Swiss Federal law prevents foreigners from acquiring residential property in Switzerland without a permit. The December 21, 2007 decision by the Swiss Federal Council granted The Chedi Andermatt an exemption from the terms of the Lex Koller Act and is giving international buyers the rare opportunity to buy residential property in Switzerland with no restrictions. Accordingly, foreign and Swiss buyers are now granted identical, unrestricted rights and obligations to buy residential units within the Chedi Andermatt project.

Due to Switzerland’s political and economic stability, the country’s real estate market is one of the most stable in the world. The high quality of life, the ability to innovate, and the stable legal framework make Switzerland an attractive location. Access to a skilled workforce is a decisive advantage to business. The Swiss economy is stable and characterised by low unemployment. Swiss real estate prices have been rising for many years. This development is based on foreign immigration figures, predominantly skilled workers from neighbouring countries including Germany. Switzerland’s attractiveness leads experts to anticipate continued high population growth that will impact positively on the Swiss real estate sector. Furthermore, due to its intrinsic value as an intangible asset, real estate offers investors an excellent protection against a rise in inflation.

As a result of the debt crisis and the uncertain economic and financial situation in Europe, the Swiss franc has gained a reputation as a strong currency. Switzerland is regarded as a secure and stable financial centre with a functioning political infrastructure. While inflation is rising in Europe, the expectation is for low inflation to continue in Switzerland. The strength of the Swiss franc enables government securities to be offered at very low interest rates and mortgage financing at very favourable interest rates.

Arrangements have been made with leading Swiss banks to provide financing to qualified buyers at attractive interest rates. The typical loan to value (LTV) rate is 50-60% of the purchase price, although the actual LTV is determined at the bank’s discretion.

In 2012, the Swiss electorate adopted the ‘second home initiative’ that imposes a restriction on the quota of second homes to a maximum of 20% of all residences per commune. If the current proportion in a community already exceeds this figure, building permits will not be granted for second homes. The Chedi Andermatt project is excluded from the scope of the second home initiative. Hence, residences in The Chedi Andermatt represent one of the last possible opportunities to acquire a holiday apartment.

Swiss residential real estate has appreciated on a very steady basis since 2002, attesting to the safe nature of Swiss residential property. The case for investing in Andermatt is promising as prices are expected to reach the prices of other exclusive alpine destinations in Switzerland such as St Moritz, Gstaad, Zermatt, and Verbier. In addition, the exemption to Lex Koller and the second home initiative are both important factors that will contribute to value creation over time. We expect units to generate 2% net yield before taxes and expect a yearly capital appreciation of 3% to 5% in the next seven years once the Andermatt Swiss Alps development is completed and has reached its full potential.

Owners of a residence at The Chedi Andematt are liable to pay income tax on the net rental income of the unit. If a residence is not earmarked for participation in the rental programme with the hotel, the basis for evaluating income tax is the so-called notional rental value (estimated at approx. 2.5% of the purchase price). If a residence is participating in the rental programme, the rental income as well as the value of the owner’s personal usage forms the basis for the income tax calculation. The income tax rate, depending on the individual tax situation of the buyer, is approximately 27%. An annual property tax of approximately 0.2% is levied in Andermatt on the value of a residence less liabilities. In addition, an annual charge for second homes of CHF 14 per square metre net-living space will be levied annually, unless the buyer rents out the unit on a permanent basis to The Chedi Andermatt hotel and uses the unit only for a short-term. The capital gain (difference between sales price and purchase price) will be subject to Swiss real estate capital gains tax of approximately 11% to 31% depending on the capital gains amount and the respective holding period.

The Chedi Residences Andermatt are organised as a ‘Home Owner’s Association’ and each owner owns a share of the entire building complex and an exclusive right to use his/her own property. Property owners are bound together via the home owners association, which sets out the rules of the ‘house/resort’. The owners have complete control over the building and at the annual meeting each owner has the opportunity to appoint an Administrator who will deal with the day-to-day running of the property. The annual meeting will also set the budget for the forthcoming year, vote on suggestions made by the Administrator and owners, and review any problems.

The acquisition of real estate in Switzerland offers no automatic entitlement to a residence permit. Non-EU citizens, aged 55 or more, are eligible to obtain a residence permit (‘pensioner permit’) if they fulfil certain criteria such as close relations to Switzerland, make Switzerland their main residence, are not gainfully employed in Switzerland or abroad and have necessary financial means. Another way to obtain a residence permit is to open a business in Switzerland. Applications for work and residence permits for self-employed non-EU nationals are assessed on the basis of whether the relevant economic sector is already oversupplied and whether the new business will create jobs for Swiss citizens. Such applications need to be discussed beforehand with the cantonal authorities.

Depending on the nationality of the visitor, a Schengen visa may be required to enter Switzerland. Schengen visa normally are valid for stays for up to 90 days over a 180-day period. A multiple-entry visa can also be obtained and allows for multiple stays in one or more Schengen countries, as long as the total length of the stay does not exceed 90 days in a given 180-day period from the date of the first entry. The stay may either be continuous or spread over several visits within the validity period of the visa, but not more than what is authorised by the visa. A multiple-entry visa may be valid for one year.

The acquisition of a residence in The Chedi Andermatt is subject to a land registration duty of 0.2% on the purchase price, up to a maximum of CHF 10,000. Notary fees will amount to a maximum of 0.2% on the transaction price, with CHF 2,000 as a minimum.

Owners will be responsible for a resort maintenance fee of approximately CHF 140 per square meter plus individual utility charges for consumed water electricity and heating. The resort maintenance fee shall cover the charges, fees and cost and expenses payable for the maintenance, management, security, insurance, upkeep, renewal, repair and replacement of the common areas comprising also the common utility charges. It also includes the access to the public hotel facilities in the extent provided to hotel guests, but excludes the consumption of food and beverage, goods or service.

An official Swiss notary from the Canton of Uri will act on behalf of both the buyer and the seller. The notary will draw up the deed of sale and all documents required for the transfer of the legal ownership and has the duty to protect the interests of both parties. By signing a power of attorney, the buyer entrusts the appointed notary’s office with the duty of ensuring that all legal formalities are respected, particularly the registration of the deed in the Land Register and releasing the acquired property from any previous mortgage. The purchase of an apartment becomes valid once the owner is registered in the Land Registry.

The buyer will be able to participate in the rental program proposed by The Chedi Andermatt hotel. The hotel deducts for costs of booking, marketing and commissions 30% of the gross rental revenue. The residence owner will receive 60% of the net rental revenue of his/her residence.

To make a reservation for a Chedi ResidenceAndermatt, a potential buyer will be asked to complete and sign a reservation form, at which point a reservation fee of 3% of the total purchase price is due. The reservation fee will be refundable within 8 weeks from signing the reservation form, minus a handling fee.

The total price minus the booking fee is payable upon notarisation of the purchase contract.