| Swiss News
According to data recently released by the Federal Office of Statistics 45,748 dwellings were vacant in Switzerland at 1 June 2014. Â This is just over 1% of all dwellings and represents an annual 14% increase in vacancy rates. The biggest increases were in the Lake Geneva region, followed by the Mittelland, Zurich and eastern Switzerland. Across the country the number of individual houses vacant increased by 12% and the number of new dwellings vacant increased by 21%. Â
Given a growing return migration of Swiss and expatriate residents from across the border in France, but also economic uncertainty in Switzerland itself, there appears to be a contradiction in the way property prices are moving. Nation-wide, prices have continued to rise in 2014 – albeit at a slower rate. The Lake Geneva region, however, has witnessed a slight drop of 0.8%. At the same time, affordable houses and flats in Geneva and Vaud appear to be just as hard to find.
According to the Swiss National Bank, family-owned properties increased by 0.5% in the year leading up to June, 2014. The Zurich and Lake Geneva regions have both witnessed slight falls in prices, yet remain among the country’s most expensive.
Even though some new buildings are being offered at discount, Lake Geneva prices are largely considered solid, and, depending on location, are still rising. However, some analysts maintain that upmarket housing could be affected if more foreign companies shy away from Switzerland because of last February’s referendum on mass immigration. Credit Suisse’s 2014 Real Estate Market report notes that while no significant change is expected, “even super cycles come to an end sooner or later,†particularly if there is a sharp rise in interest rates.
“Prices really depend on where you want to buy,†noted one real-estate representative who asked not to be identified. “Morges is becoming increasingly attractive for young professionals, yet it’s hard to find anything.†Despite slight drops in rentals because of low interest rates, tenants are still hard-pressed to find houses and flats at reasonable prices. “We’re still looking at less than 1% availability in Geneva,†he added.
Some real estate analysts expect greater demand as residents in France relocate back. There is already a noticeable rise in the number of French houses and flats up for sale, which, combined with relentless building, threatens to provoke a housing glut. Residents are worried about new health-insurance regulations that recently came into effect under the Hollande government. Premiums are now based on earnings. One can no longer simply use Swiss medical facilities unless prepared to absorb the cost of a second private insurance policy.
Many, too, are concerned that Paris will soon be able to grab taxes on Swiss properties inherited by residents living in France. Although the Swiss have yet to agree, this means that anyone left a flat or chalet in Switzerland will have to pay a hefty inheritance tax of up to 45%.
The tax regime may also change as France introduces its new administrative regions. Paris could soon be taking taxes earned by frontaliers in Switzerland, but previously handed over by the Geneva and Vaud authorities to local French communes. The latter are now worried that losing these Swiss taxes could affect their ability to develop much-needed infrastructure.
BERN More and more people are rushing to use the second pillar of their pension plan to purchase a primary residence in the face of high prices and limited housing stock. While this may give a boost to the economy, especially the property market, not everyone is happy with the trend.
There are three pillars to the Swiss social security system. The first is the basic mandatory insurance for all Swiss residents; the second is an occupational pension plan based on employee and employer contributions; and the third is a private investment option. When the second pillar is combined with the first pillar, a retired person could expect to receive about 60% of their final salary to help maintain their existing standard of living.
With interest rates low, some banks are limiting the amount of the second pillar that may be used to purchase property or towards paying down a mortgage. The Cantonal Bank of Bern reported to Le Matin that it no longer considers money from the second pillar to be “real equityâ€. Other banks may be concerned that real estate is no longer the safe investment it once was and are warning clients not to withdraw funds from the second pillar but to use it only as collateral.
The Swiss Federal Council has followed the recommendations made by the Swiss Banking Association (SBA) regarding self-regulation measures implemented by the banks.
An increasing number of avid skiers are choosing to purchase or rent an alpine retreat away from the busy, hard-core party and ski scene of Verbier. The reasons for moving go beyond Verbier’s high prices.
Over the last decade many local business owners in Verbier have moved “down the valleyâ€. Instead of working and living in Verbier, they have chosen to separate work and home life and reside elsewhere. This trend has caught on and now an increasing number of visitors are choosing to do the same. Those who have made the move attest to many advantages.
