Pick of the peaks

Graham Norwood takes the nursery slopes into the Swiss property market

Just five years ago, it was almost impossible for foreign nationals to buy property in Switzerland unless they agreed to live there for part of the year and pay local taxes, albeit at levels so low that they attracted mainly the super-rich. But Switzerland is opening up, at least a little. An annual quota of 1,440 foreigners can buy in selected cantons, or local authority regions, although their choice of property is restricted to tourist areas and, in particular, ski resorts.

Just five years ago, it was almost impossible for foreign nationals to buy property in Switzerland unless they agreed to live there for part of the year and pay local taxes, albeit at levels so low that they attracted mainly the super-rich. But Switzerland is opening up, at least a little. An annual quota of 1,440 foreigners can buy in selected cantons, or local authority regions, although their choice of property is restricted to tourist areas and, in particular, ski resorts.

Rules vary from canton to canton - in some you can buy only a chalet, in others only a house; in some cantons, overseas owners are not allowed to re-sell within five years, while in a few areas, such as Vaud, which includes the popular up-market resort of Montreux, there is no restriction on what a foreigner can buy or when they can sell. Whether for pleasure or investment, purchasers need to research the right location and get their finances sorted, too. Second-hand properties are often advertised on websites with English-language sections such as those on www.swissproperty.com and www.swiss-chalets.com, while a number of up-market UK agents are beginning to handle new-build sales.

Quite aside from the property costs, the transaction costs vary considerably. In some cantons the combined legal fees, land registry taxes and stamp duty add 2.5 per cent to a property; in others, it can be 5 per cent. In some places, non-Swiss buyers need special permission to purchase or build a large property with more than 3,000sq m of land. Other extras include switch-on fees for drains, water, telephone and cable TV, and, more unusually, a contribution by new-build buyers towards an atomic bomb shelter. This is no joke: Swiss law decrees that developers must levy a fee (which varies according to area) that goes towards communal shelters to protect against a nuclear blast.

Most ski resorts selling to foreigners are under construction or, if already established, are being expanded. For example Veysonnez resort, in the Valais canton, some two hours by car from Geneva or 100 minutes from Milan, has 4,000 ski chalets but will double in size by 2008.

The first chalets in the expansion programme will be opened this month; they are five minutes from the nearest ski lift and cost £125,000 to £260,000 each (through Chesterton Residential, 020-7629 4513). This is one of a growing number of "sale and leaseback" schemes in Switzerland. This obliges an owner to nominate a period of time for personal use of the chalet (in this case a maximum of six weeks per year). The owner then gives the property back to the developer to let out in return for a rent guarantee (here it is an annual 5 per cent of the original capital cost).

Purists may cavil when they learn the units are built in concrete and steel in six-storey mini-towers, but they look traditional enough when clad in fir half-logs. Off-plan buyers who get in early can also have a say on interior design, too.

Buyers can have a much bigger say if they choose a four-bedroom ski villa at the Les Mazots resort. Using a local builder, the villa is constructed to the buyer's specification in consultation with a local architect and according to canton planning and building laws. The village is close to highly regarded ski areas such as Villars and Les Diablerets, so the cost is accordingly high. A plot costs £450,000 and construction could take another £650,000 if it involves traditional methods.

But FPDSavills (020-7499 2644), which is marketing the properties in the UK, says build costs come down if buyers choose a prefabricated, all-timber version. Either way, the overall price includes connections for utilities as well as kitchen equipment, laundry facilities and a garage or covered parking place. The cheapest ski properties are apartments in five-storey blocks, such as those being built in the village of Anzère. It is 1,500m above sea level and has its own slopes but is close to the bigger and busier Crans-Montana. They are marketed by Chesterton and prices begin from just under £130,000.

The Swiss market is becoming sufficiently large to include retirement schemes for older buyers wanting to live near mountains, whether or not they continue to ski. Retirement Homesearch (0870 240 3258) has studios at the year-round resort of Leukerbad from as little as £54,500, rising to £260,000 for a three-bedroom unit. This resort, with about 1,600 permanent inhabitants, is close to the slopes but its main draws are private and public baths and treatment centres. Some four million litres of thermal water flows daily out of the ground into 22 indoor and outdoor pools.

To complement the country's more liberal development policy, the Swiss banks are also opening their doors wider. Britons buying holiday homes can obtain mortgages of up to 65 per cent of a property's value, sometimes for a 50-year duration, with interest paid at six-monthly intervals.

If buyers decide to rent out their chalet to visitors however - the only way to make money from your property, as capital appreciation is historically low - overheads can be high. Lettings agents routinely charge 20 per cent of income, while the intensive cleaning and maintenance in a heavily used resort may cost as much again.

These charges are usually tax deductible, however, when you pay the UK Inland Revenue its due. Owning a second home in Switzerland does not allow you to benefit from its much lower taxes but there is no capital gains tax, irrespective of which canton you buy in.

The Swiss authorities say they have no trouble meeting their 1,440-buyer annual quota, with demand highest from the Scandinavian countries and eastern Europe. So far British skiers have not applied in large numbers - apparently they prefer to hire, rather than buy, their way onto the slippery slope of Swiss chalet residency.