Monthly Archives: December 2012

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The World of Neubau

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During my months of searching, I saw many, many types of houses and flats on my search sites… but I also saw many neubau (new build) objects in the listings. I was a little wary of neubau because I’ve read some horror stories about them on forums, but at the same time I was attracted by the offers available.

Image via Erstbezug.ch

The Bad:

  • Hidden costs snowballing
  • Asshole contractors with red tape
  • Delays
  • Cannot secure a mortgage until later, interest might go up

The Good:

  • First come, first serve: Minimal fighting to buy
  • Custom changes, options galore
  • More time to save for a bigger deposit
  • Everything is NEW

A few people have vented their frustrations with neubau online, so I had a pretty clear idea what we might expect if we go this route. People complained about buying a flat for one price and then paying lots of money on changes and having the flat cost a lot more than they anticipated.

I also heard a lot of complaining about the entire process of working with contracting firms. Some horror stories had contractors pressuring clients for a lot more money before they would finish and others had extreme delays that put the buyer out of home after their move-in date was postponed.

To be honest, it did seem like neubau is a headache from what I heard. Lots of people warned others to just not try and deal with it. So why did we keep looking?

Choice. By choosing neubau, we could totally avoid the vicious bidding wars on houses and flats in Switzerland. There would be no first, second and third round of bidding. If you want a neubau flat it is relatively simple: pay a fee to reserve, sign a contract and start paying your deposit.

In essence, all we had to do was decide on a flat before someone else did. Then the flat would be ours, no questions asked.

In addition to avoiding the war on ownership, we could customize a flat to meet our own preferences and needs before it was built and when we move in, everything will be brand new. Buying something totally new was a major selling point for Kay, who didn’t want to feel like he was downgrading if we moved out of our comfortable flat in Zürich.

We also calculated that if we would have until the flat was done to save for our mortgage, we would be able to pay a significantly larger deposit and therefore we could buy a bit more expensive flat than we would have been able to at the beginning of 2012. The risk was that when our mortgage would start in 2013, the interest rates may go up.

Neubau still sounded right for us, so while I kept searching for potential existing houses, I started focussing more and more on neubau projects.

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Shopping for houses

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Despite all the scary figures I mentioned earlier, I was confident that with our savings we would be able to buy some kind of modest flat and profit on this extremely low interest.

I spent hours on Comparis looking at houses and flats. We couldn’t afford anything besides a shoebox in downtown Zürich, but there were many flats outside the city and even entire houses that were possibly in our budget.

Having been raised in Switzerland, Kay had the notion that you don’t buy property unless you are 40 or have kids. (That’s not us.) It took some time to convince him that we don’t have to fit into the stereotype for buying to be an advantageous financial choice.

The big question was size and location. Sure, we could sort of afford a 6.5 room apartment (= 5 bedroom flat) or even a 7 room house complete with garage, basement, backyard and everything, but that would mean sacrificing on location.

We do like living in Zürich and realistically, in the next 20 years we will probably change our jobs a few times. With that in mind, we are not quite in a position to commit to a small town an hour and a half away from Zürich city by train/bus.

Who in their twenties wants to worry about catching the last bus back to the middle of nowhere at the end of the night? Not us.

We have to be close enough to Zürich that if one of us would have to get a job outside, we would not have an impossible commute. Buying a car to save on commute time would also kind of negate the “saving” aspect of buying a house.

So we started limiting the search to flats in the vicinity of Zürich city, under 20 minutes to the main station by train. I mean, we just don’t need a house right now. As much as I think it would be cool to have 5 bedrooms and build a photography studio, we just don’t need that much space right now.

I saw a few older flats that could possibly be contenders, but when Kay and I visited a 3 bedroom 80 sq m flat (861 sq ft) it felt cramped and although it was technically IN Zürich, it was kind of a crap neighborhood with nothing going on around it. It was depressing.

Kay was really unimpressed with the old interior and the smell of smoke and other places we saw had 30 year old windows or unfinished interiors that would all require possibly hundreds of thousands in repairs. Some had winter gardens (like an enclosed glass balcony) but no real balcony, aka no grilling. It was always something. And none of the locations were really spot on.

Some older flats also come with “Baurecht“, which basically means somebody owns the land your flat or house is on. They have a 20-100 year contract with people to rent this land from them to build on, and you might end up paying like 400-1000CHF a month just for renting your land. It’s a pretty unattractive detail and makes it hard to sell your house if you do get suckered into a deal like that. You’ll never pay 300CHF a month in mortgage costs if you’ve always got those bloody building rights to deal with.

With all this information, we just weren’t sure buying a fixer-upper or an older flat sounded like a good idea right now.

Up next, we discover Neubau!

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