What service charges are there when buying a property?

The 3-point orientation

When buying a property in Switzerland, there are usually notary fees, land registry fees, property transfer tax, costs for the bond, bank fees and, depending on the situation, other ancillary purchase costs. As a rough guideline, buyers should plan for around 2% to 5% of the purchase price in addition to equity. The exact amount depends heavily on the canton, the purchase price, the mortgage, the bond and the contractual allocation of costs.

The principle: The purchase price is not the entire invoice

When buying real estate in Switzerland, many buyers first think of the purchase price and the necessary equity. However, the financing is not yet complete. In addition to the price of a house or apartment, there are additional costs, which can amount to several thousand to tens of thousands of francs, depending on the canton and purchasing structure.

These costs are called ancillary purchase costs. They arise from the legal processing of the purchase, the entry in the land register, the public notarization of the purchase contract, the transfer of ownership, the creation or transfer of debt certificates and, in part, through cantonal or municipal taxes.

It is important that banks often do not fully finance ancillary purchase costs through the mortgage. Buyers must therefore have sufficient liquidity. Anyone who only plans for the minimum 20% equity can quickly calculate too narrowly if notary office, land register, property transfer tax and debt certificate must also be paid.

Notary fees: The purchase contract must be notarized

A purchase of real estate in Switzerland is only valid if the purchase contract is publicly notarized. Depending on the canton, a notary's office, a deed person or an official office is responsible for this. The notary fees cover the preparation, review and notarization of the contract.

The amount of notary fees is regulated differently from canton to canton. Some cantons have fixed rates, in others the fees depend more on the purchase price, expenses or additional services. The question of whether the buyer and seller each bear half of the costs or whether a different distribution is agreed may also differ from canton to canton or contract.

It is important for buyers to know these costs early on. Especially with higher purchase prices, even small per thousand or percentages can result in noticeable amounts. When buying a property for CHF 1,000,000, notary fees can amount to several hundred to several thousand francs, depending on the canton.

Land registry fees: Change of ownership is registered

For buyers to become legal owners, the change of ownership must be entered in the land register. There are land registry fees for this. These fees also depend on the canton, the purchase price and, in part, on the volume of registrations.

The land register entry is central because it legally carries out the transfer of ownership. Without a correct entry, the purchase is not completely completed. In addition, rights and encumbrances such as easements, mortgages, residential rights or rights of way are also recorded in the land register.

When buying real estate, buyers should therefore not only read the purchase contract, but also check the land register extract. It shows which rights and obligations are associated with the property. The land registry fee is therefore not only an administrative additional cost item, but part of the legal security when buying.

Property transfer tax: varies from canton to canton

The property transfer tax is one of the biggest possible service charges when buying a property. It is incurred when ownership is changed and is collected in many cantons. The altitude varies considerably from canton to canton. Some cantons do not have a traditional property transfer tax, others charge several percent of the purchase price.

The tax is often paid by the buyer, but in some cases it is also divided between buyer and seller or regulated differently. Cantonal law and sales contract are decisive. Anyone who buys in a canton with a high property transfer tax must plan for significantly more liquidity than in a canton with no or low burdens.

Especially when real estate prices are high, this tax has a strong effect. With a purchase price of CHF 1,000,000, 1% corresponds to a charge of CHF 10,000. At 2%, it is CHF 20,000, at 3% CHF 30,000. That is why property transfer tax is an essential part of every purchase budget planning.

Debt note costs: financing via a mortgage

Anyone taking out a mortgage usually needs a bond. The bond serves as security for the bank and is entered in the land register. If there is already a sufficient bond, it can sometimes be adopted or increased. If not, a new bond must be drawn up.

The cost of the bond depends on the amount of the required bond and on the cantonal fee model. The higher the mortgage, the higher the fees for construction and registration can also be. In addition, notary or land registry fees may arise.

It is worthwhile for buyers to review existing debt certificates. If a seller has already registered a bond, it may be accepted. This can save costs. Whether this is possible depends on the bank, land register, type of bond and purchase processing.

Bank charges and financing costs

In addition to public fees, bank charges may also arise. This includes costs for checking the financing, issuing promises to pay, appraising the property, processing the mortgage or managing securities. Many banks charge such costs separately or integrate them into their offering.

Real estate valuation can also trigger costs. In the case of standard objects, some of it is carried out internally by the bank. For complex properties, special properties, investment properties or higher purchase price, an external estimate may be necessary.

