What are the financial considerations before buying a property in France?

11th July 2018
What are the financial considerations before buying a property in France?

France is a popular country for British buying property abroad. Whether you’re buying for a long-term work or lifestyle move, or a second property there are a number of differences to buying in the UK. It is especially important to understand the financial differences, so that you limit any unexpected costs when buying your French property.

Moving to France as an expat certainly has many positive factors. Property prices in France are lower than in many places in the UK and if you are happy to tackle some renovation and restoration work, there are some real bargains on the market. Space in rural areas is rarely a problem and houses regularly have a lot more land than comparable properties in the UK – often coming with their own fields or woods. Depending on what you’re looking for this may be part of the attraction.

Whether you buy an older property or a new one, the rooms are generally well-sized and kitchens are often large, with plenty of opportunity to accommodate a dining area. Interestingly, only new houses and recently refurbished properties have en-suite bathrooms. So, if you are after an older style property and en-suite bathrooms are a must-have, it can be wise to budget for them on your refurbishment list to widen your property options.

Life in France for expats is comfortable. Socially, there are expat communities in many parts of France, but particularly Aquitaine which contains the Dordogne (nicknamed 'Dordogneshire'!), Brittany, Midi-Pyrénnées and the Rhône-Alps. The French are very hospitable (particularly in rural communities) but do like you to speak at least some French. If you’re not confident with your level of French, budgeting for regular French lessons, will help you settle in faster.

The health service is excellent and once you have your Carte Vitale you will receive a 70% refund on all medical treatments and medicines that you have paid for up front. Although some medical specialisations are beginning to have waiting lists, they are usually just a few weeks long. If you have specific medical requirements, it is important to research these before making your move, so that you fully understand any associated costs.

Shopping in France is easy with wonderful supermarkets, hypermarkets and traditional markets – but prices are higher than in the UK for most items and surprisingly expensive for DIY goods. Depending on your shopping habits this can be an important consideration, as it’s an expense that adds up over time.

With Brexit looming ever closer, many British expats are currently applying for their Carte de Séjour – official residency card – to safeguard their future in the land of fine wine and cheese. With the uncertainty of the final outcome of Brexit negotiations, there is a strong chance that Sterling will remain low against the Euro for some time. If you are relying on UK based income and assets, this will be an important financial consideration.

What are the property related financial implications?

Having decided to make the move, finding the ideal property can take time as many are still sold privately rather than through agents and there are no 'one stop' websites where all properties for sale in an area are advertised. If you have decided on a particular area, it is well worth visiting all the local agents and driving around looking for hand painted signs on gates proclaiming 'À Vendre' or 'A.V'.

It is essential to have considered your total budget for buying a property in France. The selling price usually includes the agents' fees - but not always and this can add up to 20% to the purchase price, so do check with the estate agent (immobilier) what is included in the advertised price. The initials FAI on an advertisement mean frais d'agence inclus – agents' fees included - and TTC, toutes taxes comprises (all taxes included). If the agents' fees are not included in the advertised price, it is the buyer who usually pays them.

The price of the property does not include the Notaire's fees and these include taxes for buying French property which are usually 6-8% of the total value of the property. When you have found the property you would like to purchase, it is important to appoint a Notaire to act for you and if your French is not good, to have someone with you who can translate where necessary. The Notaire is a solicitor who can legally oversee the purchase of the property, arrange the transfer of title and deeds and the payment of all the monies.

The charges made by a Notaire are on a sliding scale fixed by French law. The fees comprise of 5.8% for the French equivalent of Stamp Duty, land registration and disbursements. If the property you are buying is 150,000 euros the charge is 7.39% (11,085 euros) and a property selling at 300,000 euros will incur charges of 6.69% (E20,070)

An important extra expense...

The first stage in the legal process, is to make an offer in writing (Offre D'Achat). This is usually conditional on the provision of a detailed contract of purchase and any agreed work on the property being completed. To safeguard yourself, another condition can be dependent on the results of a full building survey. This is an optional expense for the buyer but is well worth the money as standard surveys are not usually as in-depth as they are in the UK.

And a legally binding document...

The property purchase system is very different in France, but is usually quite straight forward as long as you (or someone with you) speaks good French. The French system does protect the seller because once the buyer has signed the second stage – the 'Compromis de Vente', the deposit for the property is paid (this is usually 10% of the price, but 5% on higher value properties) and is non-returnable. Although after the Compromis de Vente has been signed, there is a seven day 'cooling off' period and if you do withdraw within this time frame, the deposit must be refunded to you within 21 days.

Other costs to consider...

Before you do begin the legal process to buy a property, it is well worth taking time to assess all your likely expenses. First and foremost is currency conversion – pounds sterling into Euros. Any change in exchange rates will have implications for you – good or bad. Currency exchange companies let you 'lock' the exchange rate in advance of your purchase so that you know the exact cost. It is a good idea to contact one of these companies as soon as you decide to buy.

There will be two types of annual council tax to pay on your property. The first is Taxe Foncière which is a land tax paid by the property owner. The amount of this varies from one region to another and depends on the location of the property and how much land it has. A four-bedroom house with four hectares of land in a rural part of Aquitaine, for example, is about 1,600 euros. The second tax is Taxe d'Habitation which is a residence tax that also includes your TV licence! Calculating Taxe d'Habitation is not straightforward as it is the theoretical rental value of the property multiplied by the tax rate in the municipality – the good news is that it is usually the lower tax and in 2018, the French Government announced that the Taxe d’Habitation would be phased out for the majority of residents.

Another important consideration is the cost of the