We’re going to dispel a few French property myths and right a few French property wrongs in this report because we’ve had a string of emails asking us questions directly related to buying a home across the Channel and have deduced that there is a lot of confusion out there! So here are our top tips on buying property in France to make the whole process easier to understand.
Despite the strong euro, a weak property market in France is now appealing to Britons because it is still possible to secure a bargain second home if you shop savvy – and so this must be why there is currently a lot of interest in buying homes across all French regions and why there are a lot of questions flowing in to our inbox from those buying in France.
So today in addition to our complete guide on buying property in France we’re going to cover four areas that we have been asked about – namely 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, in a nutshell 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, but because all have to conduct the same level of customer due diligence to comply with international anti-money laundering guidelines, where a non-resident account option is available 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.
Just as there is in the UK, 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. You just have to send plenty of correspondence back and forth! Note – BritLine is their online resource and it may be of use to you, however we at Expatra do not promote their services or specifically have any experience of the institution and so cannot recommend it.
Finally when it comes to opening the essential bank account, yes getting anything done in France can take some time and even opening a simple bank account can take some time. However, important decisions in life should not necessarily be rushed and they should always be well researched too. Therefore, if you’re opening an account for a house purchase one would assume that a) you have done your research and are aware that a local account will be required at some point and that b) you have taken the time to ensure that buying property in France is the right decision and during that period of thought time you could have got the ball moving to open an account!
Important Different Between Home Insurance in France and the UK
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, just as there are many companies in the UK offering property insurances, so there are many companies in France. 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.
In the UK we are used to the fact that we always have a ‘cooling off’ period when we take out insurance during which period we can cancel and receive a full refund, and that should we wish to, we 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. My suggestion at this point is always the same – instead of assuming anything in any given situation such as the one we’re discussing, 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 British 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!). Or they can be cancelled at the annual renewal date (you must provide written notification 2 months in advance) – or 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 the UK!
Equity Release Mortgages for Property in France
Just as you can get equity release re-mortgages in the UK for British property, so 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. Also, it’s worth noting that you will struggle if you’re looking in the UK for a product suitable for equity release in France because the UK and France are different nations that have different rules for everything from the registration to the valuation of property. Therefore, a British bank may find it difficult to find anything that they could guarantee such a loan against!
So, assuming you’ve 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, something that was an alien concept in the UK which is part of the reason why the nation is on its knees fiscally speaking – and will probably remain so for generations!
So, be prepared to tell your lender what you want the money for – and be able 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! It is not a country bankrupted by greedy bankers, immature lending and governmental bank bailouts, it’s not a country of anonymous lending and irresponsible loan to value offers. 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 and live, so you need to spend time researching how you go about buying that property and moving to live in France.