Not to forget the potential costs of repaying existing mortgages. If sellers have to cancel a current fixed-rate mortgage early, an early repayment penalty may arise. This usually affects the seller, but can play an indirect role in price negotiations.

brokerage commission: Depending on the order and agreement

The brokerage commission is not always part of the additional costs for buyers. In Switzerland, the party that hired him often pays the real estate agent. In classic sales, this is often the seller. Buyers usually only pay a commission if they have placed a search order themselves or if a cost sharing has been contractually agreed.

Nevertheless, buyers should carefully check whether a brokerage fee, reservation fee or buyer commission is included in the purchase process. Cost structures may differ, particularly for new construction projects, investment properties or special marketing models.

For sellers, the brokerage commission is tax-relevant because, depending on the canton and evidence, it can be taken into account as sales costs in property gains tax. For buyers, it is particularly relevant if it is actually contractually owed.

Reservation payment and deposit

Many buyers make a reservation payment before the final purchase contract or a down payment later. These amounts are not classic service charges, but part of the purchase process. Nevertheless, they tie up liquidity and must be properly regulated.

A reservation agreement should clearly state whether and under what conditions the amount will be refunded. Situations in which financing has not yet been definitively confirmed are particularly sensitive. If you reserve prematurely, you risk losing an amount in the worst case scenario.

The down payment made to the notary's office or to a blocked account serves to secure the purchase. It will later be offset against the purchase price. However, buyers should ensure that payment, due date, and transfer of ownership are neatly coordinated.

Property change and tax consequences after the purchase

With the purchase of a property, the current tax situation also changes. Owners must declare the imputed rental value as income, but can deduct mortgage interest and value-maintaining maintenance in return. In addition, the property is included in assets, subject to cantonal tax values.

These ongoing tax consequences are not one-off ancillary purchase costs, but influence the long-term financial burden. Anyone moving from a rented apartment to their own home should therefore not only compare mortgage interest rates, but also plan for taxes, maintenance and service charges.

The distinction between value-maintaining maintenance and value-enhancing investments is particularly important. Value-maintaining costs can usually be tax-relevant; value-adding investments are more likely to have an effect on subsequent sales via property gains tax.

Buildings insurance and other insurance

Insurance is also required after the purchase. In many cantons, building insurance is mandatory or in fact necessary. It typically covers fire and elementary damage. Depending on the canton, it is covered by cantonal buildings insurance or private providers.

Household insurance, personal liability, building water, broken glass, earthquake risks or legal protection may also be relevant. In the case of condominium ownership, certain insurance policies are often regulated by the community, while others are taken out individually.

These insurance policies are more like ongoing costs than one-off ancillary purchase costs. Nevertheless, they belong in the overall planning because they become relevant immediately after the purchase. Especially for houses, insurance requirements are often higher than for rented apartments.

condominium ownership: Renewal funds and community expenses

When buying a condominium, special points are added. Buyers not only take over an apartment, but also a share of common components such as roof, façade, heating, staircase, lift, underground parking and the surrounding area. Renewal funds, utility bills and decisions of the condominium owners' association are therefore important.

The renewal fund is not a traditional purchase fee, but it is decisive for the financial assessment. If the fund is well filled, future restructuring measures are better protected. If it is too low, special contributions may be imminent. Buyers should therefore review protocols, statements, regulations and planned investments.

Current condominium owner contributions also influence housing costs. An apartment with a low purchase price can be expensive in the long term if there are high service charges, renovation needs or disputes in the community.

Renovations and immediate investments

Many real estate purchases trigger additional costs immediately after purchase. This includes renovations, painting, floor coverings, kitchens, bathrooms, heating, electrical installations, gardens, moving or minor adjustments. These costs are often underestimated because they are not included in the purchase price.

Older houses may require major investments: roof, window, façade, heat pump, insulation, pipes or energy renovations. Such costs can quickly reach five or six figures. Buyers should therefore obtain a technical inspection or at least a realistic renovation estimate before making a purchase.

Not every renovation can be financed with a mortgage. Banks differentiate between value-adding investments and pure maintenance. Anyone who wants to renovate after the purchase should therefore plan additional equity or a clear financing commitment.

Moving, set-up and connection costs

In addition to official costs, there are practical expenses. This includes moving costs, furniture, lamps, curtains, garden equipment, tools, Internet connection, changes of address, cleaning and minor purchases. These amounts seem small individually but add up quickly.

Especially when moving from an apartment to a house, new cost items arise. Suddenly you need lawnmowers, snow removal, garden maintenance, additional insurance, more furniture or technical equipment. Connection charges or adjustments to electricity, water, heating and telecommunications may also be relevant.

