L’Emplacement make this process much less stressful and complex by providing advice and assistance for our clients.
1. Top Tips for Buying a Property in France
- The process of buying property in France is fairly straightforward and the registration system is sound. However, as a general rule, it proceeds without the appointment of a solicitor or an avocat, so you need to have your wits about you.
- A limited knowledge of French may be worse than none at all, as it may give you a false sense of security. Unless you are fully confident that you know what is being said, get some assistance with translation.
- Take advice before signing a sale and purchase contract prepared by an estate agent. Estate agents act for the vendor so you need to ensure the contract is equitable. Ideally, you should only sign in front of a notaire.
- If at all possible, appoint your own notaire to act for you in the transaction, rather than using a single notaire on a shared basis with the vendor.
- If you are unsure whether you are paying over the odds ask your own notaire for their opinion as they will be familiar with the actual selling prices for properties in the area.
- As mortgages are comparatively cheap in France, and can offer some tax advantages if you relocate, you should consider buying with a French mortgage on the property.
- If you are seeking a mortgage to buy the property it is imperative you include a conditional clause in the sale contract. You should also include conditional clauses relating to planning and other matters as necessary.
- A 10% deposit is not obligatory, as a lesser sum is equally valid, so you may be able to get away with offering a lower deposit.
- The vendor is obliged to provide a number of statutory survey reports, which you should verify with the notaire. These surveys fall well short of a full building survey, so do not be over-reliant upon these reports.
- The vendor is also obliged to make a number of statutory disclosures, which you should verify in front of the notaire and include in the contract, e.g. condition, tenancies. I
- nsist that any clause that exonerates the seller from hidden/latent defects is not included in the sale contract. Establish with the vendor, and confirm with the notaire in the contract, the fixtures and fittings that are to remain in the property.
- If you are an unmarried couple it is imperative you buy on a joint basis in order to protect the interests of each party.
- If you are married then if you wish your surviving spouse to inherit all of your estate, you should adopt a French marriage contract or buy en tontine. If you are not married, or you are buying as an unrelated group of people, then you should consider buying through a property company, called a Société Civile Immobilière (SCI).
- On the day of completion, or the day before completion takes place, visit the property to ensure all is as it should be, particularly in relation to fixtures and fittings.
2. Financing a Property Purchase
Make sure you understand the costs involved in buying a house or apartment and how to go about arranging finance… if you have questions just ask Christelle!!!
- Buy for cash: a straight forward option, but once capital has been invested in a French property it can be difficult to release equity (although not impossible)…
- Re-mortgage a main house to raise the cash. A straight forward option and one that does not require dealing with French banks. Bear in mind the mortgage warning “Your home may be repossessed if you do not keep up repayments on your mortgage”. This option may therefore be putting a main home at risk for the sake of a second property.
- Finance the property with a mortgage from a French bank or mortgage provider. There are very strict rules imposed by the Banque de France on all French banks and mortgage providers. These rules govern the amount a person can spend each month on a mortgage.
Mortgage in France
It is normal for the buyer to take out a mortgage in France to finance their investment. This will ensure that the buyer is best positioned to obtain a tax deduction for the interest borrowed against any rental income and minimises the requirement to put additional debt on their family home (Equity release).
French banks typically lend 80% of the purchase price (although up to 100% can be arranged in certain circumstances). You can expect to pay a mortgage registration charge of 2%(Stamp duty) and another 1% arrangement fee. In the case of a new property development a staged loan drawdown can be arranged usually with minimal repayments until the loan is fully drawn down.
All mortgages in France must be covered by life assurance; many French lenders insist their insurance policies are used and that all the terms of the mortgage are covered.
Mortgage protection insurance will be required and is normally arranged through the bank. If you intend borrowing to finance your investment it is important that this is disclosed when you sign the preliminary purchase agreement (Compromis de Vente).
A mortgage application can be declined because of financial information, medical underwriting or the unsuitability of the property, the potential lender issues a letter which can be used to ensure a deposit is refunded.
In this instance the letter must be given to the notaire or Agent Immobilier before the date stated in the Compromis de vente. Otherwise the buyer may be obliged to continue with the sale.
On receiving a mortgage offer, there is a 15-day cooling off period. This is a legal requirement and allows a buyer sufficient time to consider the terms of the mortgage before returning the documents to the lender by post.