The three Zurich housing initiatives: an initial classification

Cantonal popular initiative “Protect affordable housing. Stop vacancies (housing protection initiative)”

Popular initiative

The initiative in brief

The core of the housing protection initiative is to enable the municipalities to independently issue regulations on housing protection in order to maintain and secure rental apartments that are financially viable for broad sections of the population. To this end, the housing protection initiative provides for an amendment to the cantonal law on the promotion of housing construction and home ownership of June 7, 2004.

According to the new § 14a para. 1, the municipalities should in particular be able to introduce (a) a permit requirement for demolitions, conversions, renovations and changes of purpose and (b) restrictions on the conversion of rental apartments into condominiums. As this is only an exemplary list, the municipalities can also issue further regulations for the protection of residential property. Municipalities can then combine a permit with the requirement to limit rents.

The prerequisite for the application of the housing protection regulations is a housing shortage in the municipality, i.e. a vacancy rate of less than 1.5%. The city of Zurich is particularly affected by this.

The respective housing protection orders in the specific case are issued together with the building permit and can be appealed to the Building Appeals Court. These orders can also be contested in particular by tenants of the rental property concerned and by tenants’ associations.

When do the housing protection regulations come into force?

If the housing protection initiative is accepted, no housing protection regulations will come into force. The municipalities will merely be authorized to issue such regulations in an implementing decree. To do so, they must adopt a municipal decree.

It can be assumed that the first housing protection regulations will come into force in two to three years at the earliest.

What are the implications for pending building permit applications?

Unless the respective implementation decrees of the municipalities provide for transitional provisions, housing protection regulations issued by the municipalities shall generally apply to building permit procedures that have not yet been decided in the first instance at the time they come into force.

However, the implementing decrees of the municipalities may stipulate that the new regulations only apply to planning applications submitted after they come into force.

Ongoing building permit procedures are therefore not directly affected by the adoption of the housing protection initiative, which is why no immediate measures are required.

However, planning applications should be submitted in good time before the implementation decrees of the municipalities come into force so that the building permit can be issued before they come into force. In this context, any delays in the building permit procedure should be planned for before the relevant implementing decree comes into force. As soon as the housing protection regulations and transitional provisions of a planned implementation decree of a municipality are known, their impact on a specific construction project should be carefully examined.

What are the implications for condominium ownership?

Because the new Section 14a para. 1 only contains an exemplary list, it is not possible to fully assess any future housing protection regulations in connection with condominiums. In connection with a possible approval requirement for the conversion of rental apartments into condominiums, the new Section 14b para. 2 stipulates that in the event of a conversion into condominiums, the land registry shall send the land register application and the legal title certificate to the approval authority and suspend the registration procedure until a legally binding decision has been made.

The condominium ownership comes into existence upon entry in the land register, whereby according to Art. 972 para. 2 ZGB, the time of entry in the land register is relevant for the development of the legal effect, i.e. the receipt of the land register application at the land registry.

Unless the municipalities provide for other transitional provisions, a permit requirement for the establishment of condominium ownership is therefore generally applicable to the establishment of condominiums that are not yet entered in the register when the implementation decree of the municipality comes into force.

The effects of a possible authorization requirement or other restrictions on the sale of condominium units cannot be assessed at present. It is conceivable that the municipal implementation decree could stipulate that such restrictions on sales only apply to condominiums that are created after the municipal implementation decree comes into force. It would also be possible, but probably less likely, to refer to condominiums that are established after the adoption of the popular initiative.

As a result, no premature justifications for condominium ownership are required in connection with the popular initiative.

Counterproposal

The cantonal council’s counter-proposal also provides for an amendment to the cantonal law on the promotion of residential construction and home ownership dated June 7, 2004. In the new § 13a para. 1, the counter-proposal stipulates that owners must check whether structural measures can be carried out in an occupied state or in stages so that terminations can be avoided or their number reduced if demolitions, conversions or renovations of apartments in an approved construction project would lead to the termination of 20 or more tenancies.

If 20 or more tenancies are to be terminated as part of a construction project, the new Section 13a (2) also stipulates a number of obligations for owners:

• The tenants affected must be informed in writing of the intended construction measures at least 12 months before the termination date;
• A contact person must be designated;
• At least one information event or comparable communication measure must be held; and
• Tenants must be given appropriate support in their search for accommodation within or outside their own housing stock.

If the owner fails to carry out this inspection or fails to comply with the above-mentioned obligations, the building permit may be refused.

The provisions of the counter-proposal shall expire ten years after their entry into force.

If the counter-proposal is adopted, the new Section 13a para. 4 still requires the Government Council to issue implementing provisions governing the procedure and responsibilities. It can be assumed that a corresponding ordinance will enter into force in the near future.

