Buying Property in France

 

 

Some Facts 

France is one of the safest countries to invest in property. Its property laws offer a high degree of protection to buyers irrespective of nationality. Having said that, the importance of research on the buyer's part cannot be over emphasized. Investing in books and magazines that offer advice on buying property in France could enlighten you about certain pitfalls. Words of caution though, do not believe everything even if it is in print. A careful study of the various locations, types of properties, prices and procedure involved in buying property must be undertaken. Some publications that should help you along the way are Foreigners in France: Triumphs & Disasters and Living and Working in France. Additionally, studying specialized magazines and visiting property exhibitions may also prove to be helpful. Seek advice from expatriates who've been there, done that to get a firsthand look at what to expect.  

Real Estate Market in France 

Apart from buyers and sellers, estate agents (agent immobilier), foreign agents, property ‘traders' (A marchand de biens) and notaires (a peculiarly French official, whose functions aren't the same as a notary or notary public) are the different players in the French real estate market. Although only about 50% of the sales in the French real estate market are executed through real estate agents, in case of foreigners most sales are through them. Around 15% of sales in the market are executed by notaries. English speaking agents are widely available and to find an agent in your area look under Agences Immobilières in the relevant French yellow pages (pages jaunes). Foreigners, particularly those from the UK, have an agent in their country who works with one or more French agents to help them find a suitable property.  

There are no government controls on agents' fees. You can expect to pay anything between 5 and 10% of the property value: the cheaper the property, the higher the percentage. Fees charged by anotaire are usually lower than those charged by estate agents, which could be 5% up to €50,000 and 2.5% above this amount.  

 

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Costs Likely to be incurred 

Buying property in France will attract the following costs over and above what you pay for the property:

1. Closing or completion costs: 40 per cent of the purchase price of a new property and over 25 per cent for a property over five years old.

2. Notaires fees: 5% up to €50,000 and 2.5% above this amount.

3. Agent's fees: 5 and 10% of the property value.

4. Registration taxes (taxes de publicité foncière/TPF) vary according to whether you're buying a new or an ‘old' (i.e. over five years old)

5. Land registry fees: usually total around 0.6 per cent of the property's value.

6. Mortgage arrangement fees: 1% of the purchase price.

7. VAT (TVA) at 19.6 per cent must be added to all fees.

8. Other fees: lawyer, surveyor or architect and utility connection and registration fees.

9. Running costs: including property and contents insurance, local property taxes, community fees (for community properties), standing and consumption charges for utilities, maintenance of facilities like garden and pool), caretaker's fees if you leave a home empty or rent it out. 

Solicitors 

Do not underestimate the importance of seeking legal advice when buying property in France. Shop around before you opt for a solicitor, there are plenty of professionals who offer good service and speak English too. The notaire will not verify any claims made by the vendor of the property which is why you need your own lawyer to sort these matters.  

Documentation

The contracts involved in buying an existing property are: 

Compromis de Vente - The most common, most comprehensive and most binding contract, which commits both parties to the sale and includes details of the buyer and seller of the property, the price, method of finance, the agent's commission and who must pay it (if applicable) and the date of completion - usually two months after the signing of the compromise. It also states what will happen in case of breach of contract and includes any conditional clauses. 

Promesse de Vente - Vendor's commitment to sell the property at an agreed price allowing the buyer a period (usually up to three months). During this period he can withdraw and forfeit his 10 per cent deposit. 

Promesse d'Achat - Buyer's commitment to purchase a property. 

Offre de Vente & Offre d'Achat - An offer to sell and to buy respectively, neither of which is binding on either party unless accepted. 

A buying off plan is a contrat de réservation (more correctly called a contrat préliminaire). This contract is in writing and contains all details regarding construction plan, design, time table for completion of construction and payment of price together with penalties for non-completion, refund of deposit and confirmation of a draft title deed will be given to the buyer at least a month before completion. 

Termination guarantee to be provided by the developer could be any one of two types of a garantie extrinsèque or a garantee intrinsèque, both being assurances that you will be provided with any funds necessary to complete the building on time. 

Conveyancing 

Conveyancing means processing of all documentation involved the purchase and sale of property and transfer of ownership. In France, this activity is strictly governed by the law and can only be carried out by a notaire authorized by the Ministry of Justice and controlled by the Chambre des Notaires

Procedure 

You and the seller sign a preliminary contract and the buyer should get a copy of the same with a notice indicating that the cooling off period is seven days within which you may cancel the agreement without any penalty. If you decide to cancel, write a letter to the notaire informing him about your decision under registered post (lettre recommandée) within the cooling off period. Any deposit that you may have paid must be returned to you within 21 days of the date of your cancellation. The right to cancel does not apply to the purchase of land for building.

If you are unhappy with anything, send a written complaint (procès-verbal) to the developer by registered post (lettre recommandée) within 30 days. In extreme circumstances, you have the right to refuse to go through with the purchase. The developer in this case will have to agree to a new completion date in which case you can take him to court. 

Mortgages

French mortgages are usually limited to 70 or 80% of the property value. All expenses and fees are around 10-15% of the purchase price for properties over five years old. You may obtain mortgages for a period between 2-20 years though the usual term in France is 15 years. In some cases mortgages for 25 years may be obtained at higher rates of interest and must be paid off before the borrower turns 70. As a rule of thumb, the shorter the duration of the loan, lower the interest rate.