Swiss Banking opposes tightening of the Lex Koller
The Swiss Bankers Association (SBA) opposes the tightening of the Lex Koller proposed by the Federal Council. The proposal fails to achieve its objective of reducing housing costs and instead risks undermining Switzerland’s attractiveness as a business location and investment activity in the real estate market, with negative consequences also for pension provision.
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No impact on housing costs and housing supply
The Federal Council intends to further restrict the acquisition of Swiss real estate by persons abroad. The SBA acknowledges the objective of alleviating pressure on residential property prices and rents. However, as the regulatory impact assessment already demonstrates, the proposed measures are not suitable for achieving this goal. This is primarily because the planned interventions are based on incorrect assumptions regarding the interaction of the relevant markets.
Rent levels are determined by the relationship between housing supply and demand, namely the development market and the user market. Prices for income-producing properties, on the other hand, are formed in the capital market, where real estate is traded, among other things, as an investment asset. The proposal targets this capital market, even though housing costs do not originate there.
The actual causes of rising housing costs lie in structural factors such as demographic developments, limited building zones and lengthy permitting procedures. Sustainable relief could therefore be achieved primarily through an expansion of housing supply.
Economically harmful interventions
The tightening measures proposed by the Federal Council will weaken the liquidity of the commercial real estate market, as foreign investors would largely be excluded as a group of potential buyers. In addition, they risk triggering the delisting of real estate funds, leading to a devaluation of holdings in the portfolios of pension funds, insurance companies and other property owners, with direct consequences for pension provision.
At the same time, Switzerland’s attractiveness as a business location would be diminished. The proposal would neither create additional housing nor lower rents, but it would jeopardize the capital supply to the real estate market as well as important investments in infrastructure, digitalisation and tourism.
The SBA therefore rejects the revision. It supports only the implementation of the motion submitted by Council of States member Martin Schmid, which seeks to facilitate the acquisition of staff housing for foreign-controlled hotel businesses.