A Swedish doctor, who travels to Verbier every year to ski, loves the vast winter opportunities and decided earlier this year to purchase his first alpine abode in Cries (Vollèges) instead of Verbier. “I really love the fact that I can come here to relax and be away from it all, but still have the proximity to a large ski area, great restaurants and nightlife in Verbier and go there if I choose to. There are a lot of Swedes who come to Verbier on a regular basis and some are also my patients. This can make it difficult to escape my work. Also when I am on holidays with family and friends I prefer to be low-key socially.â€
Kathleen Fletcher, a long-time resident and business owner in Verbier, purchased land and built a chalet in Le Levron three years ago. She was the first Australian property owner in Le Levron, which was and still is a village with few foreign residents. She says that not only have property prices increased, but there are now also a couple of British bankers who have invested in properties up there.
A practical advantage of living below Verbier is that you can catch the lift from Le Châble at the bottom of the valley and connect directly with the vast Verbier–4 Vallées ski area, bypassing the queues at the busy Medran stop in Verbier. You are also closer to the numerous smaller resorts accessible from the valley. Vichères in the Entremont valley and Crévacol in Italy are highly appreciated for their groomed pistes, absence of queues and vast off-piste skiing opportunities, as well as the possibility of a delicious Italian-style lunch. These resorts offer equally exceptional possibilities
in spring, summer and autumn for hiking, biking, rock-climbing and paragliding.
I am an interior-architect who recently transformed an old barn in the sunny picturesque village of Cries into three high-end contemporary dwellings using quality local materials. The village has a more constant, less transient population. There is a year-round, thriving community here that feels real. You can relax, go ski touring or walking in untouched nature and get away from a work environment and re-charge. It’s only a 20-minute drive from Verbier, so not a long work commute, and it’s also closer to Italy and Geneva airport.
The idea of moving away from the busy atmosphere of Verbier has been popular with locals for many years now. Tourists and recurring visitors also are realizing the advantages of choosing a more peaceful setting away from the crowded streets of Verbier for both winter and summer holidays. Deciding where is best for you really depends on what you are seeking.
 Please share your experiences in the comments section below.
Lena Truusoot
With summer holidays around the corner, many people will soon be heading off to exotic holiday destinations. Many holidaymakers will pay to stay in expensive hotels and resorts while leaving their homes in the beautiful Lake Geneva region empty. There is, however, a way to put your empty home to good use, save money and enrich the cultural experience of travel.
Back in the 1950s, as part of a project to improve cultural exchange, the Swiss and Dutch Teachers’ Unions started the home-exchange revolution, according to Intervac International, a home exchange service. With globalization and the expansion of the Internet, this revolution has accelerated and looks set to stay.
Swap the calm of your chalet…
Early movers such as Intervac International, HomeLink and HomeExchange have been joined by Internet upstarts such as Love Home Swap, Airbnb and Knok. Innovations, such as social media verification, now help an increasing number of people to take the leap and exchange homes with someone on the other side of the world whom they have never met.
The most common form is a “simultaneous exchangeâ€, where you stay in your exchange-partner’s home while they stay in yours. There is also a “non-simultaneous exchangeâ€, where second homes are swapped.
In a 2013 study entitled “My Home is Yoursâ€, professors Francesca Forno and Roberta Garibaldi from the University of Bergamo profile users based on data from HomeExchange.
It turns out that this new generation of home-swappers is not that new. Some 94% are 34 or over and close to 50% have children. And while saving is a key motive, home-exchangers are not penny pinchers. Nearly 50% choose expensive holiday options such as staying in resorts and hotels when not home swapping.
… for the buzz of a Hong Kong flat
So what are the main drivers? Interest in cultural heritage is top of the list at 98%. Ducking down to the local market to collect ingredients for cooking at home is not far behind at almost 70%. Not surprisingly trust is a key ingredient. A reassuring 75% say people are trustworthy. This could be the result of the positive feedback that comes from participation in civic organizations undertaken by nearly 60% of those surveyed.
