An Expat’s Guide to Buying Property in France
So, you’re thinking of buying property in France? We know that you might be feeling daunted by the idea of purchasing a house in another country, after all, buying a property in your home country can be challenging enough. Luckily, the process of purchasing a home in France isn’t as difficult as you might expect. With a bit of background knowledge of the French property market and the right estate agent, there’s no reason why you can’t make your dreams of owning a French country home in Dordogne or an apartment in Paris.
Whether you’re looking to buy a French property as a holiday home, for work, or for retirement, there are some things that you will need to know before you can start shopping for your dream home. But luckily, we’re here to help you understand the purchase process. This guide will walk you through everything you need to know about investing in overseas property, from post-Brexit advice to finding the right estate agent. Let’s get started!
The Property Market in France
Is Now a Good Time to Be Investing in French Property?
So first, a bit about the current property market in France. Similarly to the rest of the world, France has been hit pretty hard by the Covid-19 pandemic. However, you shouldn’t let this alarm you too much, since France is actually in quite a good position economically.
Despite the pandemic, analysis shows that now is actually a good time to invest in French property. The property market in France has been surprisingly resilient to the Covid-19 pandemic; although house prices have been rising in France, they are still 10% below their 2006 high-point.
The property market is also forecast to rebound strongly post-Covid and house prices are predicted to increase by 3.5% across France in 2021. As we expect house prices to increase in future months, this means now could be your chance to secure a good price on French property.
Buying Property in France After Brexit
Thankfully, Brexit hasn’t affected your rights to buy property in France. Post-Brexit and as a non-EU citizen, you can still buy and own French property and you still have the option to rent it out. One change that you should be aware of, however, is that if you are planning to stay in your property for longer than 90 days you will need to apply for a long-term visa.
If anything, Brexit has actually given the property market in France a lift. In 2020 before the end of the Brexit transition period and after the UK’s first lockdown, there was a noticeable surge in British buyers looking to acquire second homes in France. And for Brits who already own property in France, more of them are now moving within France rather than returning to the UK to take permanent residence in their French homes.
Things to Consider:
Should I Buy or Rent a Property in France?
Getting Residency in France
Finding a Property in France
Now comes the exciting part – searching for your home away from home! Luckily, this part of the process might seem familiar to you since it’s very similar to doing a property search in the UK. The most common way to find a home in France is by using an estate agent (un agent immobilier). You can acquire property through public auction (vente aux enchères) or through private sales. In most cases, we would recommend using an estate agent unless you’re very familiar with the French property market already. Having an estate agent’s support is especially helpful when looking for homes in remote areas or provence where properties are more difficult to find, especially properties close to the amenities you need.
Finding a Good Estate Agent (Un Agent Immobilier)
To ensure that you’re signing up with a reliable estate agent that you can trust, you should make sure that they are a member of a registered body. You can do this by identifying any of these acronyms on their website: FNAIM, SNPI, UNIS, or CNAB. If they are associated with one of these acronyms, it’s a good indicator that the company has a financial guarantee, liability insurance and at least one staff member holding a carte professionnelle.
Also, remember that in France, estate agents may ask you to sign a “bon de visite” document before visiting any properties on the market. This document specifies the details of the buyer and the property, designed to prevent conflict between estate agents. It’s a standard procedure in France and nothing to worry about.
The Process of Buying a French Property
Can I Get a Mortgage from a French Bank?
Because it’s quite common for foreigners to buy French property, there are a few French banks who will be happy to provide you with a mortgage, and the process of obtaining a French mortgage is pretty much the same as it is for French residents. Typically, a lender in France will allow you to borrow between 70-80% of a property’s value. However, some lenders will limit their loans to up to 50% of the property’s value to non-EU citizens, so this is something to be aware of.
Another thing to keep in mind is that if all of your combined credit commitments (including rents, mortgages, and other expenses) add up to greater than 33% of your household income, then the bank will not provide any further credit. If you have your deposit ready and are looking to send money to France, then it’s a good idea to look into the services of a foreign exchange expert such as Halo Financial to help you get the best rate on your international transfer.
Most French banks employ English-speaking representatives to help you but you might want to hire a professional translator just in case.
The three most common types of ownership in France are en indivision, en tontine or a Société Civile Immobilière (SCI). If you’re buying your property with someone else such as your partner, you will need to choose either an en indivision or en tontine agreement which will protect the interests of both parties. A Société Civile Immobilière (SCI) is where a company is set up for the purpose of owning and managing real estate. There are some tax advantages to this process, however, it is becoming a less popular choice as the benefits have weakened over the years. It is best to discuss with your solicitor before making any decisions on which ownership option is best for you.
Remember that French inheritance laws state that you must leave your children a percentage of your assets. This means when owning a joint property in France, you cannot leave all your assets to your spouse.
It is the responsibility of your notaire (legal officer) to put together the contract for your property. The first document you are likely to sign in the process of securing your property is the Compromis de Vente. This is a written contract of the sale agreement that outlines the agreement’s main terms between the buyer and seller. The Compromis de Vente is a legally binding document, so it is crucial that you fully understand what you are signing at this point of the sale. The main contract is called the Acte Authentique, and this is the final purchase-sale contract signed by the buyer and seller of the property. Once this is signed, the property is legally yours.
