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Deciding that you are looking to buy a property in France is easy. You’re spoilt for choice across a country that is twice as large as the UK. Although much of the process takes place in a foreign language, and is subject to French law, the steps that you have to take are equivalent to buying a property at home. Here are some considerations to help you with your French purchase.
A surprising amount of the preparation can be done before you come to France. Indeed, you’ll have to produce a lot of routine documentation to satisfy all the French administrative procedures, so fore-warned are forearmed.
 Deciding what you want to buy
Really the first question is to choose between an apartment and a house, town or country, new or old, and whereabouts? Your choice may be guided by what you see yourself doing once you have a property. Is size important? Would you like to be in the town or countryside, near to a golf course, ski slopes, coast? People who suffer from hay fever will not enjoy a country retreat, for example.
Many people only take their holidays, or start their house-hunting at one time of the year. It is important to understand what the climate will be like in other seasons.
There are some obvious advantages to buying new-build, such as the 10-year guarantee for structural soundness, and exemption from stamp duty, but modern homes tend to have smaller rooms and gardens than older ones and the garden will take time to mature. CAFPI are used to sorting out mortgages for new houses, including those bought off-plan. Our banking partners will release mortgage funds in stages, just as they do for French borrowers. You should indicate if you are buying an off-plan property on the CAFPI application form. Application Form
Older properties may have larger rooms and more character. They offer more scope for the owner’s imagination, through renovation. On the other hand, they may be more expensive to heat and need running repairs. Some fixtures and fittings will be at the end of their life. Mortgages arranged through CAFPI can cater for both your immediate cash needs and later renovations. Renovation and Restoration
Think about your must-have features, which it will be difficult to add later: a garden, garage, cave, terrace or balcony, etc nearby cafés and restaurants, access to doctor and dentist.
The most suitable property for you depends on whether you plan for it to be your main residence (immediately or later), second home, holiday home to be let out occasionally, or a buy-to-let investment.
Deciding how to pay for your property
Are you thinking of paying cash, borrowing at home or taking out a French mortgage? With interest rates at least 2% lower than dollar/sterling rates, a euro mortgage is the sensible choice. It means that you are not locking up your capital, or equity on your main home, as the guarantee will be taken out on the French property. If you plan to earn some rental income from the property, this can be collected in Euros and put towards the repayments. If you would like an idea of what a French mortgage would cost fill in the CAFPI decision in principle application form. How much can I borrow? Pre-Approval Mortgage Certificate
For EU (including UK) residents and taxpayers the minimum deposit is normally 15% of the purchase price but in some cases a 100% mortgage is possible. For those outside EU, the minimum deposit is 20%. French mortgages are normally repayable when the oldest borrower reaches the age of 70 though some lenders accept 75. We can arrange for a higher age limit subject to special insurance conditions.
Preparing yourself to buy
Wherever you decide to buy, you will have to produce documentation about yourself and your family, so it’s a good idea to assemble the paperwork before you leave home. If you take original documents, many French administrators will be happy to make their own photocopy. If they request a document to be sent later, they are quite likely to asked for a certified copy (and possibly a translation, too). They may also be less flexible about what documents they will accept.
A useful dossier, to prove your civil status and financial standing would include passport, birth and marriage certificate, final decree from previous divorce, proof of residence in the UK (such as a driving licence or Council Tax bill). It can also be useful to take along a utility bill as proof of address, as this is commonly accepted in France, and recent bank statements, showing income and outgoings.
If you need to confirm your income, recent pay or pension slips and P60 are the best documents for employed people and the retired. Self-employed people should have a copy of their accounts and tax returns.
The signing of the contract to purchase requires a deposit (about 5% for new properties and 10% for older properties), so you will need to make sure sufficient funds are available for the Estate Agent or Notaire to hold to completion. Most professional agents are happy for you to telex funds to their client account, once you have returned to the UK. Collect details of their account while you are with them.
Finding a property
For some people this is where they get most fun, while for others frustration sets in. You can take some of the stress out of the process by being well prepared. It’s not necessary to have much French to go house-hunting.
It is not usually possible to view French property on Sundays or Bank Holidays.
Estate agents (agents immobiliers) are usually local to an area and therefore will only have properties for sale within that area. The agent earns commission from the sale of the property and will try to obtain the best possible price for the vendor, but will probably have a shrewd idea of the lowest price a vendor will accept. One reason for the higher fees at French estate agents is that all viewings are accompanied, and you will often be taken to the property in the estate agent’s car. They will often sign for you, as a proxy, at the Acte de Vente and arrange the transfer of utilities. Private sellers also exist, but may not set a price at market rates and are unlikely to help you further with the purchase process.
The window price of a property is usually shown as FAI (Frais Agence Inclus). Sometimes agents appear reluctant to phone a client in front of you, because the offer price to the vendor will be exclusive of their fees. Most estate agents are members of FNAIM, the Fédération Nationale des Agents Immobiliers.
