Audemaison

The first in our series of Tips sheets covers some of the things to consider when buying a property in France.

Some of these tips may seem pretty obvious to you, but it is amazing how many people forget some of the basics when they see a ‘cheap’ house available, or when they think that a property abroad is not as big a deal as buying one in the UK (yes, we’ve heard that said several times).

You should treat a house purchase in another country with AT LEAST as much care and thought as purchasing one in your own country. And many of the same rules apply.

Buying a house

• View a number of properties and set clear parameters. Don’t be pushed by the agent. the best way to do this is to write a list of the key things you are looking for in a property, the extras you would like if you could get them, and the price range you can afford. When writing your list, BE REALISTIC. You are unlikely to get a chateau for €100k. Look in an area at the properties you can get for the money and decide whether you are getting what you want. If not, look in a cheaper area.
• Have you found the perfect house? Consider a survey. Remember major defects mean major renovation costs. The main areas to look out for are the roof, electricity and drainage as these are fairly costly in France. Make sure the house is sound, especially if it is built of weak materials such as masse (a mud/mortar material used a lot in northern France).
• Make an offer via your agent. Beware of properties and vendors that include a ‘cash element’. In fact, beware of an estate agent who proposes this to you. This is illegal in France as it is an attempt to evade Capital Gains Tax and could result in your prosecution as well as the agent and the vendor. Consider the repercussions for you: you may seem to get the property cheaper than you would have otherwise, but the official price you pay for the property will be the figure given to the Notaire. This is the price you have paid for the property and will be used in the calculation of you Capital Gains Tax when you sell the property. And when you sell it, you can bet the purchaser won’t be as gullible as to agree a cash element for you! You will end up paying twice, once when you purchase and once when you sell.
• Offers are made and confirmed in writing and in French. This can be done by fax and is a formal agreement between you and the vendors. This is a good time to provide your agent with copies of your passports for identification.
• To make an offer you will need to provide your name, address and occupation. The Offre d’Achat also details the agent, the vendor, the offer price and details of the property, including a legal description of the property. Make sure that you are getting what you were shown by the agent and, if you have any questions ask them now; once you sign, the Offre is a legally binding document.
• Offer accepted – get a French bank account as soon as you can. The French use cheques everywhere and an account is essential. Try a major bank and get your helpful agent to assist. However, do not rely on your agent to do this for you – he/she will go to their local branch of a bank they are familiar with and you will end up with a bank branch miles away from where your house is. It is best to choose a major bank that is used to dealing with foreign property owners. From time to time, British banks offer a Euro account for property owners. Also, look at credit cards in your own currency that have preferential exchange rates and fees: Nationwide used to (recently stopped) offer a zero-rate exchange on all transactions using their debit and credit cards.
• Be aware that money transfers can take a while from the UK and usually require a form to be completed by most UK banks. As in the UK, it is essential that any money that is due to be paid (whether deposit or final transaction price) is cleared with the Notaire in good time for the transaction to take place. French accounts provide the IBAN (International Bank Account Number) for the account, which makes life easier.
• Compromis de Vente – the agreement to purchase. Once you receive this a 10% deposit is due to be paid to the Notaire. This is non-refundable, unless a major defect occurs (such as a termite survey turns out negative). You are now committed to purchase, as are the vendors to the sale. Please note, unlike in the UK, there is a financial penalty if you pull out after the Compromis when you do not have a valid reason. Equally, the vendors are tied too.
• The Notaire is an independent solicitor and acts for both parties. They charge fees and it is wise to allow 15 – 20% of the purchase price for the discharge of these formalities and other costs. Unlike in the UK, the Notaire will not necessarily draw your attention to details. You need to ask the right questions at the right time. If you do not speak French, get your agent’s help or hire a translator (some Notaires can provide this service). Remember, this is a house you are buying and the outlay may be worth it.
• If you are purchasing a property from several interested parties (due to a divorce or split inheritance) you are likely to find the purchase takes longer and uses a number of additional Notaires as each party can appoint a separate Notaire. In such cases, the purchaser will be liable for 50% of the fees. If any of the vendors disagrees with the sale, the price, etc., they can draw a halt to the sale. Usually this would happen prior to the Compromis but there is no guarantee!
• Remember: if you have agreed a cash amount with your agent, this will not be declared to the Notaire and will not form part of the purchase costs. This means you will bear the cost of this amount when you sell and have to declare your CGT liability. If you forget this during the completion stage and ask your Notaire why he is quoting a lower price on the document than the one you have agreed, you are heading for trouble…! We do not recommend you follow this course of action and suggest you walk away if it is suggested to you by either the agent or the vendor. We have walked away from several potential purchases for this reason.
• Completion and exchange usually takes place in a formal meeting of both parties at the Notaire’s office. It usually takes about an hour. Although you are able to ask the agent to act on your behalf (by confirming in writing – in French – to the Notaire), it is worth going to the completion ‘ceremony’. It is quite formal and usually quite interesting to observe!
• Before you complete, you will need to have obtained house insurance and you may need to provide the Notaire with a copy of the certificate and policy. You have a legal obligation to insure the property from the time of purchase, whether you have a mortgage or not. Your insurance must cover third party liabilities (i.e., in case it collapses onto someone).
• At the ceremony (or shortly afterwards if you did not attend), you will receive a confirmation of the purchase, which you will need if the local neighbours wonder what you are doing at the property and call the local gendarmerie. You may be challenged at any time by the authorities to prove your ownership, which is what the confirmation from the Notaire is for.
• You will also receive the keys, as you now own the property as you walk out of the Notaire’s office and into the nearest sports bar.
• Deeds are kept at the Notaire’s office while all the registrations are completed. A copy will be provided on request and once the registry formalities are completed you should be offered a copy by the Notaire (for collection, not posted to you). Any refund on fees will also be paid back by the Notaire at this stage.
• Now you own a French house and this is where the hard work begins!

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