Switzerland’s government wants to tighten the Lex Koller rules, the federal law that limits foreign ownership of property, in a bid to curb speculation and ease a worsening housing shortage.

Named after Arnold Koller, a former Swiss minister, the law has long drawn a line between Swiss and foreigners, allowing the former broad access to housing while restricting the latter, especially in the market for holiday homes and investment property—foreigners with valid residency face fewer restrictions and Swiss living abroad may face some restrictions. The Federal Council now proposes to extend those controls. Buyers from outside the EU and the European Free Trade Association (EFTA) would need authorisation even to acquire a primary residence, and would have to sell within two years if they leave Switzerland.

Foreigners would also be barred from purchasing commercial property for rental purposes, while access to listed property companies and real-estate funds would no longer be routinely permitted. Quotas for holiday homes—already limited to designated tourist areas—would be reduced, and transactions between foreign owners would once again require approval, with each purchase counting against cantonal quotas.

Ministers say the aim is to refocus the law on its original purpose: shielding the domestic housing market from external demand. The draft measures are open for consultation until 15 July.

Yet the government’s own impact study suggests the benefits may be modest, warning that tighter rules could complicate large development projects and do little to resolve structural shortages.

The proposals come against a charged political backdrop. In June voters will decide on an initiative by the Swiss People’s Party (UDC/SVP) to cap the population at 10m, a plan the government opposes, arguing it would endanger Switzerland’s agreements with the European Union, including free movement of people. The tightening of Lex Koller thus serves a dual purpose: a measured policy response to housing pressures, and a signal to voters that concerns about population growth and foreign demand are being taken seriously without jeopardising ties with Brussels.

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Federal Council press release (in French) – Take a 5 minute French test now

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