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Old 07.07.2007, 20:07
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Buying vs Renting for 2 years

Hi All,

I'm on my way to Lausanne, haven't arrived yet so probably getting ahead of myself.

I'm curious, am I better off renting for two years or buying a place? I know in Australia (where I'm from) buying would be impractical because of the transaction costs (stamp duty, solicitors fees, etc. and then potentially capital gains tax when selling).

What is are the transaction costs in buying/selling, and the cost of paying a mortgage vs. renting? I would be getting a 1-2 bed apartment in Lausanne.

This has an obvious follow-on question relating to what would happen if we didn't sell the property after two years but rather rented it out without actually being resident in Switzerland.

Many thanks for any info you can pass on. I'm sure this has general interest value.
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Old 07.07.2007, 20:24
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Re: Buying vs Renting for 2 years

Haven't yet gone through the process myself but renting is quite expensive in Switzerland in terms of the space you get for your rent vs. buying. However, if you're not sure you'll be around for a few years, buying is problematic not the least because the housing market in Switzerland is a lot less liquid than say Oz or UK.

I may be wrong so others who've done it could give you a better answer but thought this might start you off.
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Old 07.07.2007, 20:27
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Re: Buying vs Renting for 2 years

Oh....this thread here will give you quite a lot more info about buying vs. renting in Switzerland. [Ins and Outs] Buying Property in Switzerland
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Old 07.07.2007, 20:37
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Re: Buying vs Renting for 2 years

If you had Googled 'buying a property in Switzerland' you would have found this.
I would rent.
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Old 07.07.2007, 22:29
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Re: Buying vs Renting for 2 years

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If you had Googled 'buying a property in Switzerland' you would have found this.
I would rent.
That website looks really dodgy. What everelse they can offer, I was immediately wary because they have ripped off the myswitzerland site.

From their homepage:
"Yes. Foreigners can get between 60% and 80% of the house price or bank-appraised value, whichever is lower. We will be glad to help you getting a mortgage."

I tell you, they're dodgy .....
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Old 07.07.2007, 22:33
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Re: Buying vs Renting for 2 years

i wouldn't buy in switzerland, considering its only for 2 years. Theres always tons of hidden fees, taxes, and paperwork needed. plus as a foreigner you need to take extra percaustions. dont let your self be a target for corrupt people. - but generally swiss people are very trust worthy.

im not sure where your from. but if your an american. than i would say dont buy. i think the USD to CHF will become better when a new president takes office.

good luck to you
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Old 08.07.2007, 09:57
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Re: Buying vs Renting for 2 years

Hi,

Yes from reading other posts it sounds like the housing market is pretty tight, and can take a long time to find something you like. Seems like a lot of people end up building or buying off-the-plan from a new development.

I'm Australian so not sure if a new American president will affect me, who knows? Anyway I guess I'm not too worried about foreign currency movement as I expect most of my cash to come from within Switz.

I guess I'm still curious, as one of those people who like to see their money 'put to work' rather than simply paying off someone else's mortgage: am I likely to see a reasonable return on investment if renting out an apartment I own and am still paying off? Surely since there is so many renters it must be worthwhile for the landlords?

In Australia landlords bitch about the low rate of return they get on their property investments, relying on capital gains and tax breaks to stay ahead - curious what the situation is in Switzerland.

Thanks
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Old 08.07.2007, 10:08
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Re: Buying vs Renting for 2 years

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Hi,

Yes from reading other posts it sounds like the housing market is pretty tight, and can take a long time to find something you like. Seems like a lot of people end up building or buying off-the-plan from a new development.

I'm Australian so not sure if a new American president will affect me, who knows? Anyway I guess I'm not too worried about foreign currency movement as I expect most of my cash to come from within Switz.

I guess I'm still curious, as one of those people who like to see their money 'put to work' rather than simply paying off someone else's mortgage: am I likely to see a reasonable return on investment if renting out an apartment I own and am still paying off? Surely since there is so many renters it must be worthwhile for the landlords?

In Australia landlords bitch about the low rate of return they get on their property investments, relying on capital gains and tax breaks to stay ahead - curious what the situation is in Switzerland.

Thanks
the market in Switzerland is tight & to a certain extent regulated to stop it overheating as it does in the UK for instance ... heres an interesting link that might go some way to explaining for you .. Property Rules
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Old 08.07.2007, 10:34
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Re: Buying vs Renting for 2 years

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This has an obvious follow-on question relating to what would happen if we didn't sell the property after two years but rather rented it out without actually being resident in Switzerland.
As a non EU citizen you are allowed to buy a property as your main residence only. If you leave Switzerland an interesting situation arises - you have to sell the property (how the authorities would make you do this I don't know - seems unworkable unless they have a compulsory purchase scheme).
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Old 08.07.2007, 10:44
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Re: Buying vs Renting for 2 years

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As a non EU citizen you are allowed to buy a property as your main residence only. If you leave Switzerland an interesting situation arises - you have to sell the property (how the authorities would make you do this I don't know - seems unworkable unless they have a compulsory purchase scheme).
Actually my partner is an EU citizen so could be bought in her name negating this aspect.
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Old 08.07.2007, 12:04
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Re: Buying vs Renting for 2 years

In terms of capital gains, property in Switzerland and Germany have remained largely flat while France, UK, Spain have shot up because of regulation here preventing people from flipping properties. In Switzerland, house prices have only gone up on average 11% between 1997 and 2004 while the rest of the west have shot up massively.

