Buying property in Switzerland the land of picture-postcard villages, clean mountain air and a rock-solid economy-has always been restricted. Across the whole country, only 1,500 foreign-ownership permits are issued each year for properties of less than 250sq m (2,690sq ft), and some towns, such as Zermatt and Saas Fee, are virtually closed to non-Swiss buyers. But since March this year, the process has become even tougher, after the Swiss accepted an initiative put forward by environmentalist Franz Weber to limit the number of second homes in any given commune to just 20%.
Second homes currently account for some 12% of the overall housing stock in Switzerland, but the Alpine cantons of Valais and Grisons register well over the 20% quota. Ski resorts top the second-home list, with Laax at 80.9% and Silvaplana at 77.4%. ‘The problem is that it’s a fluid situation, which keeps changing,’ says Jeremy Rollason, managing director of Alpine Homes, an associate of Savills. ‘Recently, we’ve gone from a two-tier market with property being sold from the Swiss to the Swiss, and the Swiss to the non-Swiss, to three-tier-with even fewer second homes being made available for the non-Swiss.’
In September, the Swiss government decided the Weber Initiative would only apply to new-build properties, clarifying the situation for pre-existing property. As a result, no new construction permits will be issued after January 1, 2013 in places where the 20% quota has already been reached. In practice, this means that in a ski resort such as Verbier, which has traditionally been a favourite with second-home buyers, new residential building work will slowly dry up. In light of this, Simon Malster of Investors in Property believes that now is the time for the UK buyer to make their move: ‘There will still be new property coming onto the market next winter, but after that, it will get a lot harder.’
Mr Malster is currently marketing a range of apartments being sold off-plan in the resort of Engelberg, with prices starting from CHF405,000 (£272,035). ‘Typically, clients want to buy a chalet or apartment off-plan and finish it to their specifications, but that option will go in the future. The irony is that Swiss second-home owners are far less likely to rent out their second homes than foreign owners, such as the British.’
But the legislation affects Swiss buyers as much as those from the UK, and in areas that rely heavily on tourism, such as ski resorts, many are worried the new rules will lead to considerable unemployment. The strength of the Swiss Franc has already caused a decline in British tourists-the country’s tourist board has revealed that the number of overnight stays by British visitors has dropped by 30% since the 2008-9 season.
‘Hotels, primary residences and commercial property will be the only permitted new building projects from the end of next year,’ comments entrepreneur and property developer Marcus Bratter, owner of the newly constructed hotel La Cordée des Alpes and a Verbier resident. ‘But the government has clarified that there is scope to renovate existing buildings for second homes in specific cases.’
Legal challenges are, however, mounting over the validity of implementing the legislation, hurriedly issued in September by the Swiss government. Sandrine Giroud, a lawyer with Lalive in Geneva, explains: ‘Under federal-constitutional rules, the implementing legislation [the law or statute enacting the Weber Initiative] should be adopted by the Swiss parliament and enacted within two years from the acceptance of the Weber Initiative-that is, before March 11, 2014.’
With so many pending questions, the situation is far from resolved-the usage rate required for a residence to be considered ‘primary’ has yet to be defined, and it’s unclear whether property that has received planning permission between the adoption of the Weber Initiative and January 1, 2013 can be built.
But despite all the uncertainty, Mr Rollason reports no let-up in demand. ‘Switzerland retains its status, not only for lifestyle but also because it offers long-term stability,’ he says. ‘People want to be exposed to the Swiss Franc because of its strength, and the housing market is far less volatile than most others. The barriers are restrictive, but only time will tell whether the legis lation will be watered down or reversed in some way.’
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