For many, however, trusting people they have never met with their most prized possession is the greatest hurdle. Exchange services use a range of features to try to reduce these risks and help you get to know the other party. Verification of email addresses, phone numbers and social media accounts are the main ones. Reviews of those who have exchanged in the past are also important. It helps that the risk runs in both directions when making a simultaneous exchange.
Forno describes home exchanging as collaborative consumption. “People are turning more and more to models of consumption that emphasize usefulness over ownership, community over selfishness, and sustainability over wastefulness.â€
A quick search reveals that Swiss residents are no strangers to modern home exchanges. HomeLink lists several hundred. For example, there is a three-bedroomed house on the shores of Lake Geneva complete with a Ford Mustang available anytime. A home to swap in Australia, USA, Brazil or Canada is the other side of the bargain. One Geneva family did a simultaneous exchange with one from Chicago, each leaving the other information packages of where to go, what to do, and how to deal with any potential house problems, such as a blown fuse. Another exchanged their secondary residence, a chalet in Les Diablerets, for an ocean-view house in Martha’s Vineyard.
So if you’re community minded, like soaking up foreign culture and taking your chances in someone else’s kitchen, and can get over the hurdle of trusting a stranger, then home exchanging could be for you.
Please comment below and share your experiences.
Parliament has yet to approve the new law protecting tenants
GENEVA Those arriving in Switzerland to work, and those who have lived here for years, know well how expensive it can be to rent a house or an apartment in the Lake Geneva region – and that’s if you are lucky enough to find something. Negotiating contracts and understanding tenants’ rights may prove equally daunting, but there may be some good news on the horizon.
Last week the Federal Council proposed a revision to Swiss tenancy laws to ensure greater transparency and allow tenants to challenge increases. Henceforth, an official form will be required for each new lease throughout the country stating the previous rent and the reasons for any increase. A government statement said: “the project aims to improve transparency in the rental housing market, with a dampening effect on prices without creating physical restrictions on the lessor.â€
Seven cantons, including Fribourg, Geneva, Vaud and Neuchâtel, already have such a requirement when a new lease is finalized, but the new official form, which can be downloaded from the internet, must be submitted before the lease is concluded. Another change provides for a one-year notification period for any rent increase to guard against sudden landlord increases in the early years of the lease. The Council’s statement said that rents can no longer be raised simply by citing improvements, whether in energy efficiency or otherwise, “unless the tenant has been duly informed in writing before the contract is concludedâ€.
Asloca, the organization representing tenants’ rights, is satisfied with the proposed revision, but Christian Dandrès of Asloca Geneva noted that in the Suisse romande it will affect mainly the cantons of Jura and Valais; the other four cantons have had this requirement for several years. “We are pleased that there will be greater transparency for tenants, especially foreigners, who may not understand their rights. While we in Geneva have access to free legal assistance in such matters, many tenants are nevertheless reluctant to take legal action to challenge an unjustified rent increase.†He also pointed out that other cantons, such as Valais, do not provide free legal assistance in such cases.
The revisions in the existing law apply to residential property only and must be approved by parliament. According to the official statement, the obligation to use the new formula to communicate rent increases “will apply regardless of the existence or not of a housing shortageâ€.
Not surprisingly, the housing federation for Suisse romande, Fédération romande immobilière (FRI), is not so pleased with the proposed revisions. “It is foolish to make it mandatory for the entire territory of Switzerland to use an official form indicating previous rent, even in cantons not facing a housing shortage,†it said in a statement. The FRI also finds that the proposal does not take into consideration the costly requirement for rental agencies and landlords to provide greater energy efficiency in order to meet the goals of Switzerland’s 2050 Energy Strategy.
Given that Geneva alone is predicted to require 50,000 more housing units by 2040, there is concern among some urban planners. Dr Sara Carnazzi Weber, a Credit Suisse researcher, told a British-Swiss Chamber of Commerce conference that what the Lake Geneva region needs to do to remain competitive is to have fewer administrative constraints that hinder new residential construction, in a market still marked by extreme shortage. The cantons and interested parties have until 30 September 2014 to address their concerns before the law is submitted to parliament.
