Changing rooms, Swiss-style: seeing the value in old things in Switzerland is not really in fashion--especially when it comes to real estate. However, there are a growing number of brave souls who are taking advantage of a good supply of old farm houses, mills and even the occasional castle in order to bring back the past, complete with its unique character and charm.

A trend toward renovation is being fuelled by the current low cost of borrowing money, says Credit Suisse economist Ulrich Braun:

"At the moment we have historically low levels of interest rates. So if you want to finance your home, now is the best time we have seen for the last 30 to 40 years."

I work as a real estate consultant and it has often seemed to me that Suisse Romande has more old buildings up for sale and renovation. But according to the statistics from leading bank lender Credit Suisse, there is actually a good spread across the country. Ticino has small stone-built 'rusticos' that have been renovated as weekend cottages.

Redundant farm buildings are also coming on the market as the subsidies for milk and milk products are reduced and farmers give up the fight to make a living solely from the land. These buildings are especially attractive when they are within a relatively easy distance of important towns such as the Federal Capital of Bern, Lausanne and even Geneva.

Buildings are harder to find around Basel and Zurich because of the boom in the service sector, which relies on warehousing and retail outlets. Braun says "a boom in the retail industry" could drive up the number of new shopping complexes to the highest level since 1975.

Foreign affairs 

The move towards renovation is essentially a foreign affair. Within the Swiss domestic property market, not all the renovation that should be done is being done:

"Nearly two-thirds of residential housing built in Switzerland between 1961 and 1980 is in dire need of renovation" according to Braun.

"Buildings constructed during this period (1961-1980) do not have a particularly good reputation in terms of build quality," he continues.

"Most homeowners are lay people with no experience in construction so they are not aware of the need to renovate their homes. More needs to be done to educate them or this could become a serious problem."

But Jean-Louis Genre of Prorenova Vaud, ah architectural and renovation firm in Suisse Romande is optimistic that renovation is a gathering trend.

"In Switzerland about half of the investments made in the construction sector concern renovations and everything indicates that this tendency will only increase in coming years."

Getting started

Lovely old buildings have been available for some time, but the trend toward renovation may have been fuelled by the influx of foreigners--and changes in Swiss law concerning their right to buy property.

In the past decade it has become easier for foreigners to buy what they want and where they want. For EU nationals it is markedly easier: Bilateral agreements with the European Union, dating from 2002, have granted EU nationals holding B- or C-permits purchasing rights that are equal to the Swiss, themselves.

Property law has kept pace, and foreigners--especially the English who value character--have begun to buy and renovate in rural areas, resorts and even some urban areas.

Also owing to these agreements, foreigners living outside Switzerland, as well as those who do not yet hold a C-permit for permanent residency, can buy buildings zoned for a commercial use. Not only are foreigners buying hotels and shopping centres, but many are also renovating these buildings to serve as health or business centres.

Making it happen

Viviane and Darrell Edmonds manage the 'Trois Sapins' in Biere, near Morges. The couple--Darrell grew up in the United Kingdom, Viviane is Swiss--have run other hotels in century buildings but this is particularly solid construction, they say.

"The building has a lot of charm and is very, very strong; local musicians come to practice alphorns in the theatre alongside the hotel and you cannot hear it in the hotel bedrooms. Our focus is to keep the hotel and the restaurant clean and well looked after. The modern focus is on the kitchens and the bathrooms. When we next renovate it will only be to replace the carpets--the rest of the building is in a very good state."

In fact, says Simon Malster, Director of London-based 'Investors in Property', the general quality of buildings in Switzerland is a drawing card for many investors.

"The quality of construction in Switzerland is always better than in the other Alpine countries where we are selling. It is so good that clients rarely organise a structural survey before purchase--always done as a matter of course in the UK."

Challenges are still immense. The focus on so-called 'new build' in Switzerland means electricians and plumbers like to work off drawings and plans--rather than tackle existing buildings that need to be adapted. Finding skilled help is tough.

Convincing local planning authorities of the validity of your reno will likely drain your time and patience. "If buying a property which requires renovation, we would suggest that it is often more appropriate to ask an architect to look at the property, as they will have a better idea of possibilities to renovate or extend the property and will be able to give a 'guestimate' of the costs," says Malster:

"Be warned however, that the full costs of renovation are often hard to estimate, as you never know what you will find until you start the work! With new build you know exactly what it will cost before you start and it can be cheaper to build from scratch rather than change an existing building."

Buy low ...

Despite the difficulties there are some sound financial principles at stake. According to research published by Martin Brown at the Bank for International Settlements in Basel, house prices in Switzerland have risen by just 1.5 per cent per year since 1985, while inflation was 1.9 per cent.

As a result, there is little chance of getting rich through property acquisition, as someone in London would understand. So with low interest rates it makes sense in Switzerland to keep the cost of the initial purchase as low as possible too. Buying a run-down barn at about SFr 200,000 and then taking on the renovation process can make financial sense.

Swiss style

There are now Do It Yourself centres throughout Switzerland with most of the materials on sale for the basic cleaning and preparation work to be done by the owner. Similarly, start-up businesses can reduce their costs by moving out of rented offices in the city and working from large conversions; the owner can live upstairs in the barn while running an office in the basement with a separate entrance.

Still, it is not necessarily the norm in Switzerland to roll up your sleeves and do any part of the renovation work yourself. TV programmes showing spirited Brits in their free time, 'changing rooms', and overhauling home or garden to a deadline of hours--rather than months--must present a truly foreign culture to most Swiss viewers.

Perhaps the greatest benefit of renovation in Switzerland is a unique aesthetic quality. In apartment complexes springing up rapidly across the country, the focus is on maximising the square-metre count inside and making the most of the view across town.

But taking on a ruin of a barn where only Dracula would feel comfortable and, three years later, greeting friends and family in a bright, wooden home with four-metre ceilings carries serious bragging rights. All the nightmares of heating engineers who have rarely been inside a barn, let alone tried to heat one, or electricians who wire your home so you have to switch on the bedroom light to use the stereo in the living room, are (very nearly) forgotten!

Expat purchases will continue ...

According to a mutual agreement with the EU dated June 1, 2002, citizens of EU countries can buy real estate as a main place of residence, just like any Swiss can.

For a second home, however, the special regulations of the Lex Koller will apply, and these vary from one canton to another. Lex Koller is due to be abolished sometime after 2010, and then it will be largely immaterial whether vacation homes are in Swiss of foreign hands.

The difference between permanent residents (C-permit) and temporary residents (B-permit) from outside the EU are becoming increasingly blurred. Citizens of other countries such as Russia and the United States are subject to the decisions of the cantonal authorities in respect of main and second residence. In practice, many receive that permission without difficulty.

But many will find their circumstances differ from one location to the next. Resorts such as St Moritz in the canton of Graubunden and Gstaad in Canton Bern work case by case, usually taking into account arrangements for personal and company taxation.

Jane McIntosh is an independent property search, renovation specialist and real estate consultant. Starting in London, she currently focuses on commercial properties in Switzerland, France and Italy.