Home affordability: Switzerland vs UK

How realistic is it to purchase a house or an apartment (in a building that’s no more than 4 stories) compared to the UK? Somewhere on the outskirts of the city or not a long drive away from the city (for example, Bern).
The reason I’m asking is because according to the statistics, home ownership in Switzerland is very low compared to the UK; factor in the stories about how difficult it is to even find an apartment to rent…
A little background: I’m in IT, a software developer (and not Google genius level either) - so not very wealthy. From what I gather, I could have a house in the UK. But I want to live in Switzerland. On the other hand, having my own home is very important to me.

Thank you in advance

UK has more of a home owning culture. Esp. with the advent of Assured Shorthold Tenancies. UK has one of the worst tenant security laws and so this is no surprise.

On the other hand, Switzerland has fairly strong tenant laws and property is expensive and requirements are high (20% down, affordiability checks) so here it is normal to rent. Again, given the environment, this is no surprise.

Of course, with post-GFC low interest rates, asset prices have been pushed up and people are now chasing property.

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It’s perfectly realistic, just probably a lot more expensive when compared with most of the UK. It’s also often dependent on residency status, i.e. most property is not available for sale to non-residents, and the “right” to buy is only granted to C permit holders.

Yes, there’s still a much lower proportion of owner-occupiers than in the UK, but it’s increased many-fold in the last 20-odd years. When I first moved here back in 2000 I started looking at property near Basel and was astonished to find that the total number of houses for sale at any one time in the whole of BS and BL was numbered in just a few hundred, such that te agents just sent you the whole list rather than full details of just those that met your criteria.

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Something to be aware of, you’ll be expected to have a 20% deposit available for any purchase.

Half of which can come out of your pension (not applicable in your case), half must be in cash.

If you can manage that, then it really pays to buy. You’ll pass on the debt to your kids (probably, it’s quite common I understand and is definitely the case for me) but you can save a bundle on interest vs rent payments.

In my case rent in my last place was 5 times my interest payments now.

This was my experience 5 years ago, perhaps things have change and someone can correct me, but I think it’s still the case.

The passing it on to kids isn’t the most important thing, which is simply that a large portion of most people’s lending is done via an interest-only mortgage with no requirement that the capital is ever repaid. For most working people there’s a cut-off point where this interest is tax-deductible against the tax you pay on theoretical income from your property, so it’s normal to have around 65% of the total cost on such a mortgage, with the rest on standard repayment model.

The figures vary dependent on individual circumstances, but in essence it makes the long-term cost of buying much lower than it might be, and much lower than paying rent.

Compare with UK endowment mortgages where you were required to invest in what turned out to be mostly dodgy investment policies vested to the lender, so your overall outgoings were much higher.

Indeed, just passing on something which I think is more common here but less so in the OP’s home country.

Certainly was the case personally.

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We are in the process of buying; there is now less competition for properties in our area and price range because interest rates are higher than 5 years ago, but on average, you save less (or choose to put more money down). Indeed, we did not manage to buy four years ago, but had no issues this time.

In our case, we will pay about the same in interest + maintenance as we do now in rent, for a somewhat larger property with a much larger terrace.

‘can’ being the operative word.

Rates were much lower indeed, but I fixed it when they were still less than today.

It’s something that’s always felt unfair somehow, that luck and timing can play such a big part. But it pays at least to understand the variables involved in such an exercise.

I was extremely naive before going through the process for instance. We had luck with the timing, the architect, estate agent and the bank, which I know now.

It can be really a lot to manage.

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Compared to the UK, there is no real housing market in Switzerland.

Expect to spend 2 years searching for a suitable property that is affordable. In fact you should spend 2 years researching what is going on before making the biggest investment in your life.

There are properties advertised (homegate.ch etc) but all to often there is a problem with them. Many sales are made by word of mouth (vitamin B). Also the further away from cities the cheaper properties become, as do one which require considerable refurbishing.

