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Real Estate Due Diligence in Switzerland
Updated on Tuesday 18th January 2022 Rate this article
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Switzerland is a very appealing country in which many foreigners choose to move. Relocating to another country usually comes with the option of purchasing a property and Switzerland is quite offering from this last point of view.
Once the buyer has found a property he or she likes, one of the most important aspects to consider is performing real estate due diligence in order to make sure the transaction will go smoothly, and the chosen house or apartment meets all expectations.
Below, our local specialists explain the main aspects related to real estate due diligence in Switzerland. We are also at the service of investors who want to open a company in Switzerland.
Real estate transactions in Switzerland
The real estate due diligence process is a verification of the purchased property before concluding the transaction. Performed by professionals, the due diligence covers certain key areas that can indicate the real state of the property and its true market value.
The process is important for investors in Switzerland who want to avoid any unnecessary risks when buying property and who want to be certain that they can make the best value-price purchase.
Our company registration specialists in Switzerland can help you with a complete real estate due diligence verification before you decide to buy property in the country.
Real estate due diligence – when is it required and what does it imply?
Real estate verification is used in all countries in order to check various types of properties. This also applies in Switzerland, where both natural persons and corporate ones can use such checks to make sure the properties they are about to acquire will not pose any problem before or after the purchase.
Real estate due diligence can be performed when buying residential properties, as well as in larger transactions completed by companies, such as mergers, acquisitions and takeovers.
Verifying a property is very important as it will save the buyer time and money in case anything is found with the selected real estate. Even if this is seldom the case in Switzerland, it is recommended to use the help of specialists in order to check a property.
Such checks can be performed by lawyers, as far as the legal side is concerned, while our company formation specialists in Switzerland can help foreign investors who want to complete the above-mentioned transactions.
Aspects to verify before buying a Swiss property
Purchasing real estate in Switzerland is not complicated, however, because of the large amounts of money involved checking the selected property becomes much more important. Luckily, there are several ways to verify it before concluding the transactions, and among these, our local consultants recommend on focusing on the following:
- the documents of the property to purchase;
- if the property is subject to litigation or disputes between heirs or other parties;
- if the property was bought by mortgage which has been or not extinguished by the time of the sale;
- if the property is subject to any encumbrances, including unpaid bills.
While some of the verifications can be completed with the Swiss Land Register, especially the legal aspects of the transaction, others require the attention of construction specialists and/or architects.
Real estate due diligence is not a complicated or lengthy tasks if this is a concern for you, which is why you can rely on our agents who are at your service and who can handle time-sensitive matters in a short time.
The real estate due diligence process
The real estate due diligence verification is a process that covers a few key areas like law, taxes, environment safety or the actual construction of the building. A real estate due diligence will include:
- - legal due diligence for the property: any purchase/sale agreements or previous rent agreements;
- - tax due diligence: property taxes, inheritance taxes or profit taxes if the property is bought by a company in Switzerland;
- - technical due diligence: an inspection of the construction plans, official approvals for further construction in the building or repair work modifications; the structural quality of the building;
- - environmental due diligence: pollution issues, water supply for the building, energy consumption;
- - financial due diligence: a look at the expenditure and future opportunities for the re-sale of the property.
Combined, all of this information will provide a complete analysis of the building's current situation. These elements can be important in a real estate purchase and can help the buyer decide if the transaction will be profitable in time.
Real estate valuation in the case of corporate transactions
If when buying a property as a private person is not complicated and the procedure can be completed in a matter of weeks, in the case of large transactions that involve commercial buildings or industrial sites that are part of the assets of a business, real estate valuation is of key importance in Switzerland.
This procedure implies a thorough analysis of the property from two important points of view: the value of the real estate and its stock market value as a means of capitalization. Apart from these, investors might also want to verify the area in which the property is located and assess if it has the potential the future owner wants.
Our company registration consultants in Switzerland can provide more information on real estate valuation, especially when considering high value transactions.
We are also at your disposal if you want to open a Swiss company and need assistance in registering one of the legal forms available in this country.
What to consider when buying real estate in Switzerland
Switzerland’s administrative organization relies on cantons which have their own regulations, which is one of the most important aspects when choosing to purchase real estate here. Each canton can have its own restrictions to the number of properties that can be sold to foreigners.
Here are some of the things to consider when interested in acquiring a house or apartment as a foreigner in Switzerland:
- - Bern is one of the cantons where only 50% of the properties can be sold to foreigners;
- - in Bern, specifically the Grindelwald resort, the minimum value of a property to be bought by foreigners is set at 750,000 CHF;
- - in Valais and Vaud, real estate acquired by foreigners can be resold after 5 years;
- - the costs associated with the purchase of a Swiss property is usually 2.5% to 3.8% of its value in any canton.
According to data provided by Statista.com, in the first quarter of 2021, the highest price per square meter was in Geneva, 13,760 euros.
The Swiss real estate market
The Swiss real estate market offers opportunities for investments both in housing and in office buildings. The country is known as one that offers a high quality of life and as a tourist destination. Many of the investors who choose to buy real estate do this with a clear business purpose in mind. Switzerland has a Land Register that contains information about properties and owners, cadastre plans and geological data.
If you would like to invest in real estate and need more information about the current regulations and the property ownership transfer you can contact our company registration consultants in Switzerland.
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Paul Gheorghiu is one of our experienced company formation agents. He will help you register your company in Switzerland as fast as possible.
Call us now at +41 41 266 0070 to set up an appointment with our experts in Zug, Switzerland. As a Sig Fiduciaire client, you will beneficiate from the expertise of our local consultants for opening a company in Switzerland.
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