Lex Koller: what do foreign investors need to know?

Switzerland has long attracted foreign investors with its economic stability, its neutral and predictable political system and its quality of life. The shores of Lake Geneva, Alpine resorts such as Verbier and Gstaad, and cities such as Geneva and Zurich are among the most sought-after destinations. But this appeal comes with strict regulation: the Lex Koller (LFAIE).

Adopted to protect the Swiss property market, this law strictly limits purchases by foreigners. Investors sometimes see it as an obstacle. For the local population, it is a safeguard, and for the authorities, a tool for regulating the market. Before starting a property project in Switzerland, an international investor therefore needs to understand the Lex Koller.

Switzerland particularly attracts foreign investors through its legal stability, its sound banking system and its taxation. Unlike other European countries, it offers both security for your wealth and a strong international image, which makes it a sought-after destination for high-end property investment. Without a strict legal framework, however, this demand could unbalance the market. That is the role of the Lex Koller, which makes Switzerland a special case. While other markets open up widely, the Confederation has chosen to set up barriers to protect its property stock and maintain a form of social fairness.

This article explains what the Lex Koller is, which purchases are possible, which restrictions apply and how investors can still take up the opportunities that exist. It also covers the law's impact on the market, the exceptions it provides for and possible changes in the coming years.

Understanding the Lex Koller

Origins and history of the law

The Lex Koller takes its name from Arnold Koller, a former Federal Councillor who championed the law in 1983. It follows the Lex Friedrich and the Lex von Moos, which already pursued the same aim: controlling property purchases by foreigners. Since it came into force in 1985, the Lex Koller has been amended several times, but its principle has not changed: foreigners not domiciled in Switzerland must obtain authorisation to acquire certain properties.

Main objectives: control and protect the market

The Lex Koller aims to:

• preserve access to housing for the local population;
• limit property speculation in tourist areas;
• prevent excessive financialisation of the residential housing stock.

In practice, the law reflects the political will to preserve the balance of a Swiss market where demand remains strong and supply limited.

Who does the Lex Koller apply to?

The law applies to individuals domiciled abroad and to foreign companies. Foreigners who live in Switzerland with a B or C permit can buy their main residence without restriction. Non-residents who want to acquire a second home or a rental property, on the other hand, are directly affected by the Lex Koller.

Types of purchase allowed

Main residences for resident foreigners

Foreigners settled in Switzerland can freely buy their main residence. The logic is one of integration: an expat who works in Geneva or Lausanne should be able to find a home without administrative obstacles linked to the Lex Koller.

Second homes: restrictions and quotas

For non-residents, buying a second home is subject to cantonal quotas. The home cannot exceed 200 m² of living area, and the plot is limited to 1 000 m². These quotas mainly concern tourist areas such as Montreux, Verbier or Crans-Montana. As authorisations are scarce, demand remains strong and prices high. To find out more, read our article Investing in a second home: pleasure or wealth strategy?

Commercial and industrial property: a possible opening

The Lex Koller does not limit the purchase of commercial or industrial property. Foreigners can invest freely in offices, hotels or factories. Switzerland thus stays open to investment that creates jobs and supports the economy.

Restrictions on foreign investors

Size limits and specific conditions

For a non-resident foreigner, the living area of a home is in principle limited to 200 m². The authorities sometimes grant exceptions, but they remain rare. This rule prevents foreign capital from buying large luxury properties and preserves supply for residents.

Building land and property development

As a general rule, the Lex Koller prohibits foreigners from acquiring building land. A foreign investor therefore cannot buy land in Switzerland to develop a residential project on it. The measure protects land, which is scarce, and limits speculation. Several property projects have already been refused for this reason.

Bans on residential rental property

Foreigners not domiciled in Switzerland cannot buy residential rental buildings. The rule protects the rental market from financialisation and prevents foreign investors from controlling a large share of housing in Switzerland.

Take an example: a foreign investor wants to buy a 350 m² villa on the shores of Lake Geneva. Even with a very high financial offer, the purchase would be refused, because the living area exceeds the limits set by the Lex Koller. The law makes no distinction according to the buyer's wealth. It sets precise criteria so that homes remain accessible to the Swiss.

Many investors discover these restrictions too late, after committing time and money to pointless procedures. Hence the value of getting informed and preparing your project in advance.