In the property buying process in France, there is a ten-day ‘cooling-off period’ available to the buyer at the end of which the deposit must be paid and the Compromis de Vente has been returned. During this period the buyer can withdraw from the purchase without penalty, however, you will have to pay a 10% penalty fee.
A property survey is a detailed and documented inspection of a property’s condition. The report can highlight any issues or defects before you go forward with the purchase of a property. Property surveys in France are slightly different to property surveys in the UK however.
In France, the property seller is legally obliged to commission and pay for a number of professional property surveys. There are ten reports in total that they must commission: asbestos, lead, electrical wiring, septic tanks, termites, energy efficiency, natural or industrial disaster risks, gas installations, radon, and geotechnical survey. These reports are put into a single document called a DTT (Dossier de Diagnostic Technique). Remember, the DTT doesn’t include the building survey that we have in the UK. If you would like a full structural survey, you will have to commission and pay for this yourself.
If you need a survey, but do not have time to carry it out before you sign a contract, you should ask the notaire to include a “clause suspensive” in the Compromis de Vente. This is designed to ensure that your property purchase is subject to a satisfactory survey.
Planning Permission and Cadastral Plans
Before you sign on a property, make sure that you ask to see the cadastral plans from the estate agent. The cadastral plans are the French equivalent of the land registry in the UK. This will document the size and location of the property and show whether there are other buildings nearby to highlight any geographical factors that affect property price. You should also enquire about planning permissions if you are thinking of doing any work on your new home such as extensions or renovations. This is important even when purchasing property in the countryside, as land can be reserved for agricultural purposes and reduce your chances of gaining planning permission.
The Deed of Sale
Once all of the checks are complete on your property, then you will need to go and sign the deed of sale contract (acte de vente) at the notaire’s office. This legal document confirms and records the purchase of the property and transfer of ownership from one party to another. The document will be read aloud to you before you sign so you may need to bring a translator if your notaire cannot provide one for you. After signing and paying the required fees and taxes, you are officially a property owner in France!
How Much Do French Properties Cost?
Taxes and Fees
Remember that there will be some taxes and fees to take care of in the process of purchasing your French property. When you are looking at a property, it’s a good idea to ask the estate agent what the quoted price includes. Any prices displayed on an estate agent’s window should include the estate agent fees and in this case, the price will be followed by the letters FAI.
There are three types of fees that you might be entitled to pay:
- Estate agent fees
- Notaire’s fees
- Mortgage fees
Notary fees are fees set by the government and the cost of these fees depend on the tax bracket of the property. Remember, every property sale in France has to be made through a notaire, so there is no way of avoiding these fees and unfortunately, they can sometimes be substantial. The Notaire’s fees will typically be around 6-8% plus VAT at 20%.
There are three taxes that you must pay in France on residential property. These are:
- Stamp duty
- Land tax (Taxe foncière)
- Local taxes (Taxe d’habitation)
Stamp duty for properties over five years old are usually charged at 5.8% and newer properties are usually charged at 0.7% plus 20% VAT. You will pay a pro-rata amount of land tax (taxe foncière) and local taxes (taxe d’habitation) which will be due on the 1st January each year.
Remember, some properties will be sold with all taxes included in the cost. This is called TTC (toutes tax comprises).
As well as purchasing fees, you may also be concerned with issues surrounding inheritance law, income, and capital gains tax. If this is the case, you should consider consulting an English-speaking legal adviser who specialises in French property law who will be able to provide advice.
How Do I Pay for My French Property from Abroad?
Using your local bank to send money abroad is often expensive and will cost you the highest fees. Instead, using the services of a reliable foreign exchange company to send money to France to pay for your French property from the UK, will help you to secure the best exchange rate. You’ll also have access to the expertise of a professional foreign exchange expert who can provide you with advice and information on the exchange market.
Halo Financial allows you to make easy and secure transfers to France whilst getting the very best exchange rates. Find out more about how we can help by giving us a call today: 020 7350 5474 or visiting the Halo Financial website.
Buying Property in France – FAQs
What are the pitfalls of buying a house in France?
There are a few pitfalls people sometimes face when buying property in France. These include not accounting for additional fees and taxes in the original budget, not bringing a translator to documentation signings, and not asking for certain papers prior to the sale such as cadastral plans that are crucial for getting planning permission.
Can a foreigner buy a property in France?
Yes, there are no restrictions on foreigners buying property in France. Even if you are not a resident, you can still buy and own French property with the option to rent it out if you want to. You will need a French bank account, valid identification, and the correct visa if you are going to live there.
Can I buy a property in France and live there?
As long as you have a French bank account and valid identification, there are no restrictions on foreigners buying property in France, but this does not automatically make you a resident. You’ll need to get a Visa to live in the country and then go through the process of applying for permanent residency if you’re eligible.
Will Brexit affect buying property in France?
Brexit has not affected your ability to buy property in France as a non-EU citizen. As long as you have a French bank account and valid identification, you can still buy property in France. However, you will need to apply for a visa if you are planning to stay there long term.
Can I still buy property in France after Brexit?
Yes, you can still buy and own property in France post-Brexit and as a non-EU citizen. If you are planning to stay in your property for longer than 90 days, however, you will need to apply for a long-term visa.