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EXPLAINED: The hidden costs of owning a home in Switzerland

Recently bought a home or just wondering if it’s all worth it? Here are some of the hidden costs you might face in Switzerland.

EXPLAINED: The hidden costs of owning a home in Switzerland
Be careful to check all hidden costs before buying a home in Switzerland. Photo by Firmbee.com on Unsplash

Switzerland is the only country in Europe where more people rent than own the home they live in.

READ MORE: Why do so many Swiss prefer to rent rather than buy their own home?

That may still be the case at present, but rising rents are pushing many people to consider whether buying a house or apartment is right for them.

Obviously the major cost you’ll face is the property itself, but other fees such as legal costs, agent fees, taxes and the like can make the purchase a lot more expensive than you might otherwise think.

For first time home owners, many of the costs come as a surprise. 

For costs relating to buying a home, please check out the following link. 

EXPLAINED: The hidden costs of buying a home in Switzerland

Here’s what you need to know about the hidden costs of owning a home in Switzerland. 

Cantonal and municipal costs

OK, so this is probably worth an article in itself, but Switzerland’s cantonal system means there are in effect 26 different cantonal cost sets. 

And while cantonal costs vary and municipal costs vary more. 

Sewage, electricity, gas, water, heating and garbage costs are just some of those which are levied at municipal level. 

Buying property versus renting in Switzerland: What is actually cheaper

This being Switzerland, some of these can occasionally be levied at cantonal level, so make sure you know about all of these costs – and who is actually levying them. 

One relatively simple tip is to get the lowdown from the previous owner, which means you don’t have to reinvent the wheel when buying a home. 

Shared costs

Another potential surprise is the way in which some costs are shared in Switzerland. 

Sometimes this can be relatively obvious, such as maintenance costs for a shared elevator or garage, but new arrivals to Switzerland are sometimes surprised by how heating bills can in some cases be partially shared by everyone in an apartment complex. 

Other costs may be shared, such as garden maintenance, snow clearing or costs for keeping things such as furnaces in compliance with new environmental regulations. 

Property taxes

Lifelong renters may be unaware of how many costs there are associated with owning a home. 

One of the major ones is property tax. All but seven Swiss cantons levy annual property taxes which can be anywhere up to two percent of the property value. 

If you’re living in Aargau, Basel Country, Glarus, Schwyz, Solothurn, Zurich and Zug you will be happy to know that you don’t have to pay any property tax – although these aren’t exactly the cheapest cantons when it comes to buying a home or costs of living. 

REVEALED: The six major Swiss cities where rents are falling

Eigenmietwert/Property rent value

For many arrivals from abroad, this can be a bit of a surprise, but the Eigenmietwert is a tax figure you should consider if buying a property. 

Whether you are buying for an investment or not, you might need to calculate the Eigenmietwert figure, which is a theoretical rent value for the property. 

While it will depend on a range of different things that your tax advisor or accountant is better placed to discuss, the Eigenmietwert fee will at least partially be offset by deductions, but it’s worth knowing about when you are considering buying. 

Perhaps unsurprisingly, the Eigenmietwert is unpopular among many people. Politicians have pushed legislation to call for its removal for decades – including as recently as September 2021 – but it remains remarkably hard to kill. 

Mortgage costs

Unless you bought the home outright, there’s a good chance you took out a mortgage in order to buy the property. 

Keep in mind that while mortgage rates tend to be lower in Switzerland, the repayment periods are longer. 

So while the longest you might pay your mortgage in other countries is 30 years, Swiss mortgages lasting between 50 and 100 years can be relatively common. 

What are some of the hidden costs of buying a home? Photo: Tierra-Mallorca-Unsplash

Maintenance costs

Maintenance costs are sometimes quite a shock for new buyers, who may be used to just calling the landlord every time a tap sprung a leak. 

This amount will of course vary greatly, but older properties are likely to have higher maintenance costs for obvious reasons.

Swiss financial organisation PostFinance recommends setting aside an annual one percent of the property value for maintenance costs.  

Keep in mind that some maintenance costs are shared, for instance for spaces in common, so you might not need to fork out for everything yourself. 

Top ten tips for finding an apartment in Switzerland

Reservation costs

Although renting is more popular than buying in Switzerland, there’s still plenty of competition for apartments. 

If you intend to buy the property, in some cases you will need to pay a reservation cost. 