As anywhere, trying to negotiate tenancy laws in Switzerland can be tricky. Disputes can range from the level of maintenance work the landlord is required to undertake to tenants refusing to pay rent.
Whether you are the owner or the renter, it is best to have an expert on your side before things get out of hand. The Lausanne-based Federation Romande Immobilière, www.fri.ch, is the country’s French-language homeowners association. The association acts on the national level as a lobbying group. It also has information on all aspects of home-ownership, including tenancy laws.
The Swiss Association of Tenants, Romande branch, can be found at www.asloca.ch. It will provide counsel to members who have questions about the obligations of renters and property owners. The site has a handy FAQ, in French, that includes questions such as when can a renter demand that wallpaper be replaced. (The answer is that the owner is obliged to replace it after a minimum of ten years if it is beginning to show wear.) The association has offices in each of the French-speaking cantons.
When things escalate and require intervention, either party can turn to their canton’s conciliation board. The boards, called Commissions de conciliation en matière de baux et loyers, comprise judges and other experts in tenancy law; their aim is to find an amicable solution to the disputes that typically involve contracts. The conciliation boards can also make legally binding rulings. Every canton’s board can be found via postcode search at the site www.mietrecht.ch.
A complete list of tenant and landlord associations around the country can be found on the federal government’s website at www.bwo.admin.ch
Jackie Campo
Your garden, terrace or balcony with its elegantly shaped box shrubs may be looking its best, but beware. The smart look of your home may be in jeopardy.
Your decorative box shrubs may become the unwitting host and victim of the box tree moth (Cydalima perspectalis), an unwelcome Asian invader with no natural predators. Originally a native of East Asia, the box tree moth was first seen around Basel in 2007 but is now ravaging box (Buxus) bushes in the cantons of Geneva and Vaud.
its voracious caterpillar
The caterpillars become active in the spring (around April, depending on the weather) and begin devouring the leaves. They are yellowy green, with a black head; older caterpillars have thin white and thick black stripes the length of the body and can grow up to 5 cm long. After four weeks, they spin a cocoon of among the leaves and twigs and pupate for about 10 days.
The box tree moth, an invader from Asia
The adult moth usually has white wings with a faintly iridescent brown border, although they can be completely brown or clear. The wingspan is around 4 cm. Once hatched, the moths find a nearby bush and lay their yellowish eggs in clusters of 15–20 on the underside of the leaves. The moths die after about eight days, but in the meantime the new caterpillars have been born. The species can produce up to four generations in a year.
A tell-tale sign of a box moth infestation is the white webbing covering the bush, reminiscent of a spider’s web, which the caterpillars produce over their feeding area. Other indications are brown leaves – often rather lacy when only the veins and stalks remain – and tiny greenish brown droppings. The caterpillars first feed on the leaves, then on the green bark of the branches, and the “bite marks†are very evident. Their voracious appetite can decimate whole groups of box almost before your eyes.
Pristine box wood hedges at Alden Biesen Castle in Belgium
Since the caterpillars begin their attack from the interior of the bush, it can take a while before any damage is visible – by which time it might be too late. It is important to check box plants regularly and thoroughly from the beginning of April to the end of September. If there is a weak infestation, the caterpillars can be picked off by hand and thrown away with the household waste.
For heavier infestations, the use of a pesticide is inevitable. Delfin (Bacillus thuringiensis) is an organic pesticide that works against small caterpillars. It has the added advantage of being bee-friendly. Other products, such as Karate Zeon, Lambda-Cyhalothrin 100 CS, Alanto Garden, Alanto Spray and Gesal Calypso, are effective against larger caterpillars but are more toxic, so necessary measures to protect bees and other wildlife need to be taken. You can also try pheromone traps, filled with poison, that attract the moths as they hatch. More drastic measures are called for if the plants are totally destroyed – rip them up and dispose of them.
Don’t forget!
Many garden centres are open on Sundays and public holidays in the spring so you can maximize gardening time. Check out individual websites for details.
