Lex Koller and its challenges

The federal law on property purchases by foreigners, also called “Lex Koller”, is a law aiming, as its name indicates, to regulate the purchase of real estate in Switzerland by people established abroad. Although it has been revised several times since its introduction in 1983, it is once again at the core of debates.

Indeed, the federal council has recently opened a consultation process concerning the revision of the Lex Koller, where a tightening of it is proposed. It would like to include among others, the following two elements:

• Prohibit the holding of shares in Swiss real estate companies by foreign investors
• Prohibit the acquisition of commercial buildings in Switzerland by foreign investors, unless a permit is granted (people who already own such objects would not be required to sell).

If such decisions should be taken, this could lead to important turmoil on the real estate equity market. We are however in the beginning of the consultation process and these are for the moment only suggestions. Moreover the association of real estate investors (VII-AII) believes that the federal council can be convinced to give up these elements.