It is important to be aware of the legal process when you buy a property in Switzerland.
It is not the same as the UK or other countries, although there are similarities to Italy if you are buying in the Italian speaking Canton Ticino. Once of the most positive points is that, as long as your contract is worded correctly, you should not have trouble with gazumping, as there will be a reservation agreement. Contracts are binding from the outset as long as the offer price is accepted. Dates are inserted so that you will know when payments are due and you can therefore arrange your finances. Clauses can be included to protect you, such as subject to searches, mortgages etc. However, we suggest that you take professional advice on these matters before signing any documentation with regard to your Swiss property purchase. Please see below for some straight forward details on how to proceed.
Normally there are two stages:
1. The proposal of purchase. (la proposta d’acquisto)
This is where a binding contract is drawn up with the details of the Swiss property for sale. The contact needs to be signed in Italian by the buyer and the seller and you should expect a translation in your native language or the language of your choice. It is important for this contract to be drawn up correctly. You would expect to have a survey at this stage, if required and mortgage agreement with whichever bank you choose.
2. The exchange of contracts (pre contratto) and completion ( diritto di compera)
This contract, signed in from of a notary has more details included than the proposal of purchase and if the Swiss property is a new build a list of finishes should be attached. All the buyer and sellers’ details, and details of the property are included as well as the land registry details and price agreed. A deposit between 10 and 20% is then sent to the account of the notary in Lugano or surrounding area who will prepare the completion document ( diretto di compera) and the contract is signed in front of the notary at the agreed time. If the buyer does not wish to use the property or cannot complete for 3 to 6 months then the completion will be at that time and this is called ‘esercizio di diretto di compera’.
The overall buying costs in Canton Ticino are low and around 3% of the purchase price and this does not change whether you are buying a second home or primary residence.
LAFE stands for: Law of Acquisition of Real Estate by Persons Resident Abroad.
Once you have appointed a notary, they will open a LAFE procedure so as to obtain permission in the Canton for the purchase of that specific property. This is a straight forward process and will take about 3 months. You will need an architect to measure the property and ensure it is within the guidelines. (200 sq. for a family that is non-resident) The cost of the LAFE is about 2,000 SF
Do keep in mind that once you have purchased a second home, you cannot sell for 5 years We normally advise our Italian clients to keep their property for 5 years to make it a more worthwhile investment in any event.
If you prefer to take out a mortgage in Switzerland the interest rates are currently very low at around 1% for a duration of 10 years. It is normally possible (subject to status) to obtain a mortgage of up to around 50% of the purchase price. Mortgage terms can range from 5, 7 to 10 years and can be paid off at the end of the term or renewed, as required. The bank normally charges around 2,000 SF to arrange the mortgage.
If you wish to rent your property then you can do so but only for holiday rental and not long-term rental. You need to use the property yourself for at least 2 weeks of the year during the high season, in Ticino from April to October. 2 to 3 months is the recommended time for the rentals.
If you wish to buy a property as a primary or permanent residence you will need to obtain a resident’s permit. If you do so the rules on the size of the property differ and there is no limit.
For any further help or information on the matters mentioned above please contact us on:
+44 (0) 1322 660988