If you are considering buying a place to live in Geneva or its environs, be aware that the purchase cost per square metre is expensive. Add to this the following requirements made of a purchaser and it becomes clear why, as we reported in a previous article, only 35% of Swiss residents own the property they live in despite very low interest rates.
Geneva average real-estate prices
**Propriété par étage (co-ownership by floor)
Financing the purchase of a property in Switzerland is more challenging than in most countries. Buyers must provide 20% of the purchase price from personal funds; 50% of this capital (10% of the purchase price) can be drawn or pledged from a Swiss pension plan (2nd and/or 3rd pillar). An estimated 4% of the purchase price must be provided from personal funds to pay notary fees, transfer duties and property taxes. A further estimated 2.5% of the total amount must be also provided to finance the mortgage note.
Buyers have to pay charges and for the upkeep of their property, which in an apartment in an old building can cost as much as CHF 1,500 per month. Estimates for annual charges are generally based on 1% of the purchase price. And if you are buying an apartment, it is quite possible that you will have to factor in the eye-watering cost of a buying or renting a parking space as well.
The Swiss real-estate process is a relatively unique one because it splits your mortgage into two ranks (rank 1: 65% and rank 2: 15%); rank 2 has to be repaid by your retirement date, rank 1 can remain open. This means that a lot of Swiss property owners never actually finish paying for their properties in their lifetime. Why? Tax optimization – mortgage interest is tax deductible.
Charles McHugo is the owner of Real Estate Advisory Service & Relocation
c.mchugo@advisory-service.ch
Some statistics on Geneva housing may help explain the lack of accommodation in the area.
A housing market is considered to be fluid when it has a vacancy rate between 1.5 and 2%, depending on who one speaks to. The vacancy rate column in the table below sets the stage. Geneva has been in a severe housing crisis since 2000, the first year since 1992 that the vacancy rate was lower than 1% (0.8%). The vacancy rate plummeted to a terrifying 0.15% in 2006; today it hovers between 0.3 and 0.4%.
Source: OCSTAT/OCP
This means that at any one time there are only between 600 and 900 residences available for rent or for sale in Geneva (villas, apartments and studios of all sizes included). This situation is partly explained by another statistic – since 1999 Geneva’s population has increased by 73,000 people, yet the number of residences has only increased by 21,251 units.
In the last quarter of 2013, there were 42,310 residential buildings in Geneva, 24,688 (59%) of them individual villas and properties. The 17,622 remaining buildings contain 198,351 residences two-thirds (67%) of which comprise small residences (studios and one-bedroom apartments); this, combined with the extremely low vacancy rate, helps to explain why it is not always easy to find residences with two or more bedrooms in Geneva. It also explains the city’s high property prices and the rents charged by landlords.
Rental costs do not include utility charges (hot water and heating) or parking. Increasingly, properties for sale come with parking places as an additional purchase.
The purchase cost per square metre in Geneva is expensive. Add to this the following requirements made of a purchaser and it becomes clear why only 35% of Swiss residents own the property they live in.
Financing the purchase of a property in Switzerland is more challenging than in most countries. Buyers must provide 20% of the purchase price from personal funds; 50% of this capital (10% of the purchase price) can be drawn or pledged from a Swiss pension plan (2nd and/or 3rd pillar). An estimated 4% of the purchase price must be provided from personal funds to pay notary fees, transfer duties and property taxes. A further estimated 2.5% of the total amount must be also provided to finance the mortgage note.
Buyers have to pay charges and for the upkeep of their property, which in an apartment in an old building can cost as much as CHF 1,500 per month. Estimates for annual charges are generally based on 1% of the purchase price. The Swiss real-estate process is a relatively unique one because it splits your mortgage into two ranks (rank 1: 65% and rank 2: 15%); rank 2 has to be repaid by your retirement date, rank 1 can remain open. This means that a lot of Swiss property owners never actually finish paying for their properties in their lifetime. Why? Tax optimization – mortgage interest is tax deductible.
Charles McHugo is the owner of Real Estate Advisory Service & Relocation
c.mchugo@advisory-service.ch
