SAFER asking them if they want to buy the property.

SAFER have two months from the date they are notified of the details of the prospective sale to make up their mind. If you are in a hurry, there is an ‘express’ service to get their response, provided you are prepared to pay extra for it.

Within each department there is a minimal land area determined by the prefecture below which SAFER does not have the right of pre-emption.

However, in some areas of the country this threshold is very low, so a small house in the country with an acre of land may still be subject to the pre-emption process!

In practice, although SAFER are omnipresent in the sale of strictly agricultural land and buildings, the vast majority of other rural property sales go through without them showing any interest.

 

 

 

Mortgage

  You will need to contact a mortgage broker who specialises in mortgages for French properties or a French bank direct in order to apply for a mortgage, you may have already be in contact and possibly have received an agreement in principal for a loan subject to the property you purchase. However you will not have been able to put in a formal application for a mortgage until you have signed your first contract and it will be necessary to send a copy of this with your application.

If you have stated that you will require a loan in order to purchase then this will be made a condition of the contract that you sign and will give you the possibility of pulling out should your application for a mortgage be reused. Hence the vendor will have to wait perhaps two to three months before knowing that the property will definitely be sold. This condition within the contract will make it subject to mortgage and will usually have a limited period of around two to three months for you to either get a mortgage offer or a refusal from a bank. Once you have your offer it will be confirmed to the notaire and the contract will become unconditional. If you get a refusal from the bank and you are not therefore ale to proceed to purchase then this letter must be sent with a letter of retraction from you by recorded delivery to the notaire within the period given on the contract. The notaire will then be in a position to refund your deposit to you.

If you are not intending taking out a mortgage then you will have had to write a particular paragraph within the contract to confirm this. You can see that an offer that is not subject to mortgage is more appealing to a vendor as he does not have to wait the two to three months to know if you can proceed, ie the contract is unconditional.

 

At this point in time you also need to make sure that your personal contribution, or the full amount if you are not applying for a mortgage, is available in Euros. It is a good idea to contact some currency exchange companies as well as your own bank to see what rates they can offer. Currency companies also offer the possibility of fixing a future rate for you so that you know exactly what your property will cost and wont have any nasty surprises before completion when you find out that the rate has got worse. In my opinion it is essential to fix the rate or buy the Euros as the point that you agree the price of your property so that you don’t find that you need more Sterling than you thought to buy your Euros. 

 

 

 

 

 

 

 

 

What are the differences between these 3 options when selling your French property through a real estate agent, you’re being offered a choice between simple, semi-exclusive or exclusive sales agreements.


Different types of sales agreements

Non-exclusive agency sales agreement:  this is the agreement giving you the most freedom. It can be signed with as many real estate agents as you want as there is no exclusivity attached to it, while leaving you free to try and sell it by yourself in the meantime. The downside of this type of agreement is an overexposure of your property, not always sending the good signal to a potential buyer seeing your property everywhere. On top of it, estate agents tend to advertise more easily properties they have been given with some sort of exclusivity (such as semi-exclusive or exclusive sales mandates)


Exclusive agency sales agreement: This agreement can be signed with only one estate agent, giving him the exclusivity of the sale of your property.  There is a fixed period attached to it, generally 3 months. During that time, you are not allowed to sell the property by yourself. The interesting part of this agreement is the following: as one and only agency has your property on its books, it will most of the time do its best in terms of advertising as well as introducing it in priority to its potential clients in order to sell it during the time of the exclusivity. It results in a better promotion of your property compare to non-exclusive sales agreements. The most important point is to choose carefully the estate agent you’re going to use.


Semi-exclusive agency sales agreement: This one is the same as the exclusive sales agreement, with a major difference: you have the option to sell it directly by yourself. This is the best option for a seller as you get both of best worlds as long as you are ready to spend some money on advertising the property by yourself.


Who’s paying the agency fees?
Most of the times agency fees are being paid by the seller, as he’s the one signing the agreement with the agency. You will need to agree on how much you would like to get from the sale of your property with your agent (this amount is called the “net vendeur”). The agency fees will then be added to the asking price to create what is called “Prix Frais d’Agence Inclus” (Price Including Agency Fees).

What if I manage to sell the property myself?
As long as you haven’t signed an Exclusive agreement, you are entitled to sell the property by yourself. If you manage to do so, you won’t have to pay anything to the estate agent(s) you’ve signed an agreement with. In this case, you will have to let the estate agent know as it would need to be removed from his portfolio and tell to whom you sold the property.

 

 

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