As mentioned, you need 20% of your own money minimum. Then the mortgage is in 2 parts. The first to be paid off, the rest can be interest only and never paid off.

Banks and insurance companies offer their staff up to 1% off mortgage payments.

I’ve owned houses here for 25 years and it was the best financial move I made. But you need to google Eigemeitwert and Grundstuckgewinsteuer.

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Two scenarios:
Let’s say you earn “a typical IT salary of100k” gross per year and are alone: definitely yes, but not necessarily a house, unless you factor in some commute of about 20-30min to a big city.

Same salary and a family of 4 - definitely not, all your money will be spent on rent, health insurance and food, no possibility to save for the 20% downpayment.

Buying a property in Switzerland: saving 20% for downpayment and taking a forever mortgage for the rest of life.

Yes. While there is imputed rental value, we don’t expect to pay off our mortgage… perhaps get it down to 50% by the time we retire, but repaying any more would not make financial sense the way things are now.

Hmmm… do I remember correctly that there was a long-running thread on EF about property/imputed rent/taxes and what did or did not make sense? I don’t want to get into that argument, we’ve looked at our particular figures and for now, this is the strategy that works.

Or you could have bought off-plan and the competition would have been less of a problem.

We tried buying off-plan last time and did not manage it then. Maybe we pulled the plug too early, but we were both fed up with how it was going.
We’re both happy with this outcome, though! This property is better than all of the ones we considered before, except the one for which we were outbid fair and square (it went for beyond what we could afford then or now).

Yes, I know. I won’t go into details, but the craziest thing we’ve been asked to do in order to even have a chance to be considered, mind! was to make a presentation of our family, insert pictures with our kids so that the (foreign) missus of the guy who has shown us the apartment could have had a say too (she wasn’t there). Basically - she had to like us, our money weren’t sufficient. I think HE liked us, but having such a wife…hmm, I doubt he had any say in this affair.
So I thanked him politely via an e-mail and declined. OH said a big No No this is plain wrong right after the visit; I was considering it…!! Jesus. :rofl:
Then I decided I too have (some) dignity. lol I mean it’s the seller’s market but still. I liked the apt but there are some limits beyond you cannot go without feeling crap about yourself.
They had like 20 visits in 10 days (as per his saying) so were probably very confident they’ll sell their house quickly. They decided to be picky.

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Oh yes, we experienced similar. Not this time, but having been through strange things makes you twitchy.

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Maybe it is Kanton-dependant, but we were able to buy our house with a B permit.

Not sure about the C permit thing, we’re B permit and up to age 59 my OH could have bought a place with a mortgage deal from his employer. Only reason we didn’t do it was because of the house that subsided we’re tied to back in the UK, 5 years ago we couldn’t sell it to free up the capital for a deposit. An Australian who was in the German classes I went to had a B permit and bought a house out in Baselland without difficulty.

Yes, it’s important to understand how purchased (and even some rented) property is view by the Swiss. Unlike the UK where people buy and sell like cars, the Swiss regard a home as something near holy!

Yours suitability for the existing neighbourhood will be considered when buying and buying is often for life. There is a development near us completed in 1973. Families moved in and are still there. Now the owners are well passed retirement, but are still living there even if they go to the care home or move to smaller flat, they would rather rent out their house than sell it!

Yes, the reasoning was they wanted to sell to a family just like theirs, because they had good memories there blah blah.
Another seller wanted potential buyers to wait one year after the purchase so they could move into their newly built house and keep living in the old one till then - because of one of their children’s school. (I don’t know how would that have worked with the bank btw)
These episodes make you hate people. :slight_smile:

Yes, it varies across the country, but I wasn’t suggesting that B permit holders could not buy, simply that in some places they may need to get some sort of permission to do so.

Specifically, the C permit gives you the right to buy in any canton/commune, not just the one that issued your permit. If you have only a B it would be a good idea to check out any local processes or rules if you’re looking to buy in another canton.

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