I've been spending the last few months trying to get my head around the property market in Switzerland - which as has been noted before on this forum is very, very different to the UK and Australia!

From what I have been told by banks and agents, the main obstacles to overcome in buying a property are:
- obtaining a permit (B or C) that allows you to buy property
- having a 20% deposit (although I have heard that a few banks now will lend more than 80%, eg Credit Agricole)
- the 33% rule - ie that the total charges for the investment (made up of mortgage repayments based on a notional 5% interest rate + upkeep + amortisation) cannot exceed one third of your income. Which means that if you want a 500k mortgage, where the charges work out to be say 35k per year, you need to show a 105k income.

What I am really interested in is to hear from anyone who has experience of buying to let here in Switzerland. We are finding it particularly hard to get around the 33% rule that all the banks seem to follow!

Thanks very much.

On top of your 33% rule, there are serious issues when trying to get a mortgage for a rental property, especially as foreigner. If you can find a mortgage you will be asked for 50% or more deposit.

Don't forget debts and obligations. Those are counted too. So if you are already spending 33% on the rent/mortgage of the place you are living, you'll be hard pressed to get a mortgage on a rental property.

(or am I reading your post wrong & you want a property to live in?)

Agree with miniMia....if you are already struggling with the normal conditions for buying for yourself to live in, buying as an investment will have more stringent rules.

No way to get past the 33% rule, having a lot of capital can help but even then they calculate with the 1st tier loan (up to 66% of the mortage) at 5% and the rest at 5.75%...and will still compare the total mortgage to your current income. Having said that, I do believe that they take into consideration the rent that you will get from the property as well. Generally, banks like to see total net rent to be minimal 5% of the selling price of the property.

Also, note that you can only buy for investment if you have a C or if you are Swiss. B permits only allows you to buy for personal use. If you want to use your pension, if you were planning on living in some part of the property for investment ( e.g. - 1 flat of the total 4 in a MFH - Mehrfamilenhaus), then the withdraw amount can not be higher than the percentage (based on m2) being used for personal use.

And don't forget that to discourage flipping in the market, taxes on capital gains on property sales is quite high and gets lowered each year of ownership with the lowest point being around 20 years (different by Kanton . but I believe this is true for Zurich)...But you are allow to use the gains to buy another property for personal use, and then it is not taxed.

Hope this helps.

My understanding of the rules is different to Mimsters. If you are on an EU passport, then you can buy a 2nd property for investment purposes.

See here http://www.deloitte.com/assets/Dcom-...20Property.pdf

Thanks miniMia, Mimster and SwissMorgs!

miniMia - yes, the property is for investment and not to live in. We have got B permits so hopefully would be able to borrow more than the 50% that foreigners can. Still waiting to hear back from a couple of banks on that one...

Mimster - thanks for the info about the capital gains tax, it means that it would probably only be viable as a long term investment, which was our intention anyway.

SwissMorgs - that was my understanding too, that if you have a B-EU permit then you can buy property just as a Swiss citizen can.

From what I remember when I was in the market a while ago, 50% is not just for foreigners but also locals and B,C permit holders when it comes to an investment property.

Also, IIRC, the rental income is not considered as if you don't have a tenant you still need to be able to pay the mortgage. But I'll go back and see if I still have some docs, sites saved.

Don't forget that rental income & hypotethical rental income on the property you live in is added to your salary on your taxes.

(how do you spell hypotethical???)

investment for buy-to-let, partly (and I say PARTLY) translates to maximizing profits and as a tendency towards speculation in the housing market.

Luckily swiss government & politicians care for its people a little more than others !.... .... and has set down some rules to make such investments not so attractive for potential speculators. The typical yield one gets is never above the 5%, and normally is ca. 3-4% (and sometimes less!). Taking such into account and the risks involved in buy-to-let investments, the whole picture is not so attractive for potential speculators... I mean investors !

Final note: myself I have not bought property and -unless I find a bargain- will not do so in the near future.

Thanks SwissMorges, sometimes I forget this, as I am non-EU.

I have to agree with you. We were not specifically looking for an investment property. We were looking for a farmhouse and happened upon one with two apartments. The whole thing was very unfavorable & a huge PITA. In the end we bought a simple, cute and well located semi.

I'm not sure what you are implying by saying people investing in property are speculators, apart from an unfounded negative connotation, but all investing is speculating of some sort.

I might be speculating here but I'm guessing you'll never invest in property as you'll never find a bargain because you're not prepared to open your mind enough to find one, as I said just speculating