At less than 40 percent, Switzerland has by far the lowest home ownership rate in all of Europe. Thanks to historically low mortgage interest rates, more people could afford their dream house or flat. But many fail due to a lack of equity. Banks lend up to 80 per cent of the value of owner-occupied housing, so buyers need at least 20 per cent equity. Those who do not have enough financial reserves could increase their equity in this way:
Sell or pledge securities
Prepay or pledge the 2nd or 3rd pillar
Advance an inheritance or accept a donation
Borrow money from family or friends as a loan
What to do if the equity is not enough?
Especially young people and young families without the prospect of an inheritance or donation are stuck at this 20 percent equity hurdle. For them, home ownership remains a dream until they have saved or made provisions for enough money. For people with too little equity, there is an alternative that is still little known in Switzerland: rent-to-buy.
Rent-to-buy: Rent today, buy tomorrow
Rent-to-buy is a lease with an option to buy. You rent a house or flat now and acquire an option to buy later, usually in 5 to 10 years. For this, you usually need 10 percent equity, pay a monthly rent and save money during the contract period to take over the property at the end of the contract and finance it with a mortgage. The purchase price for the purchase option is credited at 100 per cent when you take over the property.
Thanks to rent-to-buy, even young people with less equity can afford home ownership.
Seven advantages of rent-to-buy
You need less equity.
You do not have to worry about financing.
You can secure your dream house or flat today and move in straight away.
You set the purchase price today and benefit from rising property prices.
You are flexible and decide at the end of the contract whether to take over the property or not.
You pay the same amount for rent every month, regardless of the interest.
You pay less rent than for a comparable house or flat.
Good to know
Because you do not buy the house or flat until later, you may not finance Rent-to-buy with money from the 2nd pillar (pension fund) or 3rd pillar (voluntary pension scheme).
How much does a rent-to-buy cost?
The costs vary from provider to provider. As a rule, you must expect these housing costs during the rental period:
As a rule, 10 percent of the purchase price for the purchase option
A fee for the entry in the land register, depending on the canton, in the canton of Zurich for example 1 per mille of the purchase price
Rental prices
Service charges and maintenance costs
Premium for liability, glass and window insurance
Premium for loss of earnings insurance
Premium for death insurance
Good to know
If you take over the house or flat after the end of the contract, you will have to pay all the land registry fees and the transfer of ownership costs.
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What are the minimum requirements you have to meet?
Fast alle Mietkauf-Anbieter stellen die gleichen oder ähnliche Mindestanforderungen:
In der Regel 10 Prozent Eigenkapital (für die Kaufoption)
Keine vollzogenen Betreibungen, keine Pfändungen, keine Verlustscheine
Schweizer Staatsangehörigkeit oder dauerhafter Wohnsitz in der Schweiz (mindestens B-Bewilligung)
Volljährig und urteilsfähig
Geregeltes Einkommen
Die Wohnkosten (siehe «Wieviel kostet Mietkauf?») sind tragbar (Budget)
Good to know
In order to assess creditworthiness, many providers require an extract from the criminal record, a statement of debt collection proceedings, a current salary statement and the last tax invoice.
Tip
For clarification, rent-to-buy providers need the same documents as banks for financing. Therefore, have your sales documentation ready when you contact a provider.
For whom is a rent-to-buy suitable?
Rent-to-buy is suitable for all those who earn well and can easily pay the housing costs (interest, amortisation as well as additional costs), but (still) have too little equity. This means above all for young people or young families. Thanks to rent-to-buy, they can soon move into their dream house or flat even without much equity instead of saving for years and then not finding a suitable property. Rent-to-buy thus closes the time and financial gap until traditional home financing with a mortgage.
What does the rent-to-buy contract regulate?
The rent-to-buy contract regulates all important points for the later purchase:
The right of purchase is registered in the land register.
The purchase price for the right of purchase is fixed and may not be subsequently increased.
The rent is fixed for the entire term of the contract and may not be increased subsequently.
The right of purchase is inheritable or transferable to third parties.
The purchase price is (partially) repayable under certain circumstances if the tenant does not exercise his right to purchase.
Good to know
If the tenants wish to exercise their purchase option, a normal purchase contract will be drawn up on the basis of these conditions, which must be notarised.
Rent-to-buy is a rental contract with an option to buy: you rent a house or flat now and acquire an option to buy later.
Tip
Rent-to-buy contracts are rather rare. That is why you should seek legal advice before signing so that nothing is forgotten and you understand all the clauses.
What is special about rent-to-buy
The rent-to-buy provider is the owner until the tenant exercises his right to buy and takes over the property. That is why the provider is registered as the owner in the land register.
The tenant has a right of purchase, which he can exercise, but does not have to. The right of purchase should be entered in the land register.
With most providers, the tenant can withdraw from the contract at any time with a notice period of 12 months. With the termination, the claim to the right of purchase expires.
With most providers, the tenant can sublet the property if he wants to move during the contract period but exercise his right to buy after the contract ends.
With most providers, the tenant can sublet the property, but needs written consent to do so and is liable for any damage caused by the subtenant.
The landlord cannot terminate the contract as long as the tenant fulfils his financial obligations.
Do you dream of owning a house or a flat, but fail because of the equity hurdle? If you earn enough to pay the housing costs, you could realise your dream with just 10 percent equity thanks to hire purchase. Find out how much is possible with just a few details.
