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Swiss to vote on first home buyers scheme

First-home buyers find it difficult to enter the market. Keystone

A people’s initiative to be put to a vote in March aims to provide incentives for Swiss citizens to save money to purchase their own home.

The initiative has been launched by the Swiss Association for the Promotion of Home Savings. It calls for the cantons to give tax breaks on savings accounts specifically destined for the purchase of a first home, or for renovations on houses to make them more energy efficient or environmentally friendly.

For proponents of the initiative – and of a second, similar initiative which parliamentarians have been debating simultaneously and which is expected to be put to a popular vote in June – giving tax breaks on savings accounts will help the middle class in particular buy their own home.

But those against the proposal say it will provide a boost to the minority of the population that can already afford to buy property but will do little to aid low-income earners wishing to purchase a house.   

Home owners

Switzerland has one of the lowest rates of home ownership in Europe. According to 2008 figures from the Federal Housing Office, 39 per cent of the population own their own home compared with 56 per cent in France and 69 per cent in Britain, for example.

A spokesman for the Federal Housing Office, in an email response to, said the most recent estimates put current home ownership levels at about 40-41 per cent of the population. This rises to 45.7 per cent when incorporating people living in a dwelling owned by one of the family group.

A study by the housing office in 2005 suggested several reasons for the low levels of home ownership in Switzerland. It said the rental market offered good returns over the long term making it attractive to investors while also representing reasonable value for tenants with average rents coming in at 20 per cent of a household’s income before tax.

The housing office also noted that the high numbers of foreigners living in Switzerland had a negative impact on home ownership levels, as did a quirk in history which meant that before 1965 it was not possible in any canton, except Vaud, to purchase a property in an apartment building.

Pros and cons

The initiative to be voted on in March would see first-home savings of up to SFr15,000 ($16,000) a year, and savings of SFr5,000 a year for “green” renovations, being exempt from income and wealth taxes.

The initiative has broad support from parties on the right of the political spectrum, who argue it will further reinforce the constitutional mandate to encourage home ownership. Neither the parliament nor the government have issued a recommendation for citizens to vote for or against it.

In December, the central committee of the Swiss People’s Party came out in favour of both initiatives aimed at raising rates of home ownership through dedicated savings accounts, while the Radical Party will recommend its party caucus support the issue at a meeting in January.

Pavlo Stathakis, a lawyer with the Swiss Homeowners Association which is the sponsor of the second initiative for a savings scheme for property aspirants, told the schemes will also provide the construction industry with a boost, thus creating jobs and increasing tax revenues for local governments.

But opponents of the initiative, including the Greens and the Social Democratic Party, say the measure will do little to help low-income earners purchase a house and will instead cause property prices to rise.

“Far from being family-friendly, this project will simply allow a handful of wealthy taxpayers to evade their tax obligations,” Social Democratic Party President Christian Levrat said in a statement. “Such devises are contrary to the constitutional principal of tax equality and profit a minority at the detriment of the entire population.”

Stathakis rejects the argument, pointing out: “People with a high income, most of them are already property owners. This is not for people who want to buy a holiday flat in St Moritz, it’s a scheme for first home buyers.” 

Pilot scheme

Stathakis says experience in canton Basel Country, where a similar scheme has been in place for more than a decade, shows that it is the middle class who stand to benefit.

But opponents argue home ownership in Basel Country has not risen substantially compared with other cantons, and savings accounts intended to supplement pensions – known as 2nd and 3rd pillar accounts – may be used for purchasing a house.

Stathakis says using existing 2nd and 3rd pillar savings accounts is forcing people into making a choice between owning a home and having enough money to live on in retirement and another option is needed.

“I think in the short term, the government fears a loss of tax income,” said Stathakis.

“With any incentive that you have, you always have people who use it who could afford to pay the full price. The Basel Country experience shows that it is mostly the middle class who use this.”

Evolution of Swiss home ownership as a percentage of the population.

1950: ca. 37 %

1960: 33,7 %

1970: 28,5 %

1980: 30,1 %

1990: 31,3 %

2000: 34,6 %

2011: 40 % (estimate)

Source: Federal Housing Office

The initiative for special tax treatment of savings accounts destined for a first home purchase for personal use or to finance energy saving or environmentally friendly renovations, was proposed by the Swiss Association for the Promotion of House Savings.

It calls for the constitution to be modified so that savings of up to SFr15,000 a year for a maximum of ten years are exempt from income and wealth taxes, and the interest earned on such accounts is exempt from income tax. These must be used for a first home purchase for personal use.

Savings of SFr5,000 would be subject to the same tax breaks when the purpose is to finance renovations on existing properties to lower energy consumption or preserve the environment.

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SWI - a branch of Swiss Broadcasting Corporation SRG SSR

SWI - a branch of Swiss Broadcasting Corporation SRG SSR