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Ski resort decision opens chink in property rules

The resort of Champéry suffers from a proliferation of luxury secondary residences swisscastles.ch

Non-resident foreigners can now invest in a luxury hotel apartment complex in the Valais resort of Champéry and avoid current restrictions on property sales.

This content was published on July 10, 2008 - 08:42

The justice ministry has approved most of a SFr100 million ($92.7 million) project, where suites and apartments can be sold to non-resident foreigners without special authorisation.

Champéry, which is part of the Portes du Soleil ski area, suffers like many Swiss resorts from a proliferation of luxury holiday chalets, which are rarely rented out and only inhabited a few weeks a year.

Keen to develop its hotel sector to tackle the problem, the Swiss village presented in January a project with the French group Les Maisons de Biarritz to develop a four-star ecological holiday complex, comprising three hotels (600 beds), 15 chalets (300 beds or 51 apartments) and a spa.

According to Jean-Michel Cina, Valais economics director, Bern's approval of the three hotels and flexibility over existing property rules is extremely important to combat the problem of "cold beds".

"This is really historic," he declared. "It's a first in Switzerland. This is a strong signal which will give fresh impetus to Switzerland's tourism economy."

Well-known in France and other European countries, apartments that are bought and rented as part of a holiday complex are an interesting investment and provide resorts with valuable long-term rental accommodation. But up to now, this has not been possible under the traditional application of the Swiss legislation, known as Lex Koller.

Cina is convinced that alpine tourist regions across Switzerland will now benefit from this decision.

"It's the first time the justice office has changed its practice... and opens up new possibilities of finance for the creation of hotels via the sale of units, apartments and suites," he told swissinfo.

For the past two years he has been lobbying the tourism and business sectors, as well as ex-cabinet minister Christoph Blocher and Justice Minister Eveline Widmer-Schlumpf about the positive economic impact of these new accommodation structures for tourist regions.

The search for new hybrid accommodation is also starting to take off in Swiss-German regions. In the ski resort of Laax, developers are planning a similar "shared ownership" project, known as Rocks Resort, comprising 160 apartments and 75 hotel rooms for sale and rental.

Chalet question mark

Despite the positive decision on the hotels, the justice office intends to appeal against the 15 new chalets.

In view of their distance from the three hotels – 800 metres – lack of facilities and absence of a common hotel structure, Bern said the 300 beds do not correspond to current legislation governing property sales to non-resident foreigners.

"They are rather holiday apartments, which are subject to the Lex Koller law," said justice ministry lawyer Karsten Karau.

The French hotel group is far from dismayed, however.

"It's a great victory. We always knew that it would be difficult. We have the feeling today that we have opened a chink of light," said Michel Dupey, the president of Maisons de Biarritz.

The options concerning the chalets remain limited, however: an appeal to the Federal Court, adapting the project to meet justice ministry guidelines or using the reserve allocation of cantonal authorisations for foreigner buyers.

And despite promising to build the new complex according to the strictest ecological building standards, the local authorities and hotel group will also have to contend with an appeal against the 15 chalets by the Swiss Heritage Society.

Attractive development option

Foreign property developers are frequently attracted by the possibilities of Swiss mountain resorts but they often find themselves in conflict with Swiss law.

While the idea of abolishing the so-called Lex Koller is widely accepted, parliamentarians say that any change to the legislation would have to be accompanied by strong measures to avoid speculation.

In March the House of Representatives asked the government to review its plan to lift restrictions on property sales to non-resident foreigners.

A majority voted in favour of asking cabinet to consider whether minimum residence requirements should be applied to property sales as well as how to combat the so–called "cold bed" problem – holiday residences that stay empty most of the year.

The government believes there is no reason to fear that foreign interests would gain too strong a foothold in Switzerland and that current restrictions inhibit the development of a totally free market.

swissinfo, Simon Bradley

PURCHASING SWISS PROPERTY

The law restricts the acquisition of property in Switzerland by foreigners, by foreign-based companies or by Swiss-based companies controlled by foreigners. As a rule, they need an authorisation from the competent cantonal authority.

This is only granted if conditions set out in federal and cantonal legislation are met. An authorisation to purchase a holiday home may be granted under certain circumstances to a person living abroad.

Property ownership in Switzerland does not entitle a foreign person to a residence permit.

Nationals of the European Union or of the European Free Trade Association zone living in Switzerland with a residence permit, other foreigners entitled to settle here and Swiss-based companies controlled by anyone with the appropriate residence or settlement status do not require an authorisation.

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Tough rules

Property purchases by non-Swiss living abroad have been restricted since 1961 to avoid speculation and rising prices. The cantons are in charge of applying the law.

In 1972, sales were temporarily suspended because the market was considered to be overheating.

In 1974, conditions become stricter and the federal authorities have more oversight, but the freeze on sales is lifted.

The number of authorisations in tourism zones is restricted in 1979, a measure confirmed by voters in 1984.

In 1995, voters refuse to restrict authorisations to holiday residences, real estate brokers and investments.

Since the late 1990s, the law has become less strict, with fewer criteria having to be met by foreigners or foreign firms.

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