SWITZERLAND WANTS TO OPEN THE DOOR - BUT ITS STILL HARD TO SQUEEZE IN

Caterina Naegeli
Buergi Naegeli Rechtsanwaelte
cnaegeli@bnlawyers.ch

The abolition of the so called “Lex Koller” law would mean that foreign nationals will be able to purchase residential property in Switzerland without being subject to a complicated authorization procedure. But although the federal council of Switzerland thinks that the Lex Koller is not needed any more, the abolition is not yet ripe for decision.

The “Swiss Federal Law on Acquisition of Real Estate by Persons Resident Abroad” - to give the Lex Koller its full title - was originally designed to protect Switzerland against an “inundation” of foreign nationals since property purchases were restricted by many prerequisites. Another intended effect was to prevent the country side from becoming overdeveloped. But the demands for vacation homes only remain high in a number of tourist regions and to prevent the country side in those areas from environmental damages Spatial Planning Law gives the better opportunities and is a more appropriate solution than the Lex Koller regulations, because it will be largely immaterial whether vacation homes are in the hands of foreign or Swiss National. So the Federal Office of Justice has decided that with the exception of a few communities the law no longer serves any purpose and should therefore be abolished. The federal council of Switzerland agreed and adopted the message for the abolition on the 04. July 2007.

But still the abolition is not ripe for decision. The parliament has to agree and there lays the problem. The committee for land planning of the parliament rebuffed the federal council and applied in November 2007 for the rejection of the abolition decision and the flanked arrangements with regard to the land planning to the federal council of Switzerland. On principle they do agree that the Lex Koller is not needed any more to restrict the foreign ownership, but they want more gripping measures against real estate speculation and the prevalence of building up second homes (the so called “cold beds”). Especially the introduction of a minimum residence duration must be considered and other possibilities to solve the second home problem in tourist regions.

The list of tourist areas with the highest percentage of second and vacation homes is topped by St. Moritz, Flims/Laax, Verbier and Goms. Some areas have focused so heavily on tourism that four out of five homes stand empty for a large part of the year. While the very high density of vacation homes does generate income, it also has its drawbacks for the local population and the countryside. The infrastructure is often geared toward the peak season and at other times fails to meet the needs of the local population.

The draft now must be overworked and the new one is to be checked together with the tandem-initiatives of environmentalist Franz Weber “Save the Swiss ground”. So the good news for anyone who is not Swiss and interested in buying property in Switzerland is that that Swiss government still wants to abolish the limitation on acquisition of real estate. The bad news is that this abolition will not take place in the next years and in principle not until three years after the revised Spatial Planning Law takes effect. As far as timing is concerned, the Lex Koller is unlikely to be abolished before 2011.