Property in France
For the British, buying a house in France has always been the most popular choice for an overseas property: easy to reach by car, often surprisingly affordable and fun to rediscover your school French.
Worth noting too, is the range of environments to choose from. There is some of the world’s best skiing in the French Alps, with all the other adventurous activities that mountains offer. There is the wild Atlantic coast, the cote sauvage, or the gentle seaside towns of the north in Normandy and Brittany.
And of course there is the famous glitz of southern of France. We may love to hate the EU’s Common Agricultural Policy, but it’s helped keep the French countryside in the hands of small-time farmers who have preserved it (and its huge range of wines and cheeses!).
France never really became a place to buy investment property, which helped prevent over development. Moreover, the overseas newcomers – generally – have not tried to turn France into a corner of Essex or Dusseldorf. France is where you come to enjoy yourself, in a French way.
Because the British have been buying homes in France for so long, the processes of buying and owning are easy. There are many English-speaking estate agents, as well as builders and other property professionals you might need.
Where to Buy Property in France
The south-west of France tends to be one of the most popular areas, for its climate, cuisine and beautiful countryside peppered with charming bastide towns or villages.
The Dordogne, in the Aquitaine region, is always a favourite with UK buyers and prices have fallen by as much as 50 per cent. Bijou village houses go from under €100,000 and three-bedroom family houses with good-sized gardens for €200,000.
Don’t be shy about haggling as many homes have been languishing on the market for a good couple of years. The Lot-et--Garonne is a similar scenario.
The market in Gascony is a little bit more lively, and there’s been a growing demand for Poitou-Charentes in the past couple of years, where you can get a three-bed home for €150,000 or a charming renovated watermill for less than €250,000.
Another area growing in popularity is the Pyrenees-Orientales region for its combination of mountains, chic coastal towns and its proximity to Spain. The lovely village of Ceret, the vibrant city of Perpignan or the chic town of Collioure are all worth a look.
Or the Languedoc-Roussillon area offers a cheaper option to über-pricey Provence or the Cote d’Azur, with cities such as Montpellier, a dynamic, high-tech industrial city with an arty, bohemian culture.
The countryside has vineyards and lavender fields like Provence, the Mediterranean is on the doorstep, but for €150,000 you can get a flat in Montpellier, or a country cottage or village property without much land but in good repair.
There’s no doubt that the Cote’Azur remains THE place to own a holiday home on the Med for many wealthy buyers from around the world but prices haven’t nose-dived and the hotspots around Nice, St Tropez, Cannes, Antibes and Mougins are all still much in demand. Look for nearby villages to these hotspots for greater affordability.
Up in the north, Brittany and Normandy are great options for people who like their places in the sun not too hot, but still averaging 5ºC higher than in southern England.
The fishing villages are a great attraction, with restaurants on the harbourside, but inland you have the weekly markets, chateaux, green countryside and a wonderful infrastructure, all just a hop over the Channel. That convenience pushes seaside prices up, but go a few miles inland and sizeable farmhouses go from €250,000, cottages from €85,000.
Go into the less populated interior of France - the Auvergne and the Limousin, for example - and prices drop even more, so it's well worth investigating these beautiful and dramatic regions of France a little further.
Paris, like London, has bucked the national trend, and prices are still rising, while the French Alps remain our most popular ski-property location, with the Three Valleys as popular as ever. For investors, the dual-season returns of the prime Alpine resorts are hard to beat for returns.
If you love classic French red wines then a fantastic area is that of the Entre deux Mers around the elegant city of Bordeaux, where many homes come with a small vineyard.
How to Buy Property in France
The French conveyancing system is on the whole a safe system and the purchase of a property is secured by registration at the equivalent of a Land Registry. The process generally takes up to three months from when an offer is made and accepted.
Signature of the contract (le compromise de vente) occurs at a much earlier stage than most British buyers will be used to in the UK. A contract is signed and is conditional on the notary (the French lawyer who is required to deal with the transaction) obtaining a clear Land Registry search result and a clear local search result. The buyer receives a ten day cooling off period which runs from the day after a copy of the contract signed by both parties is served on him by registered post.
Once the notary has completed all the required searches and other formalities he will invite the parties to attend his office to complete. There is no fixed completion date however. The contract will simply indicate a target date by which completion should take place.
A much higher percentage (as many as 50 per cent) of properties are sold privately in France than in the UK, avoiding the hefty estate agent fees, so a good starting point may be driving around the area you’re buying in, looking out for signs saying “A Vendre”, or sometimes just “AV”. Obviously, you then lose the “hand-holding” service that agents offer, both during and after the sale to help you settle in, and you will need good legal representation.
However most buyers start their search by looking for property online. When looking through French search engines, “pièces” means rooms and “chambres” means bedrooms. Unlike the UK, with French properties the floor size (surface) in square metres (m2) is prominently displayed, as well as the plot size (terrain), which is so much more useful in comparing properties. It is always a good idea to line up some sort of legal representation before you look for property, so that if you find the right property you’re in a position to make an offer, and can check what you’re signing!
