Under Swiss law, foreigners who do not hold residential permits are
restricted to investing in new apartment buildings with below-market rentals. These
apartment buildings, or HLM as they are called, must be specifically authorized for
foreign purchase by the local canton government. Some cantons or states, do
provide such investment opportunities, but many do not.
- What is an HLM ?
HMLs are apartment buildings where the rents charged are below the current
market value. These are large, high quality buildings built in the center of cities and
come with modern equipments like elevators, underground parking, kitchens with modern
equipment, sometimes they share a garden, etc...
- Tell me more about these buildings.
The buildings available for investment are new low-rental apartment
buildings located in densely populated areas. They are extremely solidly built, and of a
very high quality compared to similar buildings in other countries. They are a form of
subsidised housing, but in no way do they resemble the low-rent, high-rise buildings of
the US, which are usually cheaply built and in depressed areas. Swiss HLM buildings are
above the average Swiss building standards, which are already high.
Click on the pictures above to see a larger image. These are new HLM
buildings similar to the ones you can buy.
They are mostly located in or close to the center of Swiss cities.
We must emphasize to the foreign investor that in Switzerland there are no "bad
neighbourhoods" where you have riots or where the police won't go. Some
neighbourhoods are lower-class, some are more stylish, but all are safe and secure. Even
in lower-class areas, there are neatly-trimmed lawns and flowers on the balconies.
In these buildings, the tenants tend to be blue-collar workers and
lower-middle-class workers, such as office clerks or sales attendants. Every tenant is
checked at the Bankruptcy Office and only people with sufficient, steady income are
accepted. The credit risk with these buildings is no greater than with any other building.
If you buy an already built building, yes. There are also some
people who buy projects and so have to fill the building themselves.
No. The rents are at least 30% below market rents. That is to say,
in these buildings tenants pay 30% less rent than they would pay for a similar
apartment in a non-HLM building. Consequently there are waiting lists of
people wanting to live in these buildings, so the risk of vacancies is non-existent.
Usually you should invest at least SFR 500,000, with mortgages
available for higher-priced purchases.
Prices are quite low right now, following a speculative bubble
which burst in the late 80s. Some people are anxious to sell and buyers can
negotiate good terms. At the moment, Swiss property is a very attractive
investment.
Every year you will receive the rental income, and you will have to
pay charges for the building, such as maintenance, housekeeping, taxes, etc. These,
including the management fee, will usually come to about 20% of the rental income.
One square meter is about 10 square feet, so if you think in feet,
just multiply the surface area by 10.
Probably not. The only buildings in which foreigners can invest are
HLM buildings. If someone says he can arrange for you to buy an office building, or a
building in Zurich and it will be all legal and legitimate, he's lying.
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