The Liechtenstein real estate market plays a major financial role, given that real estate makes up a large proportion of the assets of private households. Even though the average mortgage loan-to-value ratio is comparatively low at less than 66%, a substantial share of private debt consists of mortgage loans. Real estate prices in Liechtenstein have tended to rise for decades, and even during the 2008/2009 global financial crisis, the Liechtenstein real estate market continued its upward trend. Especially during the years of low interest rates, buying residential property with mortgage loans has become very attractive.
As a member state of the European Economic Area, Liechtenstein is transposing this directive into national law effective 1 April 2021 through the Mortgage and Real Estate Credit Act (HIKG). For the first time, this law establishes general licensing requirements and the possibility of cross-border activities for credit intermediaries under the freedom to provide services or the freedom of establishment.
The HIKG sets out rules governing credit agreements for consumers relating to residential immovable property, the purpose of which is:
- to acquire or retain property rights in land or in an existing or projected building; or
- to acquire a consumer good (e.g. a car) secured by a mortgage or comparable security.