Just as at home, it’s worth taking a digital camera, torch, tape measure, and notebook & pencil on a property viewing trip.
It can be helpful to complete a checklist for all the properties which you view, so that you can compare them afterwards. It is not usual for French estate agents to produce particulars. Establish whether the property has electricity connected, gas (bottled or town), phone, Broadband, TV, fosse septique or mains drainage. In France, utilities charge by the metre from their current nearest point to your property to connect their services.
Whilst viewing the property, you should note the condition of the walls, windows, roof, chimney and drains. Ask the agent or seller why the property is for sale and how long the property has been on the market. Try to find out what the neighbourhood is like and consider whether you would fit in. If you see a property you like, go back later (different time of day/week), unaccompanied, to check out the district, visit the bar, talk to the locals. In holiday areas, it is important to establish how many businesses close at the end of the season, as this practice is very common in France.
If the property has its own garden or grounds, you should take note of the state of boundary walls, gates, fences, patio, pool area, outdoor structures such as sheds, pool house, lawn, flower beds, irrigation, shrubs, trees, shade and outdoor lighting. These can be difficult or expensive to change. It’s important to establish who is responsible for the boundary fences and whether there are any rights of way. In apartment blocks you should consider the common parts, which can only be updated when the whole co-propriété votes for the work.
Other factors in the near vicinity which might affect your enjoyment include: safety (crime rate, roads, lighting), noises (trains, planes, highways, animals, industry), smells (farm animals, industry, septic tank, water treatment works), neighbours (demography, pets, privacy), public transportation (bus, train, metro), shopping facilities and hazards (flooding, avalanche, power lines, phone masts).
Once in your chosen part of France, it is usually possible to buy 1:25000 scale IGN Série Bleue maps of the area showing contours, water courses, power lines etc.
Choosing the property that is right for you
However much research you do, and however many checklists and costings you draw up, the most important choice is a property that feels right.
The legal process
If at all possible, allow one working day at the end of your visit for completion of the preliminary negotiations and paperwork. Sale and purchase of French real estate is governed by French law whoever is buying or selling the property. Understanding what is going on may help you understand why it takes the time that it does.
The Notaire is a public official, addressed as Maître. A notaire is responsible for the conveyance, preparing the various documents and confirming the seller's title to the property, checking that there are no other mortgages on the property, etc. The notaire’s main responsibility is to see that the French record of property ownership is correct, rather than to be concerned about the individual’s personal circumstances. There is no conflict of interest if both parties use the same notaire; if they use separate notaires, the fee is divided between them.
The Compromis de Vente is the first part of the sale process. The notaire or estate agent can draw up the Compromis de Vente. The Compromis de Vente is a legal contract; you should read it carefully before signing it to check that all the details and conditions are correct, such as:
· Details of the vendor(s) and purchaser(s); make sure that your names and addresses, which may be unfamiliar to a French person, have been spelt correctly;
· A full description of the property, including the “parcelle” numbers;
· The surface area of the property and land;
· Details of any fixtures and fittings included in the sale; “meubles” do not attract stamp duty and are commonly included in holiday flats;
· Clauses suspensives, such as a clause stating that the agreement to purchase is subject to gaining mortgage finance. Other clauses can be inserted, such as the seller having to carry out necessary repairs;
· Details of the mortgage and the date of when you should have the mortgage offer;
· Confirmation that an asbestos inspection has taken place (all buildings built before 1997) within the last 3 months;
· Depending on the département, properties pre-dating 1949 also need a lead plumbing inspection and a termite examination
· Property price and agent’s fees;
· Details of the notaire(s) and estate agent(s);
· Target completion date – usually two or three months;
· The penalties that will be incurred by either party if completion doesn't take place.
Once the Compromis de Vente has been signed, French law gives the purchaser a 7-day cooling off period (loi Niertz). For this reason, each buyer must be sent an individual copy of the Compromis de Vente by recorded delivery.
Although the Compromis de Vente contains a clause suspensive to allow for mortgage finance to be arranged, time is of the essence and if you do not make reasonable efforts to obtain mortgage finance in time, you could forfeit the deposit. Some agents are reluctant to take a "clause suspensive" buyer seriously as a surprisingly high percentage of deals in France fall through when the buyer can't raise the funds and exercises their right to withdraw. (NB the upside of this is that many "sold" properties come back on the market after about 6 weeks: It is not unusual for a seller to be disappointed 3 or 4 times in a row by purchasers withdrawing!) For this reason, it is much safer to obtain a prior decision in principle and a CAFPI mortgage pre-approval certificate: It may also help you get a better price as you are almost a cash buyer. Pre-Approval Mortgage Certificate
If you sign a Compromis de Vente affirming that you will not be relying on mortgage funds to complete the purchase, you may find that you will not be permitted to do so later. On the other hand, it is possible to discard a decision in principle.
