Switzerland Debates Tighter Lex Koller Rules

Switzerland is considering a broad expansion of restrictions governing property purchases by people legally classified as persons abroad. The proposal covers primary residences, commercial buildings, holiday homes, shares in residential property companies and real-estate funds, but it remains a draft and has not entered into force.

Switzerland reviews foreign property ownership rules

The Federal Council opened consultation on amendments to Lex Koller, the federal law regulating real-estate acquisitions by persons abroad, on April 15, 2026. The consultation closed on July 15, allowing the government to review submissions from cantons, political parties, business groups and other stakeholders.

The proposal exposed a political and economic divide. The Social Democratic Party and Swiss People’s Party supported tighter controls, arguing that foreign capital contributed to higher prices. Business groups, the Centre Party and the Swiss Working Group for Mountain Regions opposed parts of the package. Several property companies raised the possibility of delisting if foreign investors were barred from buying their shares, according to SWI swissinfo.

The draft does not impose a blanket prohibition on all non-Swiss citizens. Lex Koller applies to the narrower legal category of persons abroad. European Union and European Free Trade Association citizens living in Switzerland, together with third-country nationals holding permanent C residence permits, are generally outside that category.

Third-country residents would need home-buying approval

A major change concerns citizens from outside the EU and EFTA who legally live in Switzerland with B residence permits but have not obtained permanent C permits.

Under the current framework, they can generally buy one apartment or single-family house for their own permanent use without separate authorisation, provided the legal conditions are met. The proposed revision would make the purchase subject to cantonal approval.

Owners would have to sell within two years after moving away or ceasing to use the property as their primary residence. That obligation would end if the owner obtained a C permit while continuing to occupy the home.

Local registration offices would be expected to inform the authorities responsible for property approvals when an affected owner changed residence. Purchasing a home would continue to provide no automatic residence or immigration rights.

A government-commissioned regulatory assessment estimated that roughly 1,051 primary-home purchases a year could potentially fall within the revised approval system. The figure is an estimate based on information from five cantons. It does not mean that 1,051 transactions would necessarily be blocked.

Commercial property investment faces tighter treatment

Persons abroad can currently acquire premises used for business activity without authorisation. These include factories, offices, shopping facilities, shops, restaurants, workshops, medical premises and hotels. The exemption can also cover property rented to another company for commercial operations.

The government proposes retaining permit-free purchases where foreign buyers need the premises for their own business. Acquiring commercial property purely as an investment and leasing it to third parties would no longer benefit from the same exemption.

The change could affect foreign insurers, pension funds, family investment vehicles and institutional owners purchasing Swiss offices, retail buildings, logistics facilities or hotels without operating a business from them.

Residential letting is already treated differently. Buying apartments solely to rent them out does not qualify as the acquisition of a permanent business establishment under Lex Koller.

Listed property companies face a foreign-investor ban

One of the most contested provisions would prevent persons abroad from buying shares in listed companies whose main purpose is holding Swiss residential property.

The restriction would also cover regularly traded units in property funds and shares in variable-capital investment companies holding Swiss real estate. A variable-capital investment company is a collective-investment structure whose capital and number of shares can change as investors enter or withdraw.

The regulatory assessment identified 16 listed Swiss property companies with portfolios worth approximately CHF58.5 billion. Eight were considered likely to be predominantly residential, with combined property portfolios of about CHF20 billion.

For ten companies studied in greater detail, registered foreign voting rights amounted to approximately 6.5%. Foreign capital was estimated at CHF1.2 billion in property companies and CHF5.3 billion in real-estate funds, producing a combined estimate of CHF6.5 billion.

The assessment warned that affected companies could respond by leaving the stock exchange. Delisting could reduce liquidity and transparency while making it more difficult to finance large development projects. The report also questioned whether the restrictions would materially reduce foreign control of Swiss housing.

Holiday-home quotas would be cut

The reform separately addresses holiday homes and serviced apartments acquired by persons abroad. The statutory annual ceiling would fall from 1,500 properties to 750.

Of that total, 150 permits would remain in a federal reserve. Up to 600 would initially be allocated among the 17 cantons participating in the quota system. The immediately distributed cantonal amount would therefore be 60% below the current national ceiling.