The authorisation procedure

The role of cantons and communes

Every application for a purchase by a foreigner is examined by the cantonal authorities. The communes also check that local quotas are respected. Practices vary: some cantons, such as Valais, are strict, while others, such as Vaud, apply the rules more flexibly.

Steps and timescales of an application

The procedure has three steps:

1. Submitting a complete file, with a description of the property and supporting documents.
2. Review by the canton, which grants or refuses authorisation.
3. Where there is doubt, consultation of the federal authorities.

A well-prepared file, with the help of a notary or a lawyer, can shorten the wait. Conversely, an incomplete file can extend the procedure by several months.

Impact of the Lex Koller on the Swiss property market

Effects in tourist areas (Alps, Lake Geneva)

In tourist areas, the Lex Koller has stabilised the market. Quotas limit the number of second homes sold to foreigners, which prevents prices from soaring out of control. The scarcity of authorisations nonetheless sustains strong demand and high prices, especially in the major resorts and on the Riviera.

Advantages and criticisms of the law

For its supporters, the Lex Koller protects residents and ensures fairer access to housing. Its critics, often from business circles, argue that it holds back the inflow of foreign capital and restrains the market. The debate remains lively and could weigh on future political choices.

The law also affects the international reputation of the Swiss property market. Some investors see it as a discouraging barrier. Others feel it makes a purchase in Switzerland more exclusive. As authorisations are limited, a second home in Verbier or Montreux also becomes a mark of social distinction.

The law has thus created a scarcity that further strengthens the market's appeal. It acts as a filter: only truly motivated, well-advised investors see their project through.

Exceptions and special cases

Inheritance and gifts

A foreigner can inherit a property in Switzerland, even if the property does not meet the conditions of the Lex Koller. Some administrative steps are still needed to make the transfer official.

Property companies and institutional investors

Going through a Swiss company is sometimes an alternative, but the law has built-in safeguards. A company controlled by foreigners cannot freely get round the Lex Koller. The rules vary according to the legal form and the share of foreign shareholders.

International comparison

Switzerland compared with its European neighbours (France, Austria)

In France and Austria, foreigners can buy freely, although some restrictions apply to farmland. Switzerland is therefore much more restrictive, especially for second homes.

Switzerland compared with more open markets (Canada, United Kingdom)

Canada and the United Kingdom were open for a long time, but some jurisdictions now impose specific taxes on foreign buyers to curb speculation. Switzerland, with the Lex Koller, has applied strict regulation for decades.

How the Lex Koller may change

Political debate: relax or tighten the law?

Voices are regularly raised calling for the Lex Koller to be relaxed, in order to stimulate foreign investment. Conversely, some parties and housing associations want it tightened to better protect Swiss residents.

Possible scenarios for the next 10 years

Two main scenarios are emerging:

• Targeted relaxation: some cantons could gain more room to attract investors to specific areas.
• General tightening: in the face of pressure on local housing, stronger restrictions remain possible.

In the current debate, some cantons are asking for more autonomy to adapt how the Lex Koller is applied to their situation. Tourist regions such as Valais or Graubünden sometimes wish to relax the rules to support their economy. Urban cantons such as Geneva or Zurich argue instead for tightening, to protect a residential market that is already under strain.

These tensions suggest that the future of the law will involve a compromise: keeping the federal principle, but giving the cantons wider room for manoeuvre. The debate remains open, and investors will follow every adjustment closely. You can read the official text of the Lex Koller (Swiss Confederation).

Advice for foreign investors

Prepare your purchase in Switzerland carefully

Before taking any steps, check whether the property you have in mind falls within the scope of the Lex Koller. This way you will avoid a pointless and costly procedure.

Surround yourself with experts: notaries, lawyers, specialist agencies

The Lex Koller is complex, and each canton applies it slightly differently. Specialist support is therefore essential. An agency such as CFMB helps foreign investors understand the law and select compliant properties. See also: Renovating before selling: good idea or false step?

Alternatives to residential property: a focus on commercial

To invest despite the restrictions of the Lex Koller, commercial property is an option worth considering. Hotels, offices or industrial buildings can be acquired without restriction and offer an attractive return.

Conclusion

The Lex Koller is a law that every foreign investor in Switzerland needs to know. Its restrictions are strict, but they leave options open: resident expats can buy their main residence, investors can turn to commercial property, and second homes remain accessible within the limits of the quotas. For an investor, the key is to understand the law before deciding. A property strategy is not limited to the purchase price: tax and legal regulation weigh just as much in the decision.