France remains the dream destination to move to for a great number of people around the world. Whether you are buying a holiday home, a house to retire to, an investment property or a property to live in while you work in France there are three key things you should know about buying property in France.
Estate Agents in France
As a general rule, it is the buyer who settles the agency (realtor) fees in France and not the seller. Why you may ask?! One good reason is that if the buyer pays the agency fees, his legal fees are lower as the legal fees are based on the NET sales price (ie price paid to seller). If the seller pays the agency fees, then the legal fees are based on the total price inclusive of agency fees. This can make a big difference to the amount of legal fees paid. Also when the buyer comes to sell in a few years time, he can reduce his capital gains tax by the amount of agency fees paid on the purchase… again a big saving. In any event, don’t be fooled… the buyer ALWAYS pays the commission.
Purchase fees will range from 4% – 10% of the price of the property. ‘FAI’ means “Frais d’Agence Inclus” (agent’s fees included) ‘TTC’ means “ Toutes Taxes Comprises” (all taxes included). If you don’t see these words included in the advertising details ask for confirmation as that might mean the fees are payable by you, the buyer. If FIA and TTC are included in the sales particular the vendor will usually be paying the fee. Estate agents in France are known as “Immobiliers” and are highly regulated and qualified.
Sometimes it pays to buy through a notaire – but not always. A notaire is a sort of conveyancing lawyer and legally entitled to conduct property contracts in France. Notaires are also entitled to sell property. A notaire’s transaction fees may be lower, but, check out the “legal fee” rate when buying through a notaire… there are two rates, one for “negotiated through notaire” and one “not negotiated through notaire” (ie agency or direct). It usually works out the same in the end for buyers. Notaires may advertise properies and have their own website and their own magazine, and they display properties in their offices. (website for notaires and property: www.notaires.fr)
Property Contracts in France
Be aware that once you sign the initial stage of a two part contract and paid your deposit to hold the property, you have a seven day cooling off period. After that, if you do not complete the contract and payment you will forfeit your deposit without a sufficient reason to pull out. If you are not able to secure a mortgage, you will not be held to the contract and there are other conditions also inserted into the contract, for example, the buyer must be alive on the day of the sale, if not the sale is null and void. The one good thing about contracts in France is that you know where you are once you have signed the initial contract and the seller will not be left high and dry after three months just because a buyer has changed their mind.
Property Taxes in France
There are two French property taxes in France:
Taxe Foncière and Taxe d’Habitation
Taxe Foncière is paid by the owner of a property; taxe d’habitation is paid by the resident of a property even if he/she is not the owner. Non-payment of the taxe d’habitation is considered a serious offence that may result in fines or property being taken by the authorities to cover the bill.
The vendor will be able to give you details of the payments being charged on the property which will vary considerably according to the size and state of the property and location which will affect the level of services provided by the local council.
The person living in the property as at 1 January is responsible for bill payment for the annual payment, if you are buying a property, make sure that you resolve responsibility for payment through your estate agent, notaire or with the vendor.