Overview

real estate blog: Planned Tightening of Lex Koller

Walz Claudia und Godwin Jada, in: bratschi real estate blog, October 2024

With Motion 24.3961, submitted on September 23, 2024, a proposal has been made to tighten the so-called «Lex Koller», which regulates the acquisition of real estate by foreign non-residents. The motion, introduced by National Councillor Thomas Aeschi (SVP), aims to reverse the relaxations that have taken place over the past four decades regarding the acquisition of properties by foreigners and to stabilize real estate prices in Switzerland. A return to the stricter regime of «Lex Friedrich» (1984) is being considered as a potential solution.

The current Federal Act on the Acquisition of Immovable Property in Switzerland by Foreign Non-Residents (ANRA), also known as «Lex Koller», regulates the requirement for obtaining permission to directly or indirectly acquire real estate for foreigners without residence in Switzerland, EU/EFTA citizens as well as citizens of the United Kingdom of Great Britain and Northern Ireland residing in Switzerland without a B, C, or L residence permit, and third-country nationals residing in Switzerland without a C settlement permit.

 

The motion calls for amendments to the ANRA in several key areas:

 

1. Reversal of Relaxations: The relaxations made to the ANRA over the past forty years are to be revoked. This affects the acquisition of primary and secondary residences, holiday homes, multi-unit residential buildings, and commercial properties.

 

2. Expansion of the Approval Requirement: The new law should apply to all third-country nationals residing in Switzerland, as well as individuals without residence in Switzerland. One option also proposes including EU/EFTA citizens residing in Switzerland.

 

3. Mandatory Sale for Property Owners: Individuals who no longer meet the new criteria for acquiring real estate will be required to sell their properties within a specified period. Failure to comply will result in progressively increasing fines.

 

The implementation of the proposed changes requires a multi-step legislative process. After the Federal Council drafts a bill based on the motion, a consultation process follows, during which cantons, political parties, and interested stakeholders can submit their feedback. This feedback is then incorporated into the subsequent parliamentary debates in the National Council and the Council of States, which typically lead to amendments to the draft law. A national vote may also be held if a referendum is initiated.

 

The introduction of such changes could therefore take several years and face significant political and legal opposition.

 

One of the key issues will be the compatibility of the proposed extension of restrictions concerning EU/EFTA citizens with the Agreement on the Free Movement of Persons with the EU.

 

Additionally, the intended obligation to sell immovable property that was acquired at a time when the legal requirements were met, along with the threat of forced sales or fines, raises constitutional concerns. Despite the application mandate for federal laws under Article 190 of the Swiss Federal Constitution (Cst), such interventions are problematic because they affect the rights of property owners. Therefore, they must meet the high standards required for an intervention in the constitutionally guaranteed right to property (Article 26 Cst).

 

The potentially significant consequences of the proposed tightening for the Swiss real estate market will undoubtedly be a topic of discussion, particularly with regard to large projects such as luxury hotels, where foreign investments have traditionally played a major role.

 

The growing efforts from various political factions to subject foreign investments in Switzerland to stricter federal approval requirements through Lex Koller also highlight the importance of parliamentary debate on the aforementioned issues. Overall, the implementation of the motion requires a detailed constitutional review to ensure that the changes are compatible with both the Swiss Federal Constitution and the international agreements Switzerland is party to. Additionally, a thorough analysis of the potential macroeconomic and financial market implications is essential, particularly concerning real estate financing and price stability in the property market.

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Authors

Walz Claudia
Claudia Walz
Attorney at law
Zurich
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