A Guide to buying a Property or Real Estate in France

Real Estate Buyers Guide for France

The French Property Market

The French real estate market has been booming over the course of the past ten years. Indeed, since the birth of the European Union, a greater number of foreign nationals have taken to purchasing property within the country of France

When it comes to the sale of real estate in and across France, there are two primary areas in which the real property market has been hot. On the one hand, in major cities in France -- particularly in the French capital of Paris -- newly constructed residential properties have experience a brisk business and trade. A notable number of foreign nationals have taken to purchasing new residential properties in major cities such as Paris in the past five or six years.

In addition to the fast paced market in new residential properties in major French cities, older, larger residences in more rural regions are also in demand. Foreign nationals are making up a significant portion of the group of purchasers who are seeking out and purchasing these types of older, larger properties in rural areas in the country.

Investment Property in France

Like other nations comprising the European Union, France has experienced an up tick in the number of foreign nationals who are investing in commercial real estate in France since the creation of the EU. The pan-European marketplace has created an environment in which investing across national boundaries and throughout Europe has become a profitable enterprise for many men and women.

One example in which foreign investors have played a significant role in real property is found in the number of foreign nationals who have invested in real estate associated with the retail trade in major French cities. Indeed, within Paris alone, the number of foreign investors in commercial real estate, most particularly in buildings and property associated with retail operations, has increased by over 100% in recent times.

Overall, the commercial real estate market in major French cites has proven to be a very profitable investment for many foreign nationals. Most analysts agree that the commercial real estate marketplace should remain a stable and solid investment for investors, including foreign nationals, well into the next decade.

Even with some of the civil unrest that has been experienced in some locations in France during the past year, the real estate market has not experienced any real aftershocks as a result of this restiveness in some parts of the nation.

Residential Real Estate in France - Single Family Properties

As mentioned previously, the residential real estate market has been hot in many locales throughout France. In the major cities, newly built properties have been the subject of brisk sales in recent years. Many foreign nationals have been found snatching up these new residences in Paris and in other larger French cities.

In addition to newly built properties in larger French cities, rural residences have also traded on the marketplace steadily over the course of the past decade. Many foreign nationals have taken to purchasing larger residences in rural areas in France for retreat and holiday or vacation properties. For many years, France has been a destination of choice for holiday travelers from much of Europe and from other ports of call around the globe.

Residential Real Estate in France - Apartments

In the 21st century, the resort communities in France remain some of the most popular destinations for travelers and tourists from around the world. When it comes to French resorts, including the magnificent cities located on the French Riviera, many travelers and visitors actually return to these cities time and again for holiday stays. As a result, the demand for residential properties to be used for vacation purposes runs high in some of these communities. Apartments in resort communities have been in steady demand over the course of the past twenty years.

For the most part, apartments for sale in French resort communities are priced high. Buying an apartment in a major French resort community does not come cheap.

In addition to resort communities, Paris has also experienced a significant increase in the number of new and more expensive apartment units that are being constructed each and every year. Many foreign nationals have taken to purchasing apartments in the French capital city -- particularly since the inception of the European Union and the integrated European economic community.

Holiday Property in France

As mentioned previously, vacation real estate has been in high demand in France in recent years. The French resorts, most particularly those resorts in and around the French Riviera, have experienced brisk business in vacation real estate. Generally speaking, these properties come in the form of apartments that are being snatched up by foreign nationals at record rates.

In Paris as well a significant number of residential properties are sold each year to foreign nationals that intend to make use of these properties for vacation or holiday purposes. As in the resort communities, apartments tend to be the residential property of choice for people seeking vacation or holiday properties in the capital city.

Finally, when it comes to vacation or holiday properties in France, rural residences are also greatly in demand. There are some spectacular (and large and expensive) estates that are on the market at this point in time, a good share of them having been purchased by foreign nationals for vacation purposes. Rural French residences are expected to remain in high demand by foreign nationals for use as vacation or holiday properties well into the next decade, according to real estate analysts in France.

Mortgage Options

When considering the options for a mortgage on your overseas property there are a couple of choices to consider;

Do you consider raising finance on your existing property in the UK to cover the whole cost of your purchase abroad? A good idea if the interest rate in the country in question is a lot higher than it is here in the UK as you will pay a lot less in monthly repayments.
Do you secure a mortgage against the property from a local bank in the country of purchase? This can be a wise option especially if the interest rate is lower than our current UK interest rate. Most overseas mortgage / bank lenders will require upto 30% deposit on mortgages. However, you will need to give some thought to how you will service your mortgage payments each month especially if you are not living or earning in that country as you may well lose out on exchanging money each time to cover monthly expenses.
Some Builders and developers may well offer their own mortgage facilities on their properties for sale. This can be beneficial to both parties depending on the logistics of the mortgage or loan facility. Always check and compare with the two options above before making your final descision.

For more details on Mortgages in France visit our Mortgage page in the French section.

Specific steps to buying real estate property in France

The first step that occurs in the real estate buying process in France is an oral agreement to make a purchase. The oral stage of the real estate buying process is informal and actually not legally binding. However, once a buyer conveys a purchasing price to a seller, and if the seller agrees on that offering price, movement towards a binding agreement which is known in France as the compromis de vente.