Valais could see its indicative maximum fall from 330 properties to 132, while Graubünden could drop from 290 to 116. Ticino’s allocation could decline from 195 to 78, Vaud’s from 175 to 70 and Bern’s from 140 to 56.

Every acquisition by a person abroad would count against the quota, including a resale from one foreign owner to another. Between 2016 and 2025, the annual average including foreign-to-foreign transfers was about 796 transactions.

Government calculations suggest that the reform could reduce purchases by at least 196 properties a year. The reduction could approach 300 if unused permits were not reallocated among cantons.

Mountain regions warn of weaker local demand

Foreign demand supports construction, renovation, hospitality, retail and municipal revenue in several Alpine and tourism-dependent areas. Regional organisations argue that reduced quotas could therefore affect employment and economic activity as well as property prices.

Opponents also note that the existing national ceiling was not fully used during the past decade, even after foreign-to-foreign resales were included. That raises questions about the need for a nationwide 50% reduction.

The proposal contains a concession for foreign-controlled hotels. Cantons could allow them to acquire employee accommodation without the standard authorisation. If the property ceased to be used for staff housing, it would generally have to be sold within two years.

Switzerland’s housing vacancy rate remains low

The debate comes as available housing continues to decline. Switzerland had 48,455 vacant homes on June 1, 2025, equivalent to a national vacancy rate of 1%. The total was down by 3,519 properties, or 6.8%, from a year earlier.

Geneva recorded a vacancy rate of 0.34%, Zug 0.42% and Zurich 0.48%. Fifteen cantons were below 1%. The number of vacant rental homes fell 8% to 37,194, according to official Swiss housing-market statistics.

The figures demonstrate tight supply but do not by themselves establish foreign investment as the principal cause. Land scarcity, lengthy planning procedures, construction costs, interest rates and zoning restrictions also influence housing availability.

Business groups dispute the likely benefits

Business organisations argue that the reform could reduce investment without producing a corresponding increase in affordable housing. economiesuisse rejected the draft, warning about collateral effects and a possible decline in available property.

The proposed restrictions on shares and fund units have attracted particular criticism. Public companies face stricter disclosure requirements than privately held businesses. Delisting could make ownership and financing less transparent without necessarily changing the ultimate owners of the buildings.

Supporters counter that land and housing are scarce resources and that Switzerland should prevent additional investment demand from intensifying price pressure in already undersupplied areas.

The proposal still faces parliament and a possible referendum

The end of consultation does not make the amendments law. The Federal Council must analyse the submissions and decide whether to revise the draft. It may then send a bill and formal dispatch to the National Council and Council of States.

If both chambers approve the legislation, opponents may seek an optional referendum. An effective date and implementing ordinances can be set only after the political process is complete. No official start date has been announced, notes PwC Switzerland.

Frequently asked questions

What is Lex Koller?

Lex Koller is the informal name of Switzerland’s federal law restricting real-estate acquisitions by persons abroad. Its application depends on residence status, nationality, property type and the purpose of the purchase.

Would the proposal prohibit foreigners from buying Swiss homes?

No. It would introduce additional approval requirements and restrictions for specific categories of buyers. Many foreign nationals legally resident in Switzerland are not classified as persons abroad.

What would change for B-permit holders?

Third-country nationals holding B permits would need approval to buy a primary residence. They would generally have to sell within two years after moving unless they obtained a C permit and continued living in the property.

Would the holiday-home quota fall to 600?

The proposed statutory ceiling is 750. Of that amount, 150 permits would remain in reserve and up to 600 would initially be allocated to cantons.

Would EU citizens living in Switzerland be affected?

Generally, no. EU and EFTA citizens legally and actually resident in Switzerland are not considered persons abroad under Lex Koller.

Does buying property provide Swiss residence rights?

No. Property ownership and immigration status are governed separately. Buying a home does not create an automatic right to live in Switzerland.

Have the new restrictions entered into force?

No. The amendments remain a proposal. They must still pass government review, parliamentary consideration and potentially a referendum.

As International Investment experts report, the proposal targets investment demand but may have only a limited direct effect on housing prices. The government-commissioned assessment does not demonstrate that restricting listed securities would substantially reduce foreign control, while it identifies risks to liquidity, transparency and development finance. Without faster construction, simpler approvals and a larger housing supply, tighter foreign-buyer rules may redistribute demand rather than resolve Switzerland’s structural housing shortage.