Buying a property in France can be a very tempting idea for those dreaming of a relaxed life in a warmer and much healthier climate. Throw into the mix a wonderful cuisine, renowned vineries and rich cultural offerings, and you will see why France is always popular with foreign property buyers.
However, buying property in France or anywhere abroad should be a very well-considered decision, and any mistakes can be costly.
This Buying Property in France Guide is for those who are interested in the market and want quickly and easily access the comprehensive information they need to make a safe purchase.
Fees and taxes when purchasing property in France
When buying property in France, the fees and taxes involved in the process can be astronomically high. Consider up to 10% in estate agency fees, over 19% in VAT and then having to pay for surveys, notaires, an independent solicitor and so on and so forth.
So, step one: have a fixed idea of your budget in mind and stick to it. To do so you need to ask your estate agent up front about all fees.
In terms of fixing a budget that is both realistic for the area of France and the property type you are interested in, you need to take a good look at the property market in France to see what average prices look like in your preferred location at the moment.
If you need a mortgage for buying property in France, discuss getting a mortgage agreed in principal with a lender. Shop around, some big lenders such as HSBC and Barclays offer international mortgages with acceptable rates.
Make sure you know what’s included in the price
When you begin approaching estate agents there are a number of factors to consider.
Make sure that your French property agency is a professional set up and registered with official bodies such as FNAIM, SNPI or UNPI.
Next, always clarify whether any properties your agents show you are given to you with the all-inclusive price displayed – i.e., this is the price that includes their fees and sometimes even the notaire’s fees and VAT as well.
Ask every time you get details from a new agent about what the displayed price includes in the way of fees so you can ensure you are not going to exceed your budget!
With lots of foreign buyers buying property in France, most estate agents are totally used to this request and usually display prices for properties followed by the letters FAI which indicate that this is the purchase price AND the estate agent’s commission added together.
Buying property in France also involves the notaire’s fees, so you need to budget for between 2.5 and 8% on top, plus 19.6% for VAT.
Making an offer and proceeding with purchase
Having identified a property that you would like to buy you can make an offer. Your estate agent usually can tell you how low you can offer without upsetting the vendor!
Remember, before you do make an offer double check what the price includes in the way of fees and what you will have to find on top. Also see the plans and boundaries of your property.
A verbal or written offer to buy is legally binding so only make an offer with any required conditions laid out. It’s sensible when making an offer to do so in writing (offre d’achat).
Make sure you include a statement saying the sale is conditional and depends on the preparation of a sale and purchase contract in which all the conditions – ‘clauses suspensives’ – will be detailed.
Clauses suspensives will allow you to withdraw from the sale if certain conditions haven’t been met!
Clauses suspensives is basically a legal document detailing the reasons you are allowed to cite if you have to withdraw from the sale, which include factors such as you not getting the mortgage you expected, planning permission not being granted for essential work to the property or perhaps something bad being found if you elect to have a survey done.
With the offer submitted by the estate agent you wait and see if it is accepted. If it is, you will need to submit documents such as details of your loan, copies of your passport etc., to the agent who will pass required data to the noitaire who manages the sale for both the buyer and the seller.
This is an unusual practice in the UK where we have an independent solicitor for each party. If you want to have your own notaire you can, and you don’t pay double the fees as the notaires have to split the money between them.
Alternatively you can appoint a solicitor to act as your adviser, but they cannot get involved in the sale directly as only notaires have the legal authority to do so.
The next stage of buying property in France is the signing of the compromis which is the first contract. This is legally binding on the vendor immediately but as a buyer you have a 7 day cooling off period – regardless of this, you should never sign the compromis unless you are 100% certain that you are ready to go ahead.
However, during your cooling off period you can withdraw from the contract without any penalty.
Do not pay any monies, not even a deposit, until this period has ended and certainly not when making an offer on a property!
Once your 7 days are up you must make payment of your deposit which is usually 10% of the purchase price. This is non-refundable from this point forward unless you withdraw from the sale as a result of a clause in your clauses suspensives document.
Next step is carrying out various surveys
In France having a ‘sold subject to survey’ clause in the contract is not the norm. The vendor, however, has an obligation to supply the findings of multiple surveys as part of their role in the sale, these are collectively called the Dossier de Diagnostic Technique (DDT).
You will be wise to have your own surveys done as well before signing the contract to buy. You’ll have to meet the cost unless the surveys are obligatory for the area of France in which you are buying and then the vendor pays. If in doubt, ask up front.
Signing the Final Contract
Once all has been found to be in order with the property, the sale can proceed to signing the final contract.
You will either sign a Promesse de Vente or a Compromis de Vente – the compromis is increasingly being used, and is preferable as there’s a reciprocal obligation in the contract.
Ensure your contract contains all the conditional clauses you require like getting a mortgage, checking planning permissions, access, easements, etc.
Once you have signed the contract, you are obliged to buy the property subject to any conditions that are included in the contract. Be certain you want to go ahead and that the contract is correctly phrased including all your personal conditions before you sign.
You need to ensure the balance for the property is with the notaire by the date of final signing otherwise the whole sale could collapse and you lose not only your dream property in France, but your 10% deposit as well.