A short time before the notaire is ready to complete the transfer, you will be sent a draft (projet de l'acte) of the Acte de Vente, which is the final deed of sale. It will contain much of the same information as in the original Compromis de Vente, but again needs to be checked thoroughly. The Acte de Vente will also state the date that you may take possession of the property. If you have not already done so, you will be asked to produce your birth certificate and passport, together with marriage certificate and divorce decree if applicable, to confirm your civil status.
If you think you are unable to attend the signing of the Acte de Vente you can give a mandat to authorise someone to act on your behalf. A reputable estate agent usually offers this as a free service.
Once the Acte de Vente has been signed and witnessed, the notaire has to pay all the taxes, settle all the accounts of the purchase/sale and register the deeds and mortgage. A few months later you will receive a certificate informing you that the title has been registered. The original title deed is kept by the notaire, but the Notaire’s Etude is able to make authorised copies.
Other costs to face up to
Commonly referred to as notaire’s fees, there are a number of taxes and charges which the notaire collects, which are the “frais d’acquisition”. As well as the notaire’s own charges, which are subject to TVA, the notaire collects taxes on behalf of the French state and incurs charges both locally and at the registrar of mortgages. For new build, the notaire’s total charges will be about 4% of the purchase price; for an existing property they will be around 8%. Eventually you will receive a detailed account of the frais d’acquisition, together with a refund or a request for the shortfall.
All properties must be insured from the date of ownership. Some lending banks offer building and contents insurance to borrowers.
Taxe foncière (land tax) The owner on the first day of January is liable for paying this tax, which is collected in the autumn.
Taxe d'habitation (local taxes) Once the property is furnished and has water and electricity it becomes “habitable”, however infrequently it is used. The tax varies by location, according to the size of the property and its facilities. As of 2005 television licence fees are now included in the taxe d’habitation.
Charges de Copropriétaires (maintenance charges) The maintenance of shared parts of a complex, such as an apartment block is paid for by the Copropriété, using funds raised from owners. Charges will vary according to the size and quality of the complex, whether there are lifts, caretaker, swimming pool, gardens, secure parking, etc. You should consider these charges before signing the Compromis de Vente. Ask to see previous years’ accounts and minutes of residents’ meetings to check that all is in good order.
Taxe de plus-values (capital gains tax) There is no capital gains tax incurred if you sell your main home to buy another. Capital gains tax applies when you are selling a secondary residence within 15 years of purchase. The tax is applied to the difference between the sale price and the original purchase price, taking into account any improvements for which valid receipts can be produced and the transaction costs. After a delayed start of 5 years, the tax is reduced by 10% a year. The Notaire will calculate the tax due and take it out of the sale proceeds.
ISF (Impôt de solidarité sur la fortune): Wealth tax affects those with assets over €732,000 (2005 rate) on 1st January and is calculated in bands above that figure. French residents and non-residents with assets in France are taxed on the basis of their assets as at 1st January each year.
Taking ownership
Once the purchase is complete, you are free to enjoy your French home. If you have opted for a Euro mortgage, a French bank account will often be set up simultaneously with the loan (FAQ Q7). With many bills attracting penalties for late payment (majoration), setting up monthly direct debits can bring peace of mind. Bank charges are generally higher than in the UK, but a cheque book, Eurozone credit card (cheaper than world-wide) and regular statements are a good idea.
Electricity: in France various tarifs are available, depending on the property’s maximum consumption. Visit EDF to find out which is best for you.
Telephone: Phone operators in France offer many different packages. Research what would suit your usage pattern.
Plumbing: check that you know where the stopcock is and the route of the pipe from the mains on to your property. You would be charged for any leaks on your side of the water meter.
Chimney sweeping: any chimney, which is used, has to be cleaned annually.
Insurance: many French contracts work on a tacit renewal basis. After completion, you have the time to investigate whether there are better insurance policies available, and give 2-3 months’ notice to your existing insurer if you decide to change.
Mairie: in France, the local Maire likes to know the people in the commune, especially in country areas. It's worth noting that the Maire is responsable for a number of local decisions, including planning permission.
Rubbish: France is heavily committed to recycling and local schemes make this easy. The Mairie is a good place to start; they may even supply rubbish bags and recycling boxes. In France, you usually need to take proof of local occupancy (such as a utility bill) to use the local tip.
Furniture: French furniture is generally slightly smaller than its UK equivalent; try before you buy is the best test.
Delivery: a surprising amount of goods, especially bulky items, can be delivered at no extra cost, so it is always worth enquiring if you shop locally. Local delivery drivers seem able to find the most remote places, provided they have the code postale.
Neighbours: Most French people are well disposed towards newcomers and foreigners. Even if you don’t speak much French, it is worth trying to get to know people nearby as early as possible. If you are planning to take up residence in France, being part of the local community can be very enjoyable; you will often find that 'the locals' can be very helpful too.
Ex Pats: they are all over France. They will certainly be willing to show you the ropes, and ease your way into the French lifestyle.
Contact CAFPI now for any type of French mortgage !
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