In line with the comments on the Housing Protection Initiative, the new provisions apply in principle to building permit procedures that have not yet been decided in the first instance at the time they come into force. However, it can be assumed that the enforcement provisions will regulate when the new inspection and measure obligations are to be implemented and how compliance with them is to be demonstrated in the building permit procedure.

In the event that the counter-proposal is adopted, building owners with ongoing construction projects in the canton of Zurich should therefore familiarize themselves with the new inspection and measure obligations at an early stage and ensure that they can be implemented when the enforcement provisions come into force.

Cantonal popular initiative “Making home ownership possible again (home ownership initiative)”

The Home Ownership Initiative aims to significantly expand the promotion of owner-occupied residential property. To this end, the home ownership initiative also provides for an amendment to the cantonal law on the promotion of housing construction and home ownership of June 7, 2004. Now not only the canton of Zurich, but also the municipalities are to promote owner-occupied residential property for people with at most a medium income and assets.

The core of the Home Ownership Initiative is that the canton of Zurich and the municipalities must, in principle, hand over half of the apartments or single-family homes as owner-occupied residential property if they build or acquire them in accordance with the new Section 8b. The same applies to third parties subsidized by the canton or municipalities. However, luxury, second and vacation homes as well as retirement and nursing homes are exempt.

The apartments or single-family homes to be sold must be put out to public tender. The purchase price must correspond to the proportionate investment costs. Buyers must have Swiss citizenship or a permanent residence permit and have sufficient financial resources. In addition, they must use the apartment or single-family house themselves, be resident for tax purposes in the municipality concerned and not use the residential property primarily for commercial purposes.

In order to secure their own use and to prevent profitable resale, the Canton of Zurich and the municipalities can have purchase rights and/or pre-emption rights with a term of 30 years registered in their favor on the properties.

The new Section 8k also provided for by the popular initiative was declared invalid by the Cantonal Council. This would have stipulated that the imputed rental value is determined at the time of acquisition and does not change during the duration of the restriction on ownership.

Cantonal popular initiative for more affordable and non-profit housing (“housing initiative”)

Popular initiative

The core of the housing initiative is the amendment of Art. 110 of the Constitution of the Canton of Zurich and the establishment of a public-law institution by the Canton of Zurich, which creates, maintains or rents out affordable housing or grants or transfers building rights to non-profit housing developers. The public-law institution should be able to acquire land for this purpose.

The housing initiative stipulates that the institution must be established within three years and endowed with CHF 500 million in endowment capital. In addition, the canton of Zurich must transfer all properties from its financial assets that are already used for residential purposes or are suitable for this purpose and will not be required for other public purposes in the foreseeable future to the institution.

Counterproposal

The Cantonal Council’s counter-proposal also provides for an amendment to Art. 110 of the Constitution of the Canton of Zurich. The core of the counter-proposal is that Art. 110 of the constitution now states that the canton of Zurich and the municipalities must ensure favorable framework conditions for a sufficient supply of housing that meets demand. To this end, the cantonal government must examine measures to implement the amendment, particularly in the areas of housing construction and home ownership promotion, spatial planning and the acceleration and simplification of procedures, and apply to the cantonal council for the necessary legislative amendments within three years.

Conclusion

As no restrictions will come into force immediately if the housing protection initiative is accepted, no mandatory precautions are required before the day of the vote. In principle, this also applies to the establishment of condominiums. However, if the housing protection initiative is accepted, it is advisable to submit building applications as early as possible so that they can be approved before municipal implementing decrees come into force. Planned conversions into condominiums should also be initiated in good time so that they are already justified before the implementing decrees come into force. If the documents required for the establishment of condominium ownership are already available in connection with an ongoing construction project, the establishment of condominium ownership can in principle also be considered before the voting date.

However, it should be noted that there may be delays in approval procedures and justifications before implementation decrees come into force due to an accumulation of building applications and justifications for condominiums.

As it can be assumed that the implementation ordinance of the counter-proposal to the housing protection initiative will come into force soon, building owners should, in the event that the counter-proposal is accepted, address the obligation to test and implement measures in current and future construction projects at an early stage so that they are ready to implement them when the implementation ordinance comes into force.

In any case, if the housing protection initiative or the counter-proposal is adopted, it is advisable to seek legal advice at an early stage in order to clarify the specific impact on existing and planned projects.

Acceptance of the Home Ownership Initiative or the Housing Initiative has no direct impact on investors in investment properties. However, investors who receive subsidies from the Canton of Zurich or municipalities would be affected if the Home Ownership Initiative is adopted. In principle, therefore, no precautions are required for investors in investment properties in connection with the Home Ownership Initiative and the Housing Initiative.

Author:

Patrick Neher
Lawyer for Real Estate and construction law at Bär & Karrer AG