Before you go and sign the contract on the day the signature is due, you need to view the property as the final signature rests beside a statement that says the property is being sold as seen!
A lot can happen to a property between the day you view it and the day you sign the final contract – so do view it before you finally sign for it.
Following signature all final fees and taxes become payable and the property is also registered in your name. And voilà! you become the proud owner of a home in France. Congratulations!!!
However, apart from the property buying procedure, there are four issues that you need to be aware of when planning to buy a house in France.
They are: getting a bank account in France if you want to buy a home there, sorting out your home insurance, working out if an equity release mortgage is possible in France and getting a home improvement loan…
Opening a Bank Account to Buy a Property in France
There’s a popular myth amongst Britons seeking their perfect pad across the Channel, and that is ‘you can’t buy a property without a bank account, but you can’t get a bank account without paperwork proving that you already live in France.’
However, this is not an entirely accurate understanding of the situation! You see you can open a bank account as a non-French resident nowadays, such an account is called compte non-résident.
Different banks have different account availability. Nevertheless, they have to conduct the same level of customer due diligence to comply with international anti-money laundering guidelines when opening a non-resident account.
That’s why you can expect to have to supply at least the following when opening an account: a certified copy of your passport, 2 certified proofs of address such as utility bills, bank statements or any tax forms from HMRC for example, and a banker’s reference.
You may also need to supply evidence of your income and sometimes you either have to show proof that you own a French property OR that you regularly travel to France!
This may sound a little mad, but why would you want a French bank account if you didn’t have ties with the nation? Again, it’s all about ‘know your customer’ and the checks banks have to do to make sure you’re not an international criminal involved in terrorism or money laundering!
So, if you do not own property in France and cannot therefore supply your bank with your Compromis de Vente, some banks such as Credit Agricole for example will ask for evidence that you have been in France in the last six months. Such evidence could be a credit card statement showing transactions in France or some proof of travel to the nation for example.
There is plenty of choice when it comes to the banks in France that offer non-resident accounts.
Take a recommendation from a trusted friend or do your own research into which institution you would like to bank with. You can then visit a branch of the institution you favour in person and set up an account, or some such as the aforementioned Credit Agricole allow you to set up an account when you’re in the UK.
Finally, getting anything done in France can take some time, even if it’s opening of a simple bank account. However, important decisions in life should not necessarily be rushed. Looking on the bright side it gives you time to ensure that buying property in France is the right decision for you.
Home Insurance in France
Your estate agent may well recommend a home insurance company to you when you come to purchase your home in France, however you should not feel pressured or pushed to necessarily use one recommended to you.
In fact if you do feel pushed around by your agent on any point regarding the sale process, it is a good instinctive warning sign that brakes should perhaps be applied to the process so that you can think through all of your options.
In terms of the options you have regarding your home insurance, there are many companies in France offering it. All compete for the same business and some will be more competitive than others, so naturally it is wise to shop around at the outset.
You might be used to the fact that you always have a ‘cooling off’ period when you take out insurance at home. During this period you can cancel and receive a full refund, and that should you wish to, you can cancel a home insurance policy at any point for a refund minus costs and charges.
However, in France many things are done very differently to how they are done in the UK and this can lead to confusion and frustration.
The best thing to do at this point is always the same – instead of assuming anything in any given situation, take some time out to do a little research! It isn’t even that difficult with a nation like France because there are so many expats living there and so many websites and forums dedicated to moving to live as a foreigner in France.
In the case of French insurance the following is true: –
- policies can only be cancelled following the sale of the property or the insured item (and you need to provide proof of sale!)
- they can be cancelled at the annual renewal date (you must provide written notification 2 months in advance)
- you can cancel upon receipt of your renewal notice (and you have 20 days from the date stated on the letter in which to cancel your policy).
So this important difference is well worth noting – and it just serves to highlight that one cannot assume that anything is done the same in France as it is in your home country!
Equity Release Mortgages for Property in France
You can get equity release solutions from a number of French institutions. However, because of the global economic situation, such products are harder to secure.
If you have found a French lender willing to consider your request for an equity release re-mortgage, you need to be aware that they are going to want to know at least a little about what that money is going to be used for and about your position in terms of financial standing for repayment sake.
It’s all about responsible lending, so be prepared to tell your lender what you want the money for. You will also need to be ready to prove what you have spent it on should they decide to check up on you which they are fully permitted to do.
Getting a Loan for Home Improvement
In the same way that banks giving out mortgages and re-mortgages in France want to know what the money will be spent on, so any bank offering you a loan for home improvement purposes will want proof of what you’ve spent the money on.
Keep your receipts because it is not unreasonable for your bank to ask for proof that a loan given specifically for a function such as buying a car, going travelling or whatever was used for said purpose.
It’s all about intelligent and responsible lending – it stops people lying and pretending to borrow money for property improvement so that they are more likely to get the loan, but going out and actually blowing it on a trip to Las Vegas for example!
Things are done differently in France – that’s part of the charm of the nation!
However, you need to know your way around the French system if you want to survive it unscathed. So just as you will spend time researching where you want to buy a property in France, so you need to spend time researching how you go about buying that property and moving to live in France.