Buying Property In France

There are no restrictions on foreigners buying property in France. There are, as in many countries, tax implications, but that shouldn’t stop you if this is where you want to be and you find your dream home. However, always seek financial and tax advice before buying an overseas property.

The purchase of a house in France is usually straightforward and regulated. Generally speaking, problems only arise because the buyer has not understood the procedure or the property documentation. If you are not a French speaker it is essential to find either a bilingual agent you trust and/or a bilingual notary.

If you are buying a house, always examine the cadastral plan of the property you are intending to buy and the land around your plot. The last thing you want is to buy a property only to find a chicken farm is set up just upwind of your new dream home. The cadastral records of all buildings are available in the mayor’s office and online at: www.cadastre.gouv.fr.

The purchase involves the signing of two contracts: the preliminary sales agreement and the formal deed of sale. The preliminary sales agreement, drawn up by a notary or the sales agent, is an important step, and you may need advice from your bank or independent notary (if your agent is drawing it up) to make sure the terms are acceptable.

If the property is being financed with a mortgage, the preliminary sales agreement should contain a condition stating that if your application for a mortgage is not successful, your deposit will be refunded.

There are three main types of preliminary sales agreements, depending on whether you are purchasing a house that is already built, a house that is off-plan, or a plot of land where you are going to build a house.

The system and law do change from time to time. The most up-to-date source of information on buying a house is the notaires’ website: http://www.notaires.fr/notaires/en/notaires-as- property-specialists.

The best way to estimate reasonable property prices is the notaires’ databases of recent sales (the prices listed on the website are always three months old) at www.notaires.fr.

The Buying Process

When the buyer and seller have agreed on the property and the price, both parties commit to the sale by signing the compromis (or promesse) de vente. Once signed, the buyer deposits 5% to 10% (this may vary slightly) of the purchase price with the notary or agent or realtor. The deposit (called a payment on account) will be deducted from the purchase price when the deed of sale is completed, or it may be given to the seller, or returned to the buyer, if the agreement is broken.

Before signing the compromis de vente, consider carefully whether you want to add any conditional clauses (clauses suspensives). You can add as many clauses as you like, but, of course, the seller has to accept them. Typical clauses include the bank’s acceptance of the mortgage (the notaire should automatically include this), whether or not planning permission is obtainable (e.g. for renovations or minor building work), potential plans for undesirable development of land adjacent to the property, and a satisfactory survey provided by the seller (in this case, in reality, it’s not actually done… a building survey would be at the buyer’s expense, and it’s hard to legally define what a “satisfactory” survey looks like).

Once you have signed your compromis de vente, you have a 10-day cooling-off period, during which time you can withdraw from the sale without penalty but the seller can’t. The period begins the day after the buyer receives the signed compromis by registered post. If you exercise your right of retraction, the notaire must receive your notification by registered post before the tenth day. After the 10 days, you could return home, safe in the knowledge that the road to owning a property in France is well underway and should not be interrupted.

A word of caution: We know of a couple who bought a home and then decided during the cooling-off period that they had made a mistake. They tried to contact the notaire and then the agent on the last day of the cooling-off period only to find that it was a national holiday and both offices were closed. The sale went through. Make absolutely sure the notaire will be available during the cooling-off period.

The deposit, or payment on account, system works like this:

• If after the 10-day cooling off period the buyer does not wish to proceed he or she forfeits the deposit.
• If any conditions of sale included in the compromis de vente are not fulfilled (for reasons beyond the buyer’s control) the deposit will be refunded to the buyer.
• If the seller withdraws, he or she may have to pay a penalty to the buyer.
• The compromis de vente will include a date when it is expected that you will sign the final formal deed of sale (this is a target date and not legally binding).

Acte Authentique (the signing of the final sales document): Your agent or notaire will let you know the proposed date to sign the full contract. It is preferable that you are present, but you can arrange a power of attorney to act for you. It is advisable that you (or your power of attorney) see the property on the day of signing to check that you are buying the property “as seen on signing date.” In other words, make sure that the beautiful wooden doors or floor tiles you fell in love with are still there.

The whole sales process should take between three and four months.

Transaction And Holding Fees

The overall costs for purchasing property in France are high…

*Included in the notary fees are several other fees, like the stamp duty, which is listed individually for some other countries where it is not comprised in notary fees.

Real estate agent fees are typically between 3% and 10%, plus 20% VAT and is split between the buyer and the seller. However, we don’t include this cost in the table as most properties include the agent fee in the asking price.

There are two kinds of property tax in France: taxe d´habitation and taxe foncière. Whoever resides in a building must pay the tax d´habitation. Generally, rental contracts stipulate that the tenant reimburses the landlord for the taxe foncière, which is normally paid by the owner. The tax foncière is a combination of tax for the building and for the land.

Special Notes

It is common for an agent to ask you to sign a bon de visite―a simple form confirming that that specific agent showed you the property. This is done to prevent agent conflicts, as most properties have multiple listings.

To draw up the agreements you have to provide your passport, marriage papers, divorce papers, and paperwork showing details of any loans.

There is a tax credit scheme for ecofriendly home improvements including solar panels, insulation, and double-glazing. The equipment and installation must be from and carried out by a reputable seller with accreditation. Ask your local mairie (town hall) for providers.

In France, the whole business of buying and selling properties is dealt with by a notary (un notaire). A French notary is a public official responsible for ensuring that all deeds are authentic and can’t de contested. They are responsible for drawing up the final deed of sale and often the preliminary sales agreement.

Notaries must act impartially and therefore generally act for both parties. However, if the seller’s notary does not speak English, you can employ your own bilingual notary. If two notaries are used, the fees (which are set by French law) will be shared equally between them. The notary fees are paid by the buyer and generally run between 7% to 8% of the purchase price.

To locate an English-speaking notaire go to the official website of French notaries: www.notaires.fr (in English).

If the house is less than five years old and there has not been a previous sale, you may have to pay sales tax (value added tax). If that is the case, the conveyance costs would be lower.