In order to be able to realize the dream of owning a home, equity is required – a factor that has already caused many purchase and construction projects to fail. Now a new form of ownership is supposed to help: buying apartments and houses – for a while.
Home decor in Switzerland
According to the experts from “Baublatt”, only around 40 percent of the Swiss live in their own home or apartment – less than in any other country in Western Europe. The above-average construction costs in combination with the equally high need for equity explain this fact.
Buy – but only for a limited period of time
As the “Temporary Home Ownership (WAZ)” manual by the University of Lucerne (HSLU) describes, Swiss living culture could soon be expanded to include a new type of property that would result in a paradigm shift: it describes how owners can benefit from temporary home ownership. The “Temporary Home Ownership” model encompasses the ownership of a property, which is, however, limited to a certain period of time that is contractually stipulated in advance. Once this period has expired, the property will be transferred to a new owner. Yvonne Seiler Zimmermann, professor of finance at the Lucerne University of Applied Sciences and Arts and co-author of the manual, speaks on the Lucerne University of Applied Sciences website for a period of 30 years. As a rule, this would correspond to the effective useful life of a particular property. After these 30 years, the property automatically becomes the property of the original investor again, who can renovate it and pass it on to new owners if necessary.
The duration of use determines the price
Since the residential property is used for a shorter period of time, it can be sold for a lower price – the result is the occupancy of the property with a lower mortgage. At the same time, this means that more people could afford to buy a property on a temporary basis, as Seiler Zimmermann confirms: “This new form of ownership is particularly attractive for people who would otherwise not be able to afford their own home.” The 15 percent lower housing costs that arise with this form of ownership play an important role – according to the WAZ handbook.
What that means for investors
Since the property in question will return to the property of the original investor after the pre-determined period has expired, the investor can carry out renovations and make it marketable and competitive again. Seiler Zimmermann comments on this as follows: “We have a big problem in Switzerland with outdated properties that are long overdue for a complete renovation.” Since Swiss multi-family and high-rise buildings are often sold floor by floor, different interests collide, so that renovations are frequent Blocked by individual parties – a problem that would not arise with temporary residential property, says Seiler Zimmermann.
Acceptance of the new form of ownership
According to a survey by the HSLU from 2017, potential residents are open to the new model. Despite the generally positive attitude, there are only a few temporary accommodation properties in Europe. In Bern, for example, there is a 14-storey property with 42 apartments – a project that shows that the model can work. Seiler Zimmer comments on the reluctance as follows: “The real estate industry naturally struggles with innovations with so much innovative content.” In doing so, she references the existing liquidity risk that currently still exists due to insufficient market penetration.
The introduction of the WAZ form of ownership is currently limited primarily to the Swiss area. It remains to be seen whether the trend will also find its way into Germany.
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