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Old 23.05.2006, 10:17
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House buying

Hi there,
Hope you can help me with a few questions.
I'm currently renting a house but am thinking of buying. I'd like a 5 zimmer house but renting one of those in Zurich may be too expensive - so that's why I am thinking of buying - should be cheaper?

But, I'm English and know nothing about buying a house here (and my German is bad). I've heard people talk of estate agents fees of 6% and also of only 0.5% - that can't be right ???

I've searched the threads and couldn't find anything relevant.
Can anyone give me any ball park ideas?
Many thanks in advance

Rob
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Old 23.05.2006, 10:23
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Re: House buying

I bought a new-build last year and paid the estate agent chuff-all.

btw you will find that you NEED German to do a new-build here. My German's improved no-end.....

If you're buying second-hand, I believe you may end up with fees but IIRC these are usually split between the vendor and buyer.

You could talk to a guy called Alex from www.etzel-immo.ch - he speaks good English and might have some decent advice. Pretend to be buying one of their 2nd-hand houses for 10 minutes
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Old 24.05.2006, 15:02
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Re: House buying

Hi,

I just signed the contract for a second hand house today, so I can give you the low down as I see it.

Firstly, I would not expect it to be cheaper than renting - maybe a little. The rentable value of a house is added to your salary as a penalty for owning a house. This can be offset by the interest payments from the mortage. This system is due to be phased out over the next (?? 150 probably) years. Add to this all the maintence issues you usually get with a house......

Secondly, for us it was quite an issue to even find a house (over 1 year). Those that we found on the internet were not available to us, as we are not Swiss - they will preferntially sell to a swiss person than anyone else. So don't expect to get one quick! It's not just about the money here!!!

Thirdly, having said that above, now that we've found one, the whole sale has gone through in a matter of 10 days - quite incredible!

Now to the nitty gritty.

To buy the house, we first had to pay a reservation. This was 30,000 CHF. This alone did not guarentee the house, but legally prevented the owner from showing the house and otherwise promoting its sale to anyone else.

After this, as we have done today, we paid the deposit. At this stage the house is ours, unless some member of the sale process dies. The deposit we paid is 10%, 110,000CHF in this case. From this money, the current owner must pay taxes to the Geimende. In order to get to this stage we had to have a paper signed by a bank that said we had the finance to buy the house, and a guarentee of payment for the deposit.

When we get the key on the 17th July, we must transfer the rest of the funds from the bank. I should say at this point, we have not arranged the mortgage, and we have 2 banks battling each other for our business ;o) .

After the sale, we will then have the fees from the notariat. This is 0.35%, i.e. less than half of one percent, in this case say 4,000CHF. It is usual for the buyer and seller to split this 50/50 and this is what we are doing in this case.

So, the overall cost is the cost of the sale, 1.1Mil + 2,000 notariat fees. The seller has more fees, the aforementioned taxes to gemeinde , but also the commision to the sales agent.

Finally, we also have to have the electricy supply inspected by November (at our expense). This (at least in Embrach) must be done each 5 years, or after a change of ownership (how convienient!)

That's all for now, but I am happy to discuss any other aspects that may be of interest.
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Old 25.05.2006, 13:41
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Re: House buying

We also bought a place here in Fribourg, my wife is Swiss so there was far less hasle.
However, the largest fees to pay on buying a house are the transfer of ownership and land registery (droits de mutation et droits sur les gages)

This is between 3 and 4 % of the purchase price and is payed to the canton (direction des finances)
We got our bill 6 weeks after moving .
Good luck with the move.

Nick.
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Old 25.05.2006, 18:29
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Re: House buying

Help!
This is what is confusing me.
SmBuzby didn't mention these. I have a friend in Zurich who didn't have to pay this either. So is this regional or what?
Any ideas appreciated
Rob
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Old 02.06.2006, 12:40
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Re: House buying

I strongly suggest you buy/borrow the book Living and Working in Switzerland by David Hampshire, and read the section on Buying Property. The book can be found in major book stores like Stauffacher, and perhaps in the library too.

That section is very insightful on buying homes, especially in the initial stage where you are at.
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Old 02.06.2006, 12:56
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Re: House buying

Hi,

an update. A german colleague just checked for me. The change of ownership tax was abolished by Canton Zurich 1-January-2005. Good for me.

Hope that helps!
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Old 02.06.2006, 13:37
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Re: House buying

Thanks.
So change of ownership tax seems to be Cantonal then I guess. Is this on the web anywhere?