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Old 08.07.2007, 12:07
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Re: Buying vs Renting for 2 years

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In terms of capital gains, property in Switzerland and Germany have remained largely flat while France, UK, Spain have shot up because of regulation here preventing people from flipping properties. In Switzerland, house prices have only gone up on average 11% between 1997 and 2004 while the rest of the west have shot up massively.

Interesting to see what 10 years have done to property prices in Hong Kong !!!

Friend of mine is about to emigrate to Cape Town & has a feeling that he has missed the property boat, he may be right on that one.
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Old 08.07.2007, 12:12
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Re: Buying vs Renting for 2 years

I think the property boat is about to reverse in the EU and has been reversing in the US Germany and Switzerland probably won't be affect much as it's not gone up much if any! Inflation is creeping into the UK and that's going to keep interest rates up and deflate housing - it's a good thing as lots of young people can't get a roof over their heads!
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Old 08.07.2007, 12:17
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Re: Buying vs Renting for 2 years

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That website looks really dodgy. What everelse they can offer, I was immediately wary because they have ripped off the myswitzerland site.

From their homepage:
"Yes. Foreigners can get between 60% and 80% of the house price or bank-appraised value, whichever is lower. We will be glad to help you getting a mortgage."

I tell you, they're dodgy .....
I referred to this site as it has much useful information on this subject. Iím afraid I donít understand why you feel that there is something wrong in the statement that mortgages of between 60% and 80% are available to foreigners, as they are !

I certainly disassociate myself from your last statement. I understand the company to be most reputable but you obviously know otherwise.
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Old 08.07.2007, 12:20
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Re: Buying vs Renting for 2 years

I don't think they're dodgy, just that their website is a bit old school.

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That website looks really dodgy. What everelse they can offer, I was immediately wary because they have ripped off the myswitzerland site.

From their homepage:
"Yes. Foreigners can get between 60% and 80% of the house price or bank-appraised value, whichever is lower. We will be glad to help you getting a mortgage."

I tell you, they're dodgy .....
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Old 08.07.2007, 12:40
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Re: Buying vs Renting for 2 years

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I don't think they're dodgy, just that their website is a bit old school.
....which is probably just the image they like to project !
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Old 09.07.2007, 11:59
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Re: Buying vs Renting for 2 years

Okay I think I've found the answer to part of my question: rate of return on residential property rental in Switzerland:

Retails-were-best-performing-sector-in-Switzerland

Rents on the rise in Switzerland

Swiss Real estate market. Facts and trends

Last edited by markowl; 09.07.2007 at 12:14.
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Old 09.07.2007, 12:53
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Re: Buying vs Renting for 2 years

Those are good links. Thanks for sharing
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Old 09.07.2007, 13:56
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Re: Buying vs Renting for 2 years

From what I know from my swiss wife the government try to make it even on the renter by increasing some sort of tax against people that buy. I also know that you can claim tax back on repairs and maintenance to the house. I have lived here for nearly ten years now and have only just bought a house, it's far from the same as the UK propertey market which is very open and fluid. As a rule most Swiss people tend to rent and therefore it makes the property market somewhat slow to say the least. I would not be buying a house if I did not have the intention to stay a long time or to rent it out if I couldn't sell it. All of our Swiss friends prefer to build new houses rather than do up old ones for a profit. I don't know why it's just not the UK. So if you're thinking of buying for just two years I'd say don't bother. Most mortgage lenders will only give you a mortgage of 75% ( which is what we just got ). You will in no way find a mortgage for 95% like in the uk. If you do find an offer claiming this then you should be very very suspicious. The lowest you can get away with is 20% but your bank manager will frown at it a bit. They will allow it if your income supports the repayments at an average of 5% don't forget that nebankosten are also taken into account when applying for a mortgage. They include water, gas, electricity just all the payments that you need to run the house every month.
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Old 09.07.2007, 15:07
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Re: Buying vs Renting for 2 years

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From what I know from my swiss wife the government try to make it even on the renter by increasing some sort of tax against people that buy. I also know that you can claim tax back on repairs and maintenance to the house. I have lived here for nearly ten years now and have only just bought a house, it's far from the same as the UK propertey market which is very open and fluid. As a rule most Swiss people tend to rent and therefore it makes the property market somewhat slow to say the least. I would not be buying a house if I did not have the intention to stay a long time or to rent it out if I couldn't sell it. All of our Swiss friends prefer to build new houses rather than do up old ones for a profit. I don't know why it's just not the UK. So if you're thinking of buying for just two years I'd say don't bother. Most mortgage lenders will only give you a mortgage of 75% ( which is what we just got ). You will in no way find a mortgage for 95% like in the uk. If you do find an offer claiming this then you should be very very suspicious. The lowest you can get away with is 20% but your bank manager will frown at it a bit. They will allow it if your income supports the repayments at an average of 5% don't forget that nebankosten are also taken into account when applying for a mortgage. They include water, gas, electricity just all the payments that you need to run the house every month.
I am also married to a Swiss and when we decided to live here I had to adjust to a very different outlook. I found that so many Swiss had no desire to own their own home, which was very different to the UK. One of the reasons for this was probably that the rental market in CH which was much better and the Swiss seemed to be more aware of the true cost of buying, and maintaining, your own house.
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