Buy House In Switzerland
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Looking to buy your dream home in Switzerland Cosmos Values can help it become a reality. Their team of professionals provide a seamless service for expats looking to purchase a property in Switzerland, from house-hunting to applying for residency, and even selling it when you're ready to move out. Wherever your Swiss adventure takes you, get there with Cosmos Values.
Significant house price inflation in Switzerland resulted in the Swiss National Bank bringing in new regulations to lower household mortgage debt. The move caused house prices in Switzerland to drop in 2017.
Zoning regulations in Switzerland are strict. While existing properties on agricultural land (farmhouses, for example) may be bought and used by people who are not agricultural workers, there may be tough limitations on new construction, extensions, or even repairs to buildings not required for agricultural work.
You can find a variety of property types in Switzerland, from large detached houses to apartments in contained blocks. Minergie operates the standard for sustainability and energy-efficiency in newly-built homes, with between 10-25% of new buildings Minergie-certified in the last 20 years, depending on the region.
You might be familiar with paying a service charge for the maintenance of common areas if you live in an apartment. In Switzerland, however, even detached houses are likely to come with annual service charges for the maintenance of common areas such as car parks, boat docks, or private roads. For apartments, the cost can be around 1% of the purchase price each year.
On top of this, you will need to pay construction costs. These will depend on factors such as type of house, number of floors, and materials used. You can use this house construction cost calculator to help you work out overall costs.
Fees for selling a house are normally in the range of 3-5% for the seller. If you use an agency, expect to pay a fee of at least 0.5% of the selling price. Capital gains tax applies to property sales in Switzerland. You may also have to pay tax if you gift property to someone.
Switzerland is an expensive country with a high cost of living. The housing market reflects this. On average, the property price per square meter is around 13.000 CHF in the city center and around 9.000 CHF outside of it. For Zurich, the price per square meter climbs to over 19.000 CHF in a central location and over 11.000 CHF outside of the city center. Just like in any other country, buying a house in a village in Switzerland is cheaper than the city. For Geneva, in the French-speaking part of the country, the prices for each location type are around 16.500 CHF and 11.500 CHF, respectively.
The reservation contract is the first step towards actually owning the house you want to buy in Switzerland. It is binding for both parties and includes a deposit ranging from several thousand Swiss francs to tens of thousands. This amount is applied towards the down payment for the property.
Just like every other country, Switzerland has also been affected by the global housing crisis; however, the situation is much better compared to other industrialized countries. Even though house ownership in Switzerland is significantly low due to housing prices, the costs of buying property are among the lowest in Europe, with the buyer paying between 0.25% to 3.55% of the total property cost.
As we mentioned before, Switzerland is known to be an expensive country, which is noticeable in the real estate sector. The median prices for houses and apartments in Switzerland are CHF 1,100,00, respectively CHF 711,00. If you need a helping hand, financing is widely available for housing, with Swiss banks offering housing loans with low-interest rates, usually below 4%.
While real estate can be a good investment, you should not consider the house you live in as an investment. What I mean by that is that buying your primary residence is not a way to invest money to make money.
In some cases, you will make money on it. But you should not buy a house to live in to make a good investment. You should buy the house you want to live in. In most cases, you will not make any money by purchasing the home you are living in.
Buying to rent is another entirely different story. I will not cover real estate investment here. If you compare buying to live in and buying to rent or investing in the stock market, your house will be a bad investment. But it could save you some money, which is different.
If you are lucky, you will get the first house you made an offer on. But if you are not lucky, you will need to make offers for several houses. Then, you will have to wait for answers from agents and owners, which can take time and be very stressful.
Overall, this will be more work for you if you live in your own house or apartment than if you were renting. On the other hand, you also do not have to deal with possible terrible building managers (I got my load of them). So, it may not be that terrible.
Sometimes, you will not have a choice to buy or rent a house. In many regions of Switzerland, it is challenging to rent a house. There are some houses to rent. But so few of them that it is tough to find one to rent.
In Switzerland, most people buy a house to live in it and not rent it. When they leave this house, they generally sell it. It means that the market is more saturated with renting houses. And obviously, there are also fewer houses than apartments in general.
This burden is not a problem while you are working. But this could be a problem when you are retired. If your income in retirement does not meet the requirements of your mortgage, you may be forced to sell the house.
This situation is sad, but it happens in Switzerland. You need to consider this if you plan to retire soon. You do not want to be forced out of your house at the moment where you could enjoy it the most.
If you do not have enough income in retirement, the other option is that you can transfer your house to your children. I do not like this solution. I do not want to rely on my children when I am old. But many old people have to use this solution to keep their house.
Now, it is a bit of a dual-edged legacy. If you have many children, it may not be easy for them to share the house. In some cases, maybe your children do not want a house. And finally, maybe your children cannot afford the mortgage on the house. There are often some issues when an inheritance contains a house.
So, you have to be careful about your inheritance and your house. When you are growing older, you should discuss the subject with your children. You do not want to burden them after you pass. The future is something you should think about when questioning whether you should buy or rent a house.
When you are trying to decide to buy or rent a house, you will need to consider both. In some cases, buying can be cheaper. But it is not as great as people think it is. Computing the real costs of a house is more complicated than it seems. And many people do this computation incorrectly.
But as we did the math, we came out with saving some money over the long term in our case. It is not a huge difference since a bigger house means more furniture. And owning your house means you will want to improve it over the years as well. But overall, it looks good from a money point of view. It is not a great investment, as mentioned before. But it is not a stupid one either.
Now, there is one important thing here: buying is only interesting financially in the long term. Buying a house has some serious costs you cannot avoid (notary costs, for instance). So, if you buy houses too often, you will lose much money over renting.
In some cases, you may be almost forced to buy. For instance, there were almost no houses for rent in the region we were looking for in our cases. And the few that were available were highly overpriced.
So, buying can be great, but it is a lot of work and responsibilities. You can live a great financial life by renting your house. And you can live a great financial life as well by buying it. You should not believe people that tell you that only buying is right or that only renting is right. The buy or rent debate has no definite answer. There are too many parameters.
Personally, the only case I would lend the money in this situation is if I know that this is really a one-in-a-lifetime opportunity for a house and they need the money now. And I would only lend money if I know that my friend/family is good enough for money.
It is clear that the downpayment remains in your house and cannot be invested in stocks/bonds for example.My point is that the 20% (the 140K, not the notary/land register fees) will return a profit as your house/land increases value over time (on average).IMHO this profit should also be part of your calculations.Depending on the house market returns over time and the leverage effect, your return on the 140K(+the amortization) may be comparable to the 5% opportunity loss you are calculating.The only downside is that it remains in your house. But still, it is not a loss.
However, you have to keep in mind that it does not return anything, even if it appreciates. We are talking about buying vs renting. So, if you buy and it appreciates 50%, what does it do for you Nothing. if you sell, you are going to either buy a new house which would have appreciated as well and you would be back where you started or start renting and you have to do the calculations again. For it to return, you have to sell the house (and pay a fee on the operation) and then not buy another one, but rent or leave Switzeralnd.The value of my house does absolutely nothing for me. 59ce067264