I have read Living and Working in Switzerland cover to cover but it mentions in there percentages of 6% which was horrifying me as tax rates.
I must re-read it again though!

Thanks for the input.

Smbuzby - can I be rude!? Please ignore the question if you want.
With your mortgage - are you paying the 20% deposit and mortgaging the rest? I have heard of banks lending 100% if they like you(?!) - is this true?
I currently have a UK house and so am not awash with cash deposits yet.

Rob
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Old 02.06.2006, 13:45
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Re: House buying

I dont consider it rude!

A bank is a finaincial instition that will findamentally refuse to rsik its money. I find it very doubtful indeed tht yuu can get a 100% mortgage here. I'm not saying it's not the case, merely that you willl eb able to know me over with a feather if true. This approach only works in the UK in areas/on property who's value is increasing or the house is sold below it's full potential value.

We put down quite a substantial deposit, in the region of 30%. We are cashing in our pension funds to provide some of this money. The money saved in mortage payments, far exceeds the gains in the pension fund ;o) There is a small tax to pay on refunding it, but it's peanuts to the standard tax you pay on the salary in any case.

The information on taxes, and on tonnes of other stuff too, can be found on the cantonal web pages, the one for Zurich is even in English, but I'm afraid the detailed pages such as on taxes, is all in German - I always need help for this!
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Old 31.03.2008, 13:47
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Re: House buying

Can somebody clarify a bit how the withdrawal of pension savings (2. and 3. säule) works in practice? I've been told that you first need to be the legal owner of the apartment or house before you can withdraw the pension savings. But in order to get the mortgage and legal ownership you must have the (usually) 20% down payment, which in our case we don't reach without the funds from the 2. and 3. säule. Is this right? It seems like some sort of catch-22 to me...

Thanks for your help
Christoffer
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Old 31.03.2008, 17:19
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Re: House buying

When you sign the agreement to buy the house at the notaire, then the pension fund will release the funds from the pension fund. You bring the declaration of how much you have available to use for your down payment to the bank.
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Old 01.04.2008, 20:16
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Re: House buying

This topic is most interesting. We are planning to return to CH in 18 months time. Buying property in South Afica seems so easy compared to what I read in this thread and also David hampshire's book. Also we can't decide wether to buy or rent. We have checked out the Internet and there seems to be lots of houses for sale, but I would assume it is a risky decision if you are not too sure which Canton to choose as they all seem to charge different taxes and so on. Decisions, Decisions!
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Old 01.04.2008, 22:12
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Re: House buying

OK here is a summary of my experience buying in Kanton Zürich:
  • The change of ownership tax is indeed abolished in Zürich (but still applies in other cantons)
  • Banks can lend you 100% (eg Cantonal bank in Zürich gave me 97%) provided you grant them a lien/charge on 20% in the form of pension funds/securities etc.
  • Buyer and seller usually split the Notary costs for the sale between them circa 1.5-2% each depending on the Canton
  • However if you are taking advantage of the lien on 20%, instead of cashing in securities/pensions, there will be additional notary costs of the same amount which you will pay in full (ie the bank won't share these costs like the seller)
  • If you cash in your pension(s) early the taxable rates vary from 2-8% depending on the Canton, you can get info on this from your pension provider
  • Sequencing: Find property, Reserve property (against fee 3% or so), Apply for pension fund statement for liquidation/lien, Arrange finance, sign contract, funds transferred upon copy of contract availability (Notary will ask how many original copies you need for financing parties (eg bank, pension, rich Uncle etc.)
  • Your pension fund may charge a fee if you cash in of circa 400CHF
  • Move in!
Good references: www.homegate.ch, www.hev.ch, www.notary.ch, mortgage sections of banks
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Old 01.04.2008, 22:35
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Re: House buying

Another expense is a Schuldbrief (literally a letter of debt). When you obtain a mortgage, the lender has the loan guaranteed with a hold or lien on the property in the form of this document. It is quite a simple affair, but costs 1 per 1000 for the Notariat and 2.5 per 1000 for the Grundbuchamt (land registry).

So this will cost about CHF1750 plus VAT (Canton Zurich) to guarantee a loan of CHF 500,000.

TIP: these Schuldbriefs are left on a property's records even when paid off and can be reused and so you avoid this fee (or some of it).

