House of Weird – Observations On Buying Property In Switzerland

Aside

I don’t own property in Switzerland, let’s start with that disclaimer. But from time to time, when we’re walking past homely-looking chocolate-box cottages by the lake, we do like to daydream about the possibility. To which end, in recent months, I’ve begun to do a little research.

39_4fb34aa2b66c83.08543171_700x393_meet_xlMy first learning won’t blow off any socks: the property situation in Switzerland is very different to that of the UK.

In Blighty you can invest in bricks and mortar and reasonably expect annual gains of a good few percentage points. You could, before bankers bummed the world that is, also get a mortgage very easily indeed. That mortgage would likely be either a traditional repayment loan (principal and interest) or a risk-hugging interest-only type loan.

None of this really applies in Switzerland.

Although I’m still far from being able to explain all the ins and outs of it—the learning curve is slowly climbed with a housing market so complex and everything explained in French—I have deduced at least a little.

Here are just some of the bizzarities I’ve uncovered:

• You won’t make a killing in 5 years, à l’anglaise, unless you grab the deal of the century. Property values in Switzerland typically only rise in line with inflation, which means around 1% per year.

(Over the last decade or so, in popular regions such as on the shores of Lake Geneva/Canton Vaud, 1% a year has probably been too low. However during the last five years this growth rate has seemingly slowed again.)

• Despite this slovenly growth, house prices will melt your mind.

Prices are roughly similar to, or maybe a little higher than, those in Central London (at least in Canton Vaud where we’re located).

So for a new 3-bed, ground floor 1539 sq ft apartment in our village (2 mins from the shore of Lake Geneva), you might consider a tidy payout of 1,450,000 Swiss France or around GBP 1,018,000.

• In Switzerland you don’t necessarily have just one mortgage. You might have one. You might have two. Even 3.

Why? It’s complicated…

The short version – it’s all about how you want to balance your costs and risks.You don’t want to know more. Really you don’t…

You do? Really? Okay, the other version – Unlike in the UK, you cannot pay extra on a Swiss mortgage, except for at the very end of its term. Really. No overpayments. Secondly, before we go on, most mortgages are fixed interest.

Now… this means that if you had just one mortgage, of ten years say, you’d be stuck at an interest rate that could start to drive you insane (little percentage points make a big different if you’ve borrowed millions!). And you wouldn’t be able to throw that inheritance you received at this debt for years – so the capital you owed, and its interest, would stay annoyingly the same.

Therefore by having 2 or 3 mortgages of different terms (2 years, 3 years and 10 years say) you can spread out when each loan finishes. In other words, you’ll always have a loan that’s due for renewal (note: renewal not pay off) sometime soon.

With these more regularly renewing loans, you can then use that chunk of inheritance to pay a little more when one of your mortgage terms ends, reducing the capital you owe. And if interest rates have fallen in the meantime, you can benefit from renegotiating a better rate for the next 2/3/10 year stretch (or not, depending on rates).

In short, you’ve more opportunities to get better interest rates, and more chances to actually dent the capital owed a little.

Still with me? My brain aches just typing this.

However many mortgages you end up with, these will likely be a mix of interest-only and repayment loans. The biggest of these loans will be interest-only, so that your monthly premiums remain do-able.

• Forgot to mention – you can deduct taxes based on what you still owe on your  mortgages.

This is apparently – to those in the know (read: those trying to sell you mortgages) – well worth being in millions of Francs’ worth of debt for. I remain unconvinced, but must confess to not having not done the sums.

• But conversely, home owners (including those with mortgages) pay a form of tax that is calculated based on what you’d pay to rent that same property. The reason for that particular policy, I’ve realised, I have zero chance of ever understanding.

• You need a deposit of 20% to get a mortgage. Considering the prickly prices, that’s no  minor ask.

This sum can be, to a sadly ever-decreasing degree, covered by your Swiss mandatory pension pot (the sum you and your employer’s contributions have built up over time). Although of course you’ll then have virtually no Swiss pension to see you through your mercurial years, unless you’ve saved elsewhere.

• Should you pay your house off – in 70 years’ time say, considering the proportion of your debt you actually repay every year – you’ll pay Wealth Tax on its value.

• Ask a Swiss person and they’ll often tell you that prices are seriously over-inflated and should come down. They were saying this 5 years ago.

• Curiously, despite all of the above, if you want to be able to afford a little house with a garden, on a pair of normal working-professional Swiss salaries, buying is perhaps your only chance of affording such an abode. What with the prices of renting…

In conclusion, owning the property you inhabit in Switzerland appears to come down to this: paying the interest on your mortgage (and a tiny part of the principal) is effectively the equivalent of paying rent. On the plus side, with a mortgage, you’ll be able to get more house for your money than you would paying a landlord. And you can get deduct some of your debt from your taxes. Over in the Cons column, your financial life will be the bank’s. And you likely won’t ever actually own your home, you’ll just live in it. That’s just the mind shift you’ll just have to make if you want in.

Daddy Daycare – 11 Lessons in 2 Weeks

“In every real man a child is hidden that wants to play.”
Friedrich Nietzsche

Since we had a childcare gap to fill recently, I decided to lumber into the breach and look after Monkey Boy for two weeks straight.

