10 things you should know before buying a French property

10 things you should know before buying a French property

[:en]Buying a property in France is a dream many of us hold! It is both an exciting and enjoyable experience. However, buying a property in a foreign country is a challenging one as well, particularly if you do not speak the language and are not familiar with the process. Let us present to you briefly the things that you should know before buying into your dream house or apartment in France: 


1- Taxes

It is important to give consideration to the local taxes as well as inheritance taxes both in France and the country of your residence. For local taxes that you will have to pay as the owner and occupier of a property are Property tax (Taxe foncière) and Residential tax (taxe d’habitation). The property tax is to be paid by the owner on the first of January of the year of purchase. It is set for the whole year. The residential tax is to be paid by the person living in the property on the first of January of the year. So, if you are renting your property, you are exempted as it would be paid by the ‘occupier’ of the property. The other important tax is the Inheritance tax. This is one area where many buyers seek legal advice prior to buying a French property.


2- Insurance

You should ensure your property as soon as you become the owner. You can simply take over the previous owner’s insurance, but it might be best to take out insurance tailored to your own needs. 


3- Mortgage:

There is a possibility to get finance (mortgage) from French Banks, even if you are not a French citizen or resident. Once you sign the reservation contract, you have 45 days to apply for a mortgage, and one month to get the initial approval. If the mortgage is not approved, the contract is cancelled and the buyer claims back the deposit (suspensive condition has to be mentioned in the preliminary contracts). French banks will lend up to 80% of the purchase price for a classic freehold, 70% for a leaseback. The banks are able to offer both fixed and variable rates mortgages. The duration of the loan is usually 5, 10, 15 and 20 years.


4- Legal or Notary fees

The legal cost or most commonly known as Notary fees, have to be transferred to the public notary’s escrow account prior to the signature of the title deed of sale. It is about 2.5% to 3% if the property is off-plan and paid with the 2nd instalment towards the property.  For resale property, it is about 7% to 8% of the price and is paid with the final instalment.


5- Conveyancing

The conveyancing process usually takes around two to three months and is carried out by a Notaire. It is followed by the signing (by buyer and seller) of the acte de vente (deed of sale, usually in the Notaire’s office). Alternatively, the buyer can provide a power of attorney in his/her country of residence, legalised. The buyer then sends legalised power of attorney to the notary office to permit him to exchange the contracts.


6- Cooling off period

A 10-day period then follows, during which time the buyer can pull out for any reason without penalty or losing their deposit. 


7- Deposit and initial Contracts:

Once you have decided on a property and have mutually-agreed-upon the price, you as a buyer and the developer/seller will sign a document known as a reservation contract (in 3 copies). This is the legally binding document which confirms that the developer/seller must sell the property to the buyer. At the same time, you put down your deposit into the escrow account of the Notaire Public. The deposit is usually between 2% to 5% for an off-plan property and for resale, it is 10%. The deposit is kept by the notary until the signature of ‘definitive contract’ for transfer of title deed (which is the next step) and then the deposit is transferred to the developer. The paid deposit will be deducted from the price of the property.


8- French Notaire

In France, all purchases have to be done through the Notaire Public. A Notaire is a legal specialist with a public authority mission who draws up authenticated contracts on behalf of his clients. A Notaire is a public officer who operates in every area of law including family, property inheritance, asset, company law, countryside law, local authorities, etc. He acts on behalf of the State and is appointed by the Minister of Justice, and the fact that an instrument is drawn up by a Notaire is a guarantee of its legality and authenticity. All this means that the Notaires are vested with prerogatives of official authority which they receive from the State. Furthermore, the Notaire holds an escrow account to receive the funds from the buyer.


9- Location

France is one of the most beautiful countries in Europe, if not the most beautiful, and has the most varied landscape: from the historical cities to the spectacular countryside for nature lovers to the mountains and the beaches of Mediterranean and Atlantic, and the most scenic lakes surrounded with greenery. You will be spoilt by the choices. So, decide carefully where you wish to buy. 


10- Motive

To find the right place, do your homework and prepare a list of requirements for the property, location and surroundings. You will definitely succeed in finding the right property if you are sure about exactly what you want. With one of the most regulated property markets in the world, France has always been a great place to invest. Holiday lets are a lucrative business, and buying a second home is perhaps the best and most assured way to invest your money. There are three main property types in France; classic freehold, leaseback & “DIY leaseback”.