What additional costs are incurred when purchasing a home on top of the price?

The composition of the costs in detail

What are the additional costs of purchase?

In Switzerland, additional purchase costs consist of four main blocks. It is essential to consider each of these blocks individually, as they can vary greatly depending on the location of the property. As a rule of thumb, you should budget for an additional 3 to 5 per cent of the purchase price when budgeting for additional purchase costs.

The four pillars of additional purchase costs are:

• Transfer tax
• Notary fees
• Land registry fees
• Mortgage deed fees

1. The biggest chunk: transfer tax

When we talk about additional purchase costs, transfer tax is often the largest item. It is a levy charged by the canton or municipality when a property changes hands.

This is where Swiss federalism shows its most extreme side. The amount of these additional purchase costs varies greatly:

• Expensive cantons: In Bern, Vaud, Jura and Neuchâtel, the tax can be as high as 3.3% of the purchase price. For a house costing CHF 1 million, that alone amounts to CHF 33,000 in additional purchase costs.
• Cheap cantons: Zurich, Schwyz, Zug and Aargau do not levy any transfer tax on private sales or have abolished it altogether. This significantly reduces the additional purchase costs.

Important to know: In some cantons, buyers and sellers share this tax equally, while in others, it is paid solely by the buyer. Check the regulations in your target canton carefully to calculate the additional purchase costs correctly.

2. Unavoidable: notary fees

In Switzerland, a property purchase is only valid if it is publicly certified. To do this, you need a notary. Their fee is a fixed component of the additional purchase costs.

The calculation of these additional purchase costs depends on the notary system:

• Official notary (e.g. Zurich, Schaffhausen): Here, notaries are civil servants. The fees are fixed according to a tariff (often a percentage of the purchase price).
• Independent notary (e.g. Bern, Aargau, Basel): Here, notaries are self-employed. Although there are fee schedules, the fee can often vary slightly within the scope of the additional purchase costs.

For this part of the incidental costs of purchase, you should expect to pay around 0.1% to 0.5% of the purchase price.

3. Land registry fees: the formal act

In order for you to become the legal owner, your name must be entered in the land register. This administrative act incurs fees, which are also included in the additional purchase costs.

These fees are also regulated at cantonal level and are usually based on the purchase price. They are often in the range of 0.1% to 0.3%. Although this part of the additional purchase costs is often smaller than the tax, it can quickly add up to several thousand pounds when property prices are high.

4. Mortgage note fees: security for the bank

When you take out a mortgage, the bank requires security. This is entered in the land register in the form of a mortgage note. The creation of this mortgage note incurs costs that must be included in the incidental purchase costs.

The fees for the mortgage note are not calculated based on the purchase price, but on the amount of the mortgage (pledged amount). These additional purchase costs are usually between 0.1% and 0.3% of the pledged amount. Tip: If there is already a mortgage note on the property from the previous owner, this can often be taken over and increased at low cost. This saves significantly on additional purchase costs.

Regional differences and cost distribution

Additional purchase costs tend to be higher in western Switzerland (Romandy) than in German-speaking Switzerland, primarily due to higher transfer taxes. Those buying in the canton of Vaud often have to budget for twice as much in additional purchase costs as someone in the canton of Zurich.

Another aspect of additional purchase costs is cost sharing.

• Purchase agreement & notary: These additional purchase costs are often split equally between the buyer and seller.
• Mortgage note: This item of additional purchase costs is almost always borne solely by the buyer, as it relates to their financing.
• Transfer tax: Depending on the law or contractual agreement. Make sure to check in the purchase agreement who is responsible for which additional purchase costs.

When and how are these costs due?

Most additional purchase costs are due immediately after the transfer of ownership. Notaries and land registries issue invoices as soon as the entry has been made. As you cannot finance these additional purchase costs, they must be available in your account.

Misjudging the additional costs of the purchase can be fatal. If you have £200,000 in equity and the additional costs of the purchase amount to £40,000, you effectively only have £160,000 left for the down payment on the property. This reduces the maximum purchase price you can afford. So always deduct the additional costs of the purchase from your available assets beforehand.

Conclusion

Additional purchase costs are often overlooked as the "price after the price". A rule of thumb of 3 to 5 per cent of the purchase price is usually correct, but you must check the local tax laws. In high-tax cantons, additional purchase costs can determine the feasibility of your dream.

Don't forget: additional purchase costs must be paid from your own funds. If you're smart, you'll check before buying whether mortgage deeds can be taken over in order to at least reduce this part of the additional purchase costs. Transparency is key. Ask the solicitor for an early estimate of the total additional purchase costs.

If you need help calculating your budget and additional purchase costs accurately, Loft can help you keep track of everything and avoid unpleasant surprises.

Glossary

• Additional purchase costs: Collective term for all fees and taxes (notary, land registry, transfer tax) that are incurred in addition to the purchase price when buying a property.
• Transfer tax: A cantonal tax on the change of ownership of a property. It is often the largest item in the ancillary costs of purchase, but varies greatly (0% to 3.3%).
• Mortgage note: A security that serves as collateral for the mortgage. The costs of drawing up the mortgage note are included in the additional costs of purchase.
• Public certification: The formal act at the notary's office that makes the purchase contract legally valid and triggers notary fees as part of the incidental costs of purchase.
• Official notary's office: System (e.g. in Zurich) in which notaries are employed by the state. The additional costs of purchase are often fixed according to a tariff.