Buy or rent abroad? Comparing with staying in Switzerland

Once you have decided to look at living abroad, the next question comes quickly: should I buy a place? A home abroad feels like stability. It can also tie up the money you need and bind you to a country you have not yet tested for a full year.

Three options

1. Stay in Switzerland. Rent or own, at Swiss prices.
2. Rent abroad. Lower costs, full flexibility, no capital at risk.
3. Buy abroad. Lowest running costs, largest upfront cash, least flexibility.

The costs people forget

• Buying costs. Transfer taxes, notary and agent fees often add up to about 7% to 13% of the price, depending on the country and the type of property. They are gone the day you buy.
• Running costs. Property tax, community fees, insurance and repairs, often 1% to 2% of the value a year.
• Currency. The price is in euros or baht, your pot in francs.
• Selling. It can take months or years, and the price may be lower than you hoped.
• Local rules. Some countries limit what foreigners can own. See retiring in Thailand.
• Taxes. Non-residents and residents are taxed differently on property income and on gains. Check before you buy.

A worked example

A CHF 250,000 flat in a cheap market, against renting a similar one for CHF 1,000 a month.

Example Buying costs about 10% of the price, so you need CHF 275,000 in total. Running costs are 1.5% of CHF 250,000, which is CHF 3,750 a year. The CHF 275,000 could have earned 3.5%, or CHF 9,625. Owning therefore costs CHF 13,375 a year. Renting costs CHF 12,000.

So even where houses are cheap, renting can match or beat owning once you count what the money could earn, and it keeps your capital free. This is an illustration with assumed numbers.

When buying can make sense

• You know you will stay, because you have already lived there for a year or more.
• You do not need the capital for your bridge years before the pensions start. See the three pillars.
• You have taken local legal and tax advice.
• You can afford a loss on resale.

When to rent

Almost always at first. Rent for a year or two, in different seasons, before you commit. A flexible rent also keeps your capital invested, and you can spend it down over time. That is the idea in rent for life, die with zero.

For the same question at home, read rent or buy in Switzerland. For the options by country, see Portugal, Spain, southern France or Italy.

Next step

Open the calculator and compare a rent-abroad budget with your Swiss one.