That’s nothing compared to my better half’s six-month stretch of course. But since I’m a man and therefore expected to be utterly useless at this stuff, it’s officially a big deal.

Cue fourteen exhausting and illuminating days, the likes of which I’ve never experienced. Firstborn survived, physically at least. And so did I. A qualified success then.

Here’s what I learned:

1. Stay-at-home parents, be they mums or dads (although they’re almost exclusively the former in La Suisse it seems), do a bloody amazing job.

2. As a working Dad, what you think you know about your partner’s daily child-caring life is pretty far removed from reality.

3. Between prepping baby’s next meals and running around tidying up the last session’s crap when he sleeps, it doesn’t stop. For a minute.

(And to think, you used to ask why your wife didn’t read or snooze during the breaks. The shame!)

4. Without wanting to sound preachy (although I’m going to), in my view this eye-opening project should be compulsory for new Dads.

The reasons why are numerous:

  • It’s choc-full of quality bonding moments
  • You’ll appreciate your other half a whole lot more (which she in turn will love you more for – hey free brownie points!)
  • You’ll learn about yourself – from your patience levels and fecal tolerance to singing improvisation skills and lower back strength – whether you want to or not
  • You’ll stop thinking about work.
  • You’ll actually have a lot of laughs. I know, laughs… with a non-speaking, static, dribbling machine. Who knew?

5. A sedate tempo is required when looking after a child over the course of several days or weeks. You can’t simply pack each day full of exhausting ‘Waahey!‘ activity-fests. No human could survive that amount of exertion.

6. It’s the little moments. A close-up stare or wonky waltz here, an ear-tugging or dribbly hug there.

7. Poo is the least of your worries. It’s only poo. Just keep your mouth shut.

8. What Mini-Me finds ear-burstingly hilarious one day (example: lifting an old rug and holding it over your head with a dramatic “Ta-da!”… I know, I know, what?) will likely bore him to tears the next.

9. Strollers and fully laden supermarket trolleys do not a winning combination make.

10. It’s not difficult to see how such a single-focus existence can, despite being utterly joyous at times, lead to a parent feeling truly alone. When baby is asleep or screaming the house down and you’re too tired to work out why, you can easily feel like the sole surviving adult trapped in a concrete box. Parent and baby groups suddenly make a lot of sense.

11. I miss it already.

childcare switzerland

When I run the country…

Perhaps one of the most interesting things about living in a foreign land, for me at least, is getting your head around how your home and adopted societies are alike and differ, how they function – what works, what doesn’t, and the attitudes your average person in the street has towards such things.

For example, pesky foreigners coming here and getting up to all sorts of dreary badness is a complaint of some folks in both the UK and Suisse, but there are also a host of differences, not just in language of course but in terms of democracy (i.e. direct or indirect), defense (military service or not) and so on.

Moreover…. oh…. sod it. This half-assed intro is, honestly, just a ruse to allow me to post what I just scribbled down at lunchtime – some general rules on how I will  run the country when, one fine day, everyone realises that I’m by far the best person for the job. So long as the hours aren’t too long, I can bring dogs to work, and Facebook isn’t blocked in the office. Here goes…

MATT’S COCK-EYED MANIFESTO FOR A COUNTRY:
Loosely based on what he understands about England and Switzerland (which arguably isn’t much)

General

  • The Cabinet – must be 50/50 male/female by law, with a prudent and genteel biscuit-making lady in charge of Defence. (This is most definitely not a joke. Love Biscuits, Hate War.)
  • No seafood. Horrid stuff.

Law & Order

  • No capital punishment. Instead Abba-listening punishments (if a listener likes Abba, then capital punishment may be allowed).

Work

  • 6 weeks holiday (excluding public holidays) per year for everyone. If you’re over 50, you can have 8.
  • Every top civil servant must swim or jog for at least 2 hours a week (to clear their heads and remove their bellies).
  • Out of work for a year or more? Do what job we give you or lose all benefits (which, I nearly forgot, were 50% of your last salary up to a maximum rate I haven’t bothered to calculate). Decide against it? You can come back and change your mind at any time.

Tax & Finance 

  • Flat tax (deal with it), but none for those earning under 10K (GBP) or so. (This mightn’t have been thought through fully.)
  • No public pensions in future (i.e. from those starting work now onwards). You must pay min. 10% of your gross salary into your own scheme by law.

Education

  • No hardcore religion-based school of any kind. You can worship what you like, where you like, but leave the kids out of it.
  • Any kid who fails those exams they do before age of 18? One year’s military service.
  • Every kid must study (or have lessons in… that sounds easier) a foreign language, from first school to leaving school.
  • Same as above with cooking (extra credits if they create dishes using my pasta recipes site).

Health

  • Haven’t really thought about the medical / state insurance side of things – that’s my perogative as a benign dictator. Definitely no uplifting boob jobs paid for from public purse though, with some obviously occasional exceptions.
  • Drugs = legalised and taxed. Less criminals, more cash, likely the same amount of stoners.

Or you’re out…!