BUT I would recommend not buying in Switzerland if you stay is anything less than 10 years. You will need 1 -2 years to even find somewhere and you should be aware of Grundstuckgewinesteuer (tax on profit on sale) [search these forums]. This can be 40% of a profit that might only be 10 - 20 over 10 years. It is only avoided by reinvesting the same or more in a property in Switzerland...
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Old 12.05.2008, 14:30
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Re: House buying

Hello,

My general query is this: we are planning on moving. We have visited Switzerland and examined the housing options without going into details (ie. we looked at houses & apartments, but didn’t speak with banks etc.).

It looks like it will cost about CHF3000 per month to rent the sort of house we want, but only about 1500 per month to buy one and pay it off (based on CHF550k house, with a 20% deposit), given the relatively low interest rates.

On a purely cash flow basis, it seems that buying is superior to renting. I realize this is probably naïve, so, aside from the practical renting versus buying issues, and assuming preservation of capital, can someone shed light on the following:
  • Transaction costs for buying (eg. ‘stamp-duties’)
  • Other hidden charges
  • Establishment fees for mortgages etc.
  • Capital gains taxes on future sale assuming you lived in it for at least 12mths (if you hang on to it without living in it and rent it out does this change things).
Although I have looked elsewhere on the forum, there doesn’t seem to be particularly thorough or well referenced posts. Can anyone help (happy to be redirected to another link).

Cheers

Moe.
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Old 12.05.2008, 15:14
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Re: House buying

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It looks like it will cost about CHF3000 per month to rent the sort of house we want, but only about 1500 per month to buy one and pay it off (based on CHF550k house, with a 20% deposit), given the relatively low interest rates..
Unless you want to live somewhere really remote you'd be doing well to buy a whole house for 550k.
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Old 12.05.2008, 16:17
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Re: House buying

I think you will be very lucky indeed to find a house for 550k, unless you are happy to live somewhere out in the sticks, and even then you'll be lucky to get something half decent.
Stamp duty - I think it depends on which Kanton,but in my case in SZ it was 1% of the house value.
Mortgage establishment fees - you can do this for zero if you choose certain deals. Other deals may cost you a few hundred francs.
Capital gains -again, I think it depends on Kanton and Gemeinde where the house is, but generally the longer you keep the house, the more discount you get on the stamp duty. Be prepared to keep the house for a few years!
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Old 12.05.2008, 16:38
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Re: House buying

Capital gains are handled differently in the various cantons. To give you an idea, here is how it is figured in canton SZ, from the cantonal website:

http://www.sz.ch/steuern/grundstueck...uer/index.html

ETYA - link is not behaving nicely Click on 'Wegleitung zur Grundstückgewinnsteuer', then on 'Steuerberechnung'

As you can see, if you sell within the first year, you'd be looking at a 40% increase in the tax on the profit, dropping with each year of ownership until you have held the property a full 5 years. After that, there is a reduction in the tax, up to 70% after 25 years of ownership.

The tax policy is there to discourage speculation.

YMMV in other cantons.

This of course assumes that you actually sell the house at a profit... Be aware that in many areas houses do not appreciate or appreciate far more slowly than houses have in other countries. Do make sure you understand the peculiarities of the Swiss real estate market before making investment decisions.

ETA: Also, make sure you are figuring Eigenmeitwert (the theoretical rental value of your house, which is then added to your income, and upon which you will pay income tax) into your total cost calculation.

Last edited by meloncollie; 12.05.2008 at 17:14.
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Old 12.05.2008, 16:52
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Re: House buying

I'm having a hard time believing this as my experience is that the rent vs. buy market in Switzerland is more or less in par. Are you really comparing apples with apples here? I.e. same area, same size etc. Are you taking all the "Nebenkosten" into consideration?


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It looks like it will cost about CHF3000 per month to rent the sort of house we want, but only about 1500 per month to buy one and pay it off (based on CHF550k house, with a 20% deposit), given the relatively low interest rates.

.
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Old 13.05.2008, 22:44
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Re: House buying

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I'm having a hard time believing this as my experience is that the rent vs. buy market in Switzerland is more or less in par. Are you really comparing apples with apples here? I.e. same area, same size etc. Are you taking all the "Nebenkosten" into consideration?
Err - no, that's the basis of my question. I want to know what all the 'Nebenkosten' (I assume that means associated costs) might be.

Are there any others I should be aware of?

And yes, it is in the sticks.

cheers,

Moe
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