Selling building land and plots: what should I look out for?
Selling a plot of land requires a lot knowledge and can be time consuming. Comparis explains the basic steps of the sales process and indicates where it’s worth getting professional help.
05.07.2023
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1. Selling land: how do I determine its value?
Do you want to sell your building land in Switzerland? First determine the value of the property. This way you won’t end up selling your property for less than it’s worth. The property value is influenced by various factors.
A first indication is the reference land value. At least every two years, each municipality publishes the average value from previous land sales.
However, the reference land value is of only limited benefit in determining the value of your property, as other factors also affect the price.
The market and therefore the land value are not stable. Depending on the situation, the price may vary.
For example, in the canton of Zurich (link available in German only), the average purchase price per square metre in 2012 was 1,141 francs. In 2022, the average price per square metre was 1,754 francs.
The better the location and infrastructure of a property, the higher its value.
In a city with good access to public transport, you can achieve a higher selling price for your property than in the countryside without a bus connection.
The larger the plot, the more it is worth. A well-formed plot of land is worth more than an irregularly shaped one. This is because irregularly shaped plots of land make it difficult to build buildings.
If the plot is well positioned, you can ask for a higher price. For example, a property with a lake view is worth more than one with a city view.
Easements are encumbrances on a property. There are two different types (link available in German only):
Positive easement: the owner must accept certain encroachments on their property rights
Negative easement: a restriction on property rights
Examples of easements are for right of way or building setback. For example, a right of way entered in the land register allows for public passage through a private property.
A setback easement allows a building to be constructed closer to the property boundary than what the local building and zone regulations allow. The land register lists all easements.
Undeveloped land can be divided into four basic categories. Sales prices depend on the categories and use (residential, commercial, agricultural and forestry or mixed form).
Prospective building land
These are plots that are to be developed in the future. The construction and land-use plan of the municipality provides information on the use of prospective building land. There is no guarantee that prospective building land may be developed.
Building land
The property is designated as building land. There is a legally valid development plan. However, connections for electricity, water and wastewater are not present.
The property may only be built on if these connections are available. The local municipality provides information on the timetable of development work.
Building plot
A building plot has connections for electricity, water and wastewater. Access to the local supply, disposal and transport systems is available.
The construction project can start soon. Building plots achieve the highest selling prices compared to prospective building land and building land.
Agricultural land
According to the law (Art. 63 BGBB [in German, French and Italian only]), you may only sell land designated for agricultural and forestry use in the zoning plan to persons who wish to use it for agricultural purposes. The value of agricultural land increases significantly when rezoned to building land.
The utilization rate indicates the proportion of allowed habitable living space on the property. The habitable living space is the sum of the living space of all floors, not including:
surfaces with a ceiling height of less than 1.50 metres
floor and basement if not inhabited
laundry room and boiler room
balcony
other uninhabitable rooms
The higher the utilization rate, the more flexibility the buyers have when building a house. This means that the higher the rate, the higher the property value.
For example, a plot of 200 square metres has a utilization rate of 0.5. This means that you are allowed to have 100 square meters of living space on the property.
Some cantons work with a floor area ratio instead of a utilization rate. This includes uninhabitable rooms.
There are legal restrictions on the construction of a house that vary by canton and city.
For example, the exterior of a house in the city of Bern must fit in with that of other houses in the area (Art. 6 BO [in German only]). In the city of Zurich, flat roofs must be landscaped (Art. 11 BZO 2016 [in German only]).
Depending on the building code, restrictions may reduce the value of a plot of land.
2. Selling building land: who are the potential buyers?
Different parties may be interested in your property. It may be that the municipality wants to acquire the land in order to develop it itself.
Private individuals or property developers may also be interested. Institutional investors primarily target larger plots of land.
3. Should I sell my land by myself or use an estate agent?
Selling on your own requires expertise and negotiation skills. Make sure that you plan enough time.
Creating a meaningful seller’s pack alone takes several work days. The seller’s pack of a property includes:
description of the plot’s location
type of use
register of contaminated sites or suspected sites
building regulations (utilization rate)
situation, zone and cadastral plans (development)
hazard map (flooding, rockfall and other risks)
Consider carefully whether you are up to all these challenges. Seek professional assistance early if you do not want to manage the sales process on your own.
4. Selling building land in Switzerland: what costs arise when selling land?
Selling a property incurs costs. Taxes and fees apply. The amount varies between cantons. Some of the costs can be split between the buyer and seller.
| Cost | Amount |
|---|---|
| Notary fees: the notarization of the sales or purchase contract is a legal requirement and subject to a fee. | Up to 0.5% of the transaction value. |
| Land register fees: local authorities charge a fee for entering information into the land register. | 0.1%-0.5% of the transaction price. |
| Property transfer tax: for the transfer of the ownership of a property from one person to another, you will have to pay a property transfer tax in most cantons. | Depending on the canton, between 1.0% and 3.3% of the sales price. In certain cases, there is a reduced tax rate in some cantons. |
| Capital gains tax on property: the net profit achieved through the sale of a property is subject to taxation. The seller’s profit gets taxed as capital gains tax. | The amount depends on various factors. |
| Estate agent fees: the actual amount depends on the type of property, its location and the sale price. In general: the higher the sale price, the lower the commission. | 5% of the achieved sale price on average. |
This article was first published on 18.11.2020
