Nine expert tips on real estate
With a share of 44%, real estate was the largest component of Swiss household assets, totaling a market value of CHF 2 trillion in 2017, according to the Swiss National Bank. Real estate matters. Our nine specialists share their most important tips on how to get it right.
1. Gianfranco Bibbo, Mortgages Switzerland: "Don't forget the politics"
“We are experiencing a period of multiple regulatory and economic changes that affect the local real estate market. Immigration, restrictions on secondary residences as well as political initiatives such as the abolition of the imputed rental value or the urban sprawl initiative can significantly change the value of a property. In addition, there seems to be a trend towards digitalisation and risk sharing. My team is monitoring these trends on a daily basis.”
2. Beatrice Hodel, Real Estate Advisory: ”Build up a network as early as possible”
“Real estate is an emotional topic that opens up lots of possibilities. In order to take the right steps from the very beginning, I advise everybody to involve all interested parties and independent advisors early on. This way you will gain a realistic overview of your personal situation and are able to derive possible actions. This provides you with flexibility.”
3. Janwillem Acket, Chief Economist: “Keep a close eye on the interest rates”
“With interest rates at record low levels for the last ten years, we have gotten used to the fact that money is relatively cheap. But we shouldn’t forget that for example in the early nineties, the average rate for a 5 year fixed rate mortgage in Switzerland was above 8%, compared to a bit more than 1 % right now. The tides will therefore certainly turn one day. The question is when? The good news: It doesn’t seem that interest rates in Switzerland will rise significantly in the short term. But we should already be preparing for the change.”
4. Sandro Fischlin, Investment Partners Zurich: “Look at the big picture”
“One of the most important investment principles is to have a holistic view of your assets, including real estate. This determines how much real estate investments such as funds, REITS (Real Estate Investment Trust) or real estate shares can meaningfully complement your overall portfolio. It’s the overall asset allocation that matters.”
5. Nathalie Eser, Succession Planning Switzerland: “Familiarise yourself with your legal situation”
“The legal type of real estate ownership can have an important impact on the dissolution of the marital property for married couples in case of divorce or death. Cohabitating partners should also seek advice on the form of acquisition and financing. The transfer of properties to the next generation raises additional challenges with regard to tax and succession law. We advise our clients on all these legal aspects related to the acquisition and transfer of real estate.”
6. Sanja Obradovic, Mortgages German-speaking Switzerland: “Invest time to check every aspect of your property purchase”
“Today, the Bank has a mortgage book of just under CHF 10 billion worldwide. Our discerning clientele particularly appreciates our tailor-made mortgage solutions, our personal contact with mortgage specialists, our flexibility and our network. When it comes to a property purchase, you should carefully check every aspect of your decision: What type of property best suits your needs? What specific features should your ideal property have? How much mortgage do you qualify for and how much can you actually afford? Take your financial possibilities into account and don’t forget your personal well-being.”
7. Thomas Bamert, Pension Planning Switzerland: “Make the most out of your vested benefits”
“Vested benefits accrue if pension holders leave a pension fund before a pension claim has arisen (retirement, death or disability) and a transfer to a new pension fund is either not possible or only partially possible. For vested benefits in the current low-interest environment, mortgage loans can be used to replace low-interest-bearing investments with higher-interest investments and increase the level of investment diversification. A mortgage out of vested benefits offers tax benefits similar to those of mortgages with banks or insurance companies. The option to invest up to 100% of your vested benefits means that with appropriate vested benefit capital, substantial mortgages can be awarded, traditional mortgages can be replaced and mortgages can be increased.”
8. Thomas Bopp, Financial Planning: “Check the affordability of your home”
“Many homeowners would like to continue to live in their homes as they age. In order to achieve this goal, several risks and events should be considered. For instance, when a partner dies or becomes unable to work, financial bottlenecks may be unavoidable. An individual’s income also changes upon retirement. A smaller income in old age affects the affordability of the mortgage. It is therefore important to take preventive actions early on.”
9. Susanna Keller, Tax Planning Switzerland: “Be aware of tax savings opportunities”
“The holding and transfer of real estate may raise numerous challenges, but can also represent a substantial tax saving potential. We provide our clients with comprehensive tax advice and support relating to major renovation plans, rebuilding or refurbishment of their real estate investments. We also review their holding structure to optimise the after-tax return to their real estate portfolio. Last but not least, we explain how to plan the conveyance of real estate in a tax-efficient manner when it comes to gift and property gain tax.”
If you’re interested in finding out more, please contact us.