Lex Koller: the Swiss law that limits foreign property purchases

Switzerland has little land for development as 70% of the country is covered by the Jura mountains, the Swiss Plateau and the Alps. For this reason, the Swiss law “On Acquisition of Real Estate by Foreign Individuals” (Bundesgesetz über den Erwerb von Grundstücken durch Personen im Ausland) of 16 December 1983 restricts the purchase of real estate by foreign individuals. It has been dubbed “Lex Koller” after former president Arnold Koller, a lawyer by profession, who initiated it. On top of that, local authorities have established additional restrictions on real estate acquisitions by non-residents in the country’s cantons and communes.

Property purchase restrictions

Swiss law distinguishes three types of residential property: permanent dwellings, investment and resort properties. Depending on the origin of the buyer, they are authorised or prohibited from buying property depending on its type.

According to Lex Koller, foreign individuals are:

• citizens from outside the EU/EFTA who do not hold a valid residence permit (Type C).
• EU/EFTA citizens who do not have a valid Swiss residence permit.

These buyers are prohibited from buying real estate for investment purposes or land for development. However, they are allowed to buy resort property in some cantons according to local quotas.

Commercial property (retail and office premises, hotels, industrial facilities) in Switzerland can be bought without restriction by citizens of any nationality. However, foreign legal entities cannot make real estate acquisitions but they can register purchases in the name of a company listed on the Swiss stock exchange as long as non-resident shareholders own no more than 33% of the company’s capital.

Restrictions on non-resident citizens

1. Properties can be acquired for vacation purposes only: a non-resident individual may buy resort property if the cantonal authorities permit it in accordance with special quotas. Quotas are generally granted for flats in apartment hotels approved by local authorities. The Federal Council (Schweizerischer Bundesrat) grants 1,500 permits per year for foreign purchases, shared among the cantons. The only project without quotas is Andermatt Swiss Alps. Resort property (including apartments in apartment hotels) cannot be registered to legal entities.

2. Foreign nationals can only buy residential property in some cantons (quota-dependent)

Geneva and Zurich do not grant quotas for pre-owned housing. Instead, foreign individuals should prove that the city has become their place of permanent dwelling in order to buy property. Only 0.25% of the city's total housing and apartment stock is for sale, making it very hard to buy property here. However, in Ticino some 20–90 new and pre-owned properties are put up for sale each year to non-residents looking for second homes. The most popular area, Graubünden, famous for the most prestigious resorts like St. Moritz, grants much less second home purchases to foreigners — it should not exceed 30% of the total housing stock in the area.

Marina Filichkina Head of Sales Tranio Thailand, Europe

3. One property per household: a non-resident can only buy one property for family use. A family is by law composed of the buyer’s spouse and children under 18. A second home can be registered in the name of other relatives or children over 18.

4. Size restrictions: foreign citizens cannot buy property over 200 sq m in size or land exceeding 1,000 sq m. However, the maximum area can be increased up to 250 sq m and 1,500 sq m respectively in exceptional areas if the buyer proves there is good reason for it.

Yulia Kozhevnikova, Tranio