In February 2021 the Economic Affairs and Taxation Committee of the National Council surprisingly decided to include the initiative to temporarily prohibit the acquisition of business premises by persons abroad in the revised urgent COVID-19 Act instead of amending the Lex Koller through the ordinary legislative process. However, the Council of States and the National Council recently rejected the proposal. Despite this pleasing result, the topic remains on the agenda.
The Legal Affairs Committee of the National Council recently submitted an initiative that would temporarily prohibit the acquisition of business premises by persons abroad. The proposal claims that it will mitigate the negative impact of the COVID-19 crisis by preventing foreign investors from acquiring financially distressed Swiss companies at low prices. However, as foreign investors improve the sales conditions for such companies by fostering demand, the amendment would actually be counterproductive.
The proposed COVID-19 Business Rental Act has failed in Parliament and is thus off the table on a national level. The main arguments for the dismissal included the retroactive intervention in private law contracts and the legal uncertainty with regard to the question of whether the proposed act had a sufficient constitutional basis. However, the topic of COVID-19 rent reductions will likely lead to court decisions in the future.
The Federal Council recently submitted to Parliament a preliminary draft federal act on rent payments during the COVID-19 lockdown and opened the consultation procedure with the cantons, political parties and interested organisations. The act is a political decision and its constitutional basis is questionable. Further, a number of the suggested provisions leave room for improvement.
Numerous shops, restaurants and other facilities throughout Switzerland have had to close their businesses due to emergency regulations issued to combat COVID-19. This has led to the question of whether the tenants of such premises are still obliged to pay rent or whether they are entitled to a full or partial rent reduction. Despite many opinions having been expressed in the legal community and by politicians, this question remains as unanswered as it was at the beginning of the lockdown.
In response to growing market needs, several cantons have introduced an electronic procedure for building permit requests. The improved applications and increased transparency with regard to the documentation and the status of building permit procedures enable planners to carry out projects more efficiently. This is a major advantage, especially for institutional investors and project developers.
As of 1 July 2020, new provisions will apply to electronic access to land register data. Whereas current access to electronic land register data is highly restricted, the new legal provisions of the Federal Ordinance on the Land Register extend access to electronic land register data for specified parties. While the ordinance provides the basis for this extended access to land registers, it is up to the cantons to decide whether they wish to introduce it.
According to federal planning principles, the cantons and municipalities must guarantee free public access to lakesides and riverbanks. However, some cantons have not yet implemented the required legislation, not least because of objections from private landowners. This article outlines the applicable federal legal framework and highlights examples of its implementation by two cantons.
While it remains unclear when and on what terms Brexit will happen, the United Kingdom and Switzerland recently signed an agreement on citizens' rights which covers the purchase and retention of real estate by UK citizens in Switzerland and vice versa. After Brexit, UK citizens with a legal and actual Swiss residence will require a permanent Swiss residence permit (C permit). Otherwise, they will be considered persons abroad and will be subject to the Lex Koller restrictions.
Swiss voters recently rejected an initiative that aimed to stop urban sprawl by freezing the overall size of building zones and strictly limiting exceptions that allow building activities outside building zones. While supporters of the initiative considered the current legal regime to be insufficient, opponents argued that the proposed initiative was overly strict, unable to accommodate cantonal and regional differences and inadequate to address population and economic growth.
The Federal Supreme Court recently addressed for the first time whether the prohibition to build secondary homes on private property entitles landowners to compensation. The court ruled on the consequences of the withdrawal of a previously established right through an amendment of the law and clarified that the concept of private property is not a fixed notion inaccessible to change. There is no entitlement to a permanent definition of the concept of private property.
In March 2017 the federal government submitted to public consultation several proposals to amend the legal regime governing foreign investments in Swiss real property. The vast majority of the comments received rejected the proposed amendments. While the government subsequently dropped its plan to amend the Lex Koller and a related ordinance, certain pending parliamentary motions may impact the Lex Koller regime in the medium term.
Swiss legislation provides for adequate compensation for considerable advantages and disadvantages resulting from spatial planning measures. In particular, land that is newly allocated to a building zone substantially increases in value. Owners of such land will benefit from spatial planning activities without any contribution on their part. For reasons of fairness, these benefits are subject to a levy which is supposed to 'skim off' part of the added value.
The proposed second part of the Spatial Planning Act revision will give the cantons more flexibility with regard to construction activities outside building zones so that they can consider their individual needs more appropriately. An initiative to stop uncontrolled urban sprawl will oblige the federation, cantons and communities to freeze the present size of building zones and ensure that the zones grow no further.
Foreign investments in Swiss real estate are governed by a federal law known as the 'Lex Koller' and additional cantonal rules. The law restricts the acquisition of residential real property by non-Swiss residents. In a recent decision, the Federal Supreme Court decided for the first time that the sale of a vacation home between two non-Swiss residents is allowed only in designated communities. The decision stops a long-standing practice of the cantonal authorities.
An initiative adopted in 2012 led to a constitutional amendment limiting the total number of second homes in any municipality to 20% of the total number of residential units existing in the concerned municipality. Each municipality is obliged to keep an inventory of all homes and to update it by the end of each calendar year. The Federal Office for Spatial Development recently published the inventories of second homes for the first time.
Even though the federal Parliament recently rejected two motions to tighten the legal regime governing foreign investments in Swiss real estate, the federal government has now submitted a number of proposals that head in the same direction. Under the guise of closing loopholes and improving law enforcement, a substantial tightening of the legal regime governing foreign investments is under discussion.
Swiss environmental laws provide for certain requirements to allow new building zones and new buildings in areas that are affected by noise. To assess compliance with these requirements, noise measurements are required. In a recent decision, the Federal Supreme Court decided that a widely used method of measurement – so-called 'ventilation-window practice' – is not compatible with legal requirements.
The cadastre of public law restrictions on land ownership (PLR cadastre) is being developed by the federal government and the cantons. It is one of the three cornerstones of the Swiss cadastral system, besides the land register and cadastral surveying. Whereas information on private law restrictions can be obtained from the land register, the PLR cadastre provides information about the most important public law restrictions on land ownership.
Following the United Kingdom's EU referendum, the legal situation of UK citizens – particularly those living in Switzerland – is likely to change in relation to Swiss real estate. Until Brexit takes legal effect, UK citizens with legal and actual Swiss residence may be treated as Swiss residents and thus may acquire Swiss residential properties without restriction. However, this should change once Brexit takes legal effect.