At its essence, the compromis de vente is a conditional or preliminary agreement to purchase real estate,

Generally speaking, the compromis de vente will set forth those steps and acts that must be taken and that must occur before a final contract will be entered into between the parties and before ownership of the real estate will transfer from the seller to the buyer. For example, after the signing of the compromis de vente, the buyer will have to obtain suitable and appropriate financing while the seller will have to work to make certain that the title to the property is free and clear and that the real estate can be transferred to the buyer without any encumbrances.

At the time the parties enter into the compromis de vente, the buyer will have to make what normally amounts to a deposit in the amount of 10% of the total purchase price. There are limited instances when the deposit is refundable. For example, if free and clear title to the property cannot be arranged during the time period set forth within the compromis de vente, the buyer can back out of the deal and get the deposit money back. However, barring something of this nature, if the buyer does back out of the agreement, he or she generally will lose the deposit money that has been paid pursuant to the terms and conditions of the compromis de vente.

It is highly recommended that the deposit be paid to either a qualified solicitor or a designated notaire. A solicitor or notaire will hold the money until all of the requirements and obligations of the compromis de vente appropriately are completed and concluded. At that time, the money will be paid to the seller if the deal goes through or will be refunded to the buyer under limited circumstances as outlined previously.

Generally, there are legal fees of under 10% that are associated with most real estate sales in France. These fees are due to be paid upon the completion of the sale -- at the same time that the balance due on the overall property sale is paid by the buyer.

The real estate agency will also be entitled to a commission. Negotiations between the parties will determine whether it is the buyer or the seller who will pay these fees. The real estate agency fees can be as low as 5% of the purchase price or as high as 10% of the purchase price in some instances.

There are restrictions on how much of the purchase of real estate a foreign national can finance in France. If a foreign national is a citizen of another European Union nation, that person can finance up to 85% of the total purchase price of the real estate. If a foreign national is from a country beyond the European Union, he or she can only finance up to 80% of the total purchase price of the property. On the other hand, a French citizen can finance 100% of the purchase price of the real estate in question.

The final agreement in the real estate sales transaction is what is known as the acte de vente (which roughly translates as the final deed for sale). This agreement is to be signed in front of an official notaire

We always recommends using a Solicitor or Lawyer

Depending on the property and possibly the area, the laws on buying and selling Property in France can vary somewhat.

Be careful with the capital gains tax as this is chargeable on all second home sales owned for less than two years at a rate of 33% with a sliding reduction on pofit percentages over a 20 years period.

There are no restrictions on foreign ownership.

Property Prices in France Guide
Range Varies, for example:
From £10,000 / €14,000 for rural properties in need of renovation
From £30,000 / €42,000 for apartments/studios
From £50,000 / €70,000 for suburban homes
From £60,000 / €8,000 for Ski apartments and chalets over £100,000 / €140,000.
From £150,000/€210,000 for South of France properties

Locations in France
France is broken down into many regions and has a variable lfestyle

Cost of Living in France
Although the general standards of living are quite high in France in areas heavily populated like Paris,Cote d'Azur,Riviera etc. Areas within rural communities tend to be a little cheaper to live in and as such are becoming quite popular with overseas buyers.

Buying property in France
standard freehold residential property.

Once an agreement on price is reached by both buyer and seller, a solicitor or notary will draw up a legally binding contract which both parties would sign.
Normally a 10% deposit would be paid at this point (which would be held in a secure account until the completion). The property would be withdrawn from the market and the legal system would commence its checks etc. At this stage if you were to back out of the contract you would lose your deposit.

Normally the final contract would be signed by both parties at the Notary’s office and at this stage the deeds would pass to the buyer and the land registery updated. The balance of the purchase price would be paid to the Notary who will then pay the vendor. You will need to provide the Notary with a copy of your birth certificate translated into French and, if applicable, a copy of a Marriage Certificate, also translated.

Solicitor / Lawyer
We recommend that you enlist the services of a Lawyer or Solicitor in the purchase of your French Property, preferably one who speaks English. This will help to protect your interests in the purchasing procedure. This will be in addition to needing a Notary who is mandatory for property purchases

Fees
Expect to pay around 10-15% over the selling price;
The Notary fee around 3%, transfer tax 7.5% (less than 1% for new properties) and registration fees around another 6%.
The vendor should pay the Real Estate Agents fees. CHECK!

Property Tax in France
Property taxes are levied on property plus residential tax for living as a owner occupier or as a tenant (renting or not). Both are calculated on the average property rental values.

Mortgages
Normal lending criteria will allow you to borrow up to 80% from French banks or international mortgage brokers and should be declared at the time of the preliminary agreement. The normal repayment term can vary between 15 - 25 years depending on the lender.

For more information on buying property in a particular area of France, please contact the Estate Agent concerned or visit the French Governments website:
www.info-europe.fr

This guide is not meant to represent a full guide on buying property in France but is will give you an insight to the procedures to follow.

French Embassy in London
58, Knightsbridge
London
SW1X 7JT
Tel: +44 (0)207 201 1000
Fax: +44 (0)207 201 1004

Email: press@ambafrance.org.uk
Web: www.ambafrance.org.uk