These costs are rarely part of the bank statement, but they weigh on liquidity. Anyone who no longer has a reserve after the purchase comes under unnecessary pressure due to such spending.

Ongoing service charges after purchase

The ongoing service charges of owning a home should not be confused with the one-time ancillary purchase costs. After purchase, there are regular costs for heating, water, electricity, sewage, insurance, maintenance, repairs, gardening, administration and provisions.

Banks often expect around 1% of the property value per year for maintenance and service charges in terms of affordability. For a house worth CHF 1,000,000, that's around CHF 10,000 per year. This amount is a long-term average. In individual years, it can be lower or significantly higher.

A reserve is particularly important for older properties. Anyone who only takes interest and amortization into account underestimates the actual cost of housing. A home is not just a purchase, but a long-term maintenance obligation.

Who pays which costs?

The distribution of costs varies depending on the canton, practice and purchase contract. Notary and land registry fees are often shared between buyer and seller, but can also be agreed otherwise. The property transfer tax is often borne by the buyer, but is regulated differently from canton to canton.

The bond usually concerns the buyer because it is related to the financing. Brokerage costs are usually paid by the contracting party. Reservation or project costs depend on the specific agreement.

The distribution of costs should therefore be expressly regulated in the sales contract. Buyers should not assume that an oral statement is sufficient. What is in the contract is decisive. Each cost item should be clearly understood before notarization.

Example calculation: Property for CHF 1,000,000

A rough example calculation shows the importance of service charges. Depending on the canton and financing, real estate for CHF 1,000,000 may result in additional purchase costs of around CHF 20,000 to CHF 50,000. This corresponds to approximately 2% to 5% of the purchase price.

This may include notary office, land register, property transfer tax, debt certificate and other fees. In a canton with a low property transfer tax and existing debt certificates, the costs are rather lower. In a canton with a high property transfer tax and a new bond, they can be significantly higher.

Reserves are also needed for relocation, insurance, renovations and ongoing service charges. Anyone buying a property for CHF 1,000,000 should therefore not only plan for CHF 200,000 equity, but also sufficient additional liquidity.

Common mistakes with ancillary purchase costs

A common mistake is trying to finance ancillary purchase costs with a mortgage. Banks generally finance the value of real estate, not every ancillary cost item. That is why buyers often have to pay these costs separately from their own funds.

A second mistake is the assumption that all cantons function in the same way. There are major differences, particularly when it comes to property transfer tax, notary fees and land registry costs. Buying a house in Zurich, Basel-Landschaft, Bern, Vaud, Geneva or Zug can trigger various service charges.

A third mistake is forgetting running costs. Anyone who only looks at purchase price and interest underestimates ownership. Maintenance, repairs, insurance and provisions are part of budget planning right from the start.

Practical recommendation: Calculate service charges before buying

Before signing a sales contract, buyers should prepare a complete cost overview. This includes purchase price, equity, mortgage, notary fees, land registry fees, property transfer tax, bond costs, bank charges, relocation, renovations and liquidity reserve.

In addition, you should obtain an estimate of the fees from the notary office, the bank or the cantonal office. Many cantons and notary offices offer fee calculators or tariff overviews. This makes it possible to avoid unpleasant surprises.

Anyone who compares several properties in different cantons should definitely include the additional purchase costs. A property with a slightly lower purchase price may end up being just as expensive as a property in a cheaper canton due to higher fees.

Conclusion: service charges can make up several percent of the purchase price

The answer to the question What service charges are there when buying a property? states: In addition to the purchase price, there are in particular notary fees, land registry fees, property transfer tax, bond costs, bank fees and, depending on the situation, other costs for reservation, valuation, insurance, moving or renovation.

As a rough guideline, buyers in Switzerland should plan for around 2% to 5% of the purchase price for ancillary purchase costs in addition to equity. The exact amount depends heavily on the canton, the purchase price, the financing and the distribution of costs in the purchase contract.

If you want to buy securely, you should therefore not only calculate the 20% equity for the mortgage, but also withhold enough liquidity for fees, taxes, bond, relocation and initial maintenance costs. A solid purchase plan does not end with the purchase price, but includes all one-time and ongoing costs of ownership.

Glossary of service charges when buying real estate

Additional purchase costs: Additional costs when buying real estate, such as notary office, land register, property transfer tax and debt certificate costs.

Property transfer tax: Cantonal or municipal tax when a property changes ownership.

Notary fees: Fees for public certification of the purchase contract and other notarial services.

Land registry fees: Costs for registering the change of ownership and other rights in the land register.

Bond: Mortgage that serves as security for the mortgage by the bank and is entered in the land register.