The Swiss government’s proposal to tighten the Lex Koller, which restricts property purchases by foreigners, has exposed a sharp divide between political parties and business groups. Parties on the left and the Swiss People’s Party (UDC/SVP) argue that the reforms would close longstanding loopholes in the law, reported RTS. Business organisations and most centrist parties warn that the measures could deter investment and weaken Switzerland’s economic appeal.

Switzerland has long struggled with high real estate prices and an acute housing shortage. Roughly two thirds of the population rent and the rental vacancy rate was 1% in 2025. To help solve the problem, Switzerland restricts foreign ownership with a law known as Lex Koller. However, some claim foreigners continue to push prices up through the back door by investing in Swiss real estate funds. The federal council wants to stop this. It says the changes are intended to ease pressure on the housing market.

Under the proposal, people domiciled abroad would no longer be allowed to buy shares in listed residential property companies or units in regularly traded real-estate funds. Foreign buyers would also need authorisation to acquire commercial property unless it is used directly for their own business activities. Additional approval requirements would apply to third-country nationals purchasing a primary residence. The public consultation closed on Wednesday.

Supporters argue that the reforms would prevent foreign investors from circumventing the existing law through financial markets. Jacqueline Badran, vice-president of the Socialist Party (SP) and a member of the National Council, says overseas capital has helped push up land values, house prices and, ultimately, rents. The UDC/SVP shares that view, arguing that foreign investment has fuelled the rise in Swiss property prices.

Opponents dispute both the diagnosis and the remedy. The Swiss Working Group for Mountain Regions (SAB) argues that the measures would hurt alpine regions without easing the housing shortage. The Swiss Association of Municipalities likewise contends that tighter restrictions would do little to increase housing supply and could even make the problem worse.

The Green Liberal Party (GLP) says key elements of the proposal remain insufficiently justified. In particular, it questions how restricting foreign investment in commercial property would reduce pressure on the residential housing market. It also warns that the reforms could undermine Switzerland’s attractiveness to international investors.

The Centre Party shares many of those concerns. While it agrees that the housing shortage requires action, it argues that the main causes lie elsewhere—notably in slow planning procedures and restrictive building regulations.

Listed property companies have voiced perhaps the strongest objections. Several have warned that they could delist from the Swiss stock exchange if the reforms are adopted. The industry is now pinning its hopes on Parliament watering down the government’s proposals.

In any case the ongoing debate is unlikely to boost the supply of housing.

More on this:
RTS article (in French) – Take a 5 minute French test now

For more stories like this on Switzerland follow us on Facebook and X.