Situated in the Alps, Liechtenstein is a winter sport destination for many and, in the summer, a must for the dynamic mountain lovers. Whether you intend to purchase a property in Liechtenstein for investment or simply thinking to retire in a healthy beautiful environment, Liechtenstein is an inspired choice for the purchase of real estate.
Buying a house or a property in this small but charming country is a process that requires a number of mandatory steps. Foreign nationals will find that having proper assistance makes an important difference. Our team of lawyers in Liechtenstein who specialize in real estate law can assist investors who wish to purchase property as well as individuals who are looking to buy a home for personal use.
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Legal procedures for property acquisition in Liechtenstein
Being a small country, at the moment, Liechtenstein allows each year only 28 EU nationals to become owners of Liechtenstein properties and only after a minimum of three years residency. Foreign nationals, such as those working for multinational companies who have been subject to intra-company transfers may take up residence here provided that they have a valid work permit. In this case, foreign employees may find it advantageous to rent a property, a step during which our team of lawyers in Liechtenstein can also help.
Apart from the legal considerations, foreign nationals are also advised to keep in mind that the properties in the Principality can be expensive, according to their type, location, and facilities. When renting, the two parties may freely negotiate the amount, and the disproportionate rental price increased are not permitted.
The real estate purchasing regulations for foreigners are very strict and require good training in this country’s legislation. Therefore, when you intend to purchase a house or a piece of land in this country, our attorneys in Liechtenstein will be able to assist you from the preliminary counseling to the signing of the sale agreement. The strict requirements are precisely the reason why many investors choose to work with a local team of specialists, like our lawyers. The Principality of Liechtenstein has been granted this regime (the freedom to restrict property market access) particularly because of its small size. The restrictions apply to foreign nationals from all European countries, Norway and Iceland included.
If you are interested in acquiring property, the specialists at our law firm in Liechtenstein will help you with:
- valuation: determining whether the price of a property is appropriate or exceeding the mean of the real estate market;
- legal matters: informing you of the regulations on property acquisition by foreigners and helping you to conform to such regulations;
- due diligence: a regular checkup on whether or not your choice for investment hidden risks;
- others: working with our team is useful for overcoming the language barriers you might confront with in case you are not a German speaker.
Out of these steps, the valuation and the due diligence can be particularly important, especially since the local property purchase laws are strict. Investors will be willing to request specialized services in order to make sure that the property they decide to buy has a fair market price and it is in line with the applicable safety construction requirements as per its type.
Property due diligence checklist can include the following:
- Cadastral check: the property is checked for registration with the local cadaster, its plans and graphic representations are verified.
- Structural and construction check: the property is checked according to the structural safety standards and construction standards and an on-site inspection is performed, as needed.
- Administrative verification: the ownership of the property is verified, as well as any previous mortgages.
- Environment due diligence: when the property is required to comply with environmental regulations and laws; can also include a checkup for no sources of pollution on the premises.
Our attorneys in Liechtenstein are very careful in helping you overcome any potential misunderstanding you might encounter in the legal matters.
Laws for property owners and tenants in Liechtenstein
As previously stated, the law includes several provisions as to the rights and liabilities of both the landlords and the tenants. In our previous example, we mentioned the fact that there can be no disproportionate rental increases. This means that, in practice, the rent is usually only raised if the contract is concluded for a duration of more than two years and only proportional to the inflation rate. Another common practice is to ask for deposits when renting a property and a usual amount is the value of three month’s rent (as it was previously negotiated between the parties).
The Civil Code is a legal resource for the rights and liabilities of property owners. Our team of lawyers in Liechtenstein can provide detailed information on the landlord and tenant laws as well as the manner in which any disputes can be taken to court or, when possible, resolved through mediation or arbitration. In practice, disputes between the landlord and the tenant will not pass beyond the court of the first instance. When possible, it is advisable to avoid court litigation because of the costs involved and resort to arbitration, when the tenancy agreement includes such a clause.
Another legal issue that needs to be addressed related to property ownership is the one related to the tax law. Our team of lawyers who specialize in taxation issues can provide buyers with more information on the estate tax, which has progressive rates. There is no real property tax per se, however, the notional income on the property’s net value is subject to income tax.
Finding a property to buy in Liechtenstein
Finding real estate one can acquire in Liechtenstein is not difficult one has decided on the type of property he or she is interested in. There are plenty of houses and apartments one can choose between and the main aspects to consider can imply the cost and the closeness to various points of interest.
In most cases, the properties for sale are advertised by real estate agencies, but private sellers can also post their houses or apartments on the internet or in local newspapers. Foreign citizens interested in buying properties in Liechtenstein are advised to conduct thorough searches before deciding and they can choose any means they consider suitable to find the desired place to stay.
When using the help of a real estate agency, it could be simpler to decide on a restricted number of properties selected in accordance with the buyer’s indications.
Our lawyers in Liechtenstein can complete verifications with the Land Register and make sure the property is free of encumbrances and other legal issues.
Steps to complete when buying real estate in Liechtenstein
After finding the desired property, there are several steps to complete for the acquisition of the real estate. Among these are:
- signing a pre-sale contract that can provide for various requirements to be met by the buyer and the seller;
- paying a small portion of the property price to retain the house or apartment until the finalization of the procedure;
- singing the sale-purchase contract and transferring the rest of the amount to the seller’s bank account;
- paying the fees associated with the transaction and transfer of the property
- registering the property with the Land Register and obtaining the title deed with the new name on it.
The sale-purchase agreement should be drafted and signed before a public notary. Our law firm in Liechtenstein can also help in such matters. We can prepare the documents that need to be certified.
Also, foreign citizens interested in buying properties in Liechtenstein can obtain our help in setting up bank accounts here with the purpose of speeding up the transfer of the money after closing the arrangements and having the house or apartment they desired.
The agreement must contain specific information about the seller and the buyer, as well as the correct address of the property about to acquire.
Moreover, its surface and price at which it was bought must also be clearly stated in the document. We advise to pay attention to such particularities in order to have a valid document, as it needs to be filed with the Land Registry for registration of the new ownership title.
Financing your property acquisition in Liechtenstein
You can try to apply for a mortgage in order to facilitate your real estate acquisition or to support your construction work or the renovation of the property. If you satisfy the mortgage loan approval conditions, you must next choose between different types of rates: fixed or libor mortgage loan (libor mortgage refers to adjustable rate mortgage). First you should determine the type of loan which best suits your plans and to calculate the interest rate in advance, matters in which our attorneys in Liechtenstein have a vast experience, being able therefore to offer juridical counselling in any mortgage issue.
Moreover, it is important to find a bank which has flexible conditions and our lawyers in Liechtenstein can help you identify the attractive solutions offered by the banks. They can also advise you on how to organize your payments for a smooth amortisation and how to make the purchasing of your property in Liechtenstein an easy, stress free legal procedure.
According to a housing census in 2015, the statistics for occupied buildings were the following:
- Single-family houses: 6,283.
- Apartment blocks: 2,258.
- Residential buildings with mixed-use: 1,991.
- Others: 329.
As per the same housing census, owner-occupied dwellings were more numerous compared to rented ones.
What is going on in a Liechtenstein real estate due diligence process?
The due diligence process depends on the needs and requirements of each person, but in general, it follows a typical procedure:
- identification of the specific objectives of each person;
- gathering of the relevant information;
- wealth screening (an understanding of the financial capacities and buying willingness of the person);
- conduction of risk assessment;
- clarifying the terms, conditions and costs involved by the real estate transfer process.
Checklist for real estate due diligence in Liechtenstein
The attorneys in Liechtenstein provide in-depth analyses of the properties, in conformation with complex and detailed checklists. Their work focuses on items such as:
- Acquisition actions – elaboration of the purchase contract, preparation of a funding schedule and set-up of required bank accounts;
- Zone surveying by which attorneys check for eventual local development planning;
- Lease and tenant issues, which refers to leases and entitlements verification, reviewing tenant lease files and securing tenants against overcharges;
- Financial matters, which refers to the appraisal of utility bills and the comparing of expenses;
- Litigation and insurance;
- Physical property inspection and review, which implies the verification of the utility site plan, parking, building permits etc.;
- Governmental review, verifying zonal authorizations for occupancy;
- Financing matters in case you need mortgage consultancy and elaboration of loan documentation
Special conditions for foreign citizens buying real estate
Foreign citizens interested in acquiring real estate in Liechtenstein must meet certain requirements. The most important one is for these to have resided in the country for at least 3 years. However, it should be noted that Liechtenstein has strict immigration regulations imposed on both EU and non-EU citizens.
So, if you want to buy a property in the Principality, you must first secure a residence permit, a matter where our Liechtenstein lawyers can help.
Acquiring commercial property in Liechtenstein
When it comes to opening a company in Liechtenstein, the acquisition of real estate for commercial or industrial use is different from that of residential ones. Enterprises are allowed to acquire already built sites that can be used for carrying out their operations. However, one of the most common ways of owning real estate as a business in this country is through a holding company that can take over the immovable assets of a local company.
Industrial and commercial sites can also be obtained through mergers, acquisitions, and takeovers. However, these are subject to stringent regulations and must also comply with various commercial laws.
If you are interested in such large transactions, we recommend using the services of our law firm which can provide tailored assistance.
What are the fees to consider when buying a property?
The fees and taxes that need to be paid upon the purchase of a property in Liechtenstein are divided between the buyer and the seller. These also depend on whether the services of a real estate agency were used.
Here are the most important aspects to consider according to this site:
- the legal and notary fees are around 0.90% of the property’s value and must be paid by the buyer;
- if the buyer uses a real estate agent, a fee of approximately 3% of the property value must also be considered;
- trip costs must also be included if the buyer is a foreign citizen and comes into the country to complete the transaction.
Feel free to contact our law firm in Liechtenstein for further information and for a good, professional juridical experience of real estate acquisition in Liechtenstein.