When you’re ready to start looking at properties, make contact with some agents. They will show you a selection of houses that meet your criteria and will be able to answer questions on the buying process and compulsory diagnostic tests that will be carried out before purchases.
The Cost of Buying Property in France
A buyer should budget for between 7-8% on top of the purchase price for notary's fees and tax. The tax (effectively stamp duty) represents approximately 5.5% of this amount and the rest is the notary's fee. The seller doesn't contribute to the notary's fees. The fees and tax are payable via the notary’s account on completion of the purchase.
For new build and off plan purchases the costs payable by the buyer are significantly less - approximately 2.5%.
Additional notary's fees will be charged if the buyer is obtaining a French mortgage to assist with the financing of the purchase. Buyers should expect to pay additional notary's fees of 0.5 -1% of the amount of the loan for the notary to receive loan instructions from the bank and register a charge over the property in favour of the bank.
Getting a Mortgage in France
Applying for a mortgage from a French bank is a very bureaucratic process. The bank will require extensive information from the buyer in order to assess his financial standing. Details of income and all outstanding liabilities including current borrowings will be scrutinised.
The maximum loan to value permitted is 85% and life cover is generally compulsory for loans representing more than 50% of the purchase price. A buyer may be required to undergo a medical examination prior to being accepted for life cover.
French banks will not lend to non-French residents for what may be considered as a quasi-commercial project such as the purchase of a gite business. They will also tend not to lend to non-French residents who state they intend to move permanently to France once the property purchase is completed unless there is very clear income continuity. This is because they will be concerned as to how the borrower will be able to maintain his loan repayments if the previous UK source of income is discontinued by any proposed move to France.
There are no up-front valuation / product booking fees, but all lenders tend to charge an arrangement fee which is generally speaking only payable if you proceed with them with their mortgage offer. If the mortgage is refused, no fees are payable.
By using one of the regulated currency exchange companies to arrange the conversion of your GBP into Euros you will invariably save money compared to if you were to use your high street bank. The rates offered by currency companies are very competitive with no hidden charges.
They make hundreds of foreign currency transfers every day and have sophisticated systems in place to ensure that your Euro funds arrive where you need them, when you need them.
A 10% deposit is generally payable by the buyer on signature of the contract. It is sensible to set up an account with one of the currency exchange companies at the start of the buying process so that the Euros required for this deposit and in due course the balance of the purchase price and the fees and taxes can be purchased at the best rate available.
Property Ownership in France
In terms of how best to structure the purchase of the property, this is something that needs to be considered at the beginning of the transaction and it is important to take specialist independent legal advice on the ownership options available and the legal and tax consequences of the death of a joint buyer.
Some contracts but not all will allow for a substitution of the buyer by another or the addition of another buyer or a different legal entity between signature of the contract and completion. In addition, for some joint buyers it might be desirable to include what is called a tontine clause in the final purchase deed. This clause would ensure that on the death of one joint owner, the survivor is considered owner of the whole property. Use of the tontine is not however without its drawbacks and for married couples the adoption of the French marriage regime known as universal community is generally considered preferable to buying with a tontine clause.
Who Does What
You should only view properties through a licensed immobilier, as these agencies must have a carte professionnelle as well as full professional indemnity insurance. Almost all prices that you see on an agent’s website, or in their window, will include their fees (normally around 5-7 percent) but will not include notaires fees and taxes. You should check this before viewing.
All French estate agents operate under the Loi Hoguet (their code of conduct) and are subject to tighter regulations than their counterparts in the UK. There are also a small number of federations that have best practice charters and who offer training & guidance to their members.
The biggest, and best known, of these is the FNAIM which has over 11,000 member agencies throughout France, selling almost half a million houses.
A Notaire is a self-employed legal specialist who has public approval to draw up the conveyancing contracts and oversee the sale. All sales need to go through the hands of a notaire. They act on behalf of the state and are pointed by the Minister for Justice. Both seller and buyer are able to request a notaire of their choice – costs remain the same and they simply split the work. You can find a list of notaires, and their duties, at www.notaires.
Contrary to popular opinion, the notaire is not there to represent you. They represent the state and undertake planning and other searches with the local authorities. If you want to have someone representing your legal interests there are many UK legal practices that employ French notaries.
Once you become the owner of a property in France, there are several annual taxes for which you are likely to be liable. You will definitely be required to pay two local taxes (broadly equivalent to Council Tax in the UK). The first is the land tax (taxe fonciere). The more land a property has, the more land tax will be payable. A local refuse tax is also often charged together with the taxe fonciere.
The second local tax is the occupier's tax (taxe d'habitation). The taxe d'habitation is payable by whoever owns of or occupies a property on the 1 January each year and so for many buyers this won't actually become your responsibility until the 1 January of the year following the purchase. The taxe fonciere on the other hand is routinely apportioned between buyer and seller on the completion date with the buyer being required to pay the seller the amount payable for the period from completion to 31 December of the year in which completion takes place.
These two local taxes equate broadly to Council Tax in the UK.