If this is due, the way it is calculated will differ depending on cantonal/municipal rules. 

In some instances it is a flat fee, for instance 10,000 or 20,000 francs. In other cases, it will be a percentage figure – which can make the eventual fee much higher. 

This money is of course put towards the purchase price, but you will need it in cash which can be a bit of a surprise for some. 

Insurance

There are dozens of different types of insurance that you might need to pay as a home owner. 

Some of these are optional and others are compulsory, but they can add up to a high monthly amount. 

Insurance on the building can cost between 300 and 700 francs per year, while liability insurance is likely to be around the same. 

Many insurance companies offer packages for home and contents, so it’s worthwhile shopping around to see which has the best rates and what is specifically protected. 

As with any of our explainer articles, this report is intended as a guide only and should not take the place of legal advice. 

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LIVING IN SWITZERLAND

Reader question: How can I find a good lawyer in Switzerland?

Although you hope to never need one, sometimes you might have to seek legal advice in Switzerland. This is how to find it.

Reader question: How can I find a good lawyer in Switzerland?

When you move to a new country, including Switzerland, you have to look for a whole new network of professionals.

You may or may not have immediate need for the proverbial butcher, baker, and the candlestick maker, but sooner or later you will have to find other professionals, with the most essential one being a doctor.

READ MORE: What you should know about finding a doctor in Switzerland

Chances are you will also need, at one time or another, a legal counsel. That should in principle not be a problem as Switzerland has an abundance of lawyers — 7,317 currently practicing in the country, according to European data.

The question of how to find one that best suits your needs depends on many factors — for instance, what kind of legal advice you are seeking (estate planning, inheritance, divorce, etc), whether you speak the language of your region or need an English-speaking attorney,  and whether you can pay (the often exorbitant) fees, or need free counselling instead.

Speaking of fees, the hourly rates vary widely from one lawyer or legal practice to another, with some charging as little as 100 francs or as much as 1,000.

Much depends on the lawyer’s location — with the ones practicing in large cities like Zurich and Geneva being more expensive than their counterparts in small towns or rural regions  — the area of specialisation and general reputation — the more prominent the attorney is with a roster of famous or well-heeled clients, the higher fees they will typically charge.

An important thing to know is that, depending on the advice you are seeking, you may not need a lawyer at all, but rather a public notary; in Switzerland, these professionals perform many tasks that only attorneys can do in other countries, such as drawing contracts and establishing other legal documents.

Here are some tips on how to find a lawyer or a notary that best fits your needs:

Word of mouth

As with any other services, personal recommendations from people you know and trust are best.

This will spare you the effort of “investigating” the person, such as researching their credentials and feedback from previous clients — the due diligence process that everyone should undertake before hiring any professional.

Professional associations

If you don’t know anyone who can recommend an attorney, do your own research.

Professional organisations such as the Swiss Bar Association (SBA) and the Swiss Federation of Notaries are good resources, as they both allow you to look for professionals in or near your place of residence.

English-speaking attorneys

Many Swiss lawyers and notaries, especially those practicing in large urban centres where many foreign residents live, speak English.

But if you want to make sure yours does, the UK government put together a list of English speaking attorneys in Switzerland, which should help you with your search.

‘Free’ legal advice

In principle, all legal assistance comes at a cost, except for exceptional cases, which are defined by each canton.

SBA has a canton-by-canton list, where the designation “GRATIS JUDICATURE” stands for “free legal advice”.

However, there is also such a thing in Switzerland as “legal protection insurance” (Rechtsschutzversicherungen in German, protection juridique in French, and protezione giuridica in Italian).

It covers attorney and other associated fees if you undertake court action against someone, are sued, or simply need legal advice.

There are two different types of legal protection insurance — one specifically for traffic accidents and the other for all other matters. Sometimes they are combined.

Typically, this insurance covers costs of legal representation associated with contract disputes, employment, loans and debts, healthcare, housing, retail purchases, and travel.

The annual cost of this insurance, which you can purchase from practically every carrier in Switzerland, is minimal, especially if you consider how much you’d have to spend if you hired an attorney yourself.

Another benefit of these policies is that a lawyer will be assigned to you by the insurance company so you won’t have the headache of looking for one on your own.

This article provides more information about this insurance:

EXPLAINED: Why you need ‘legal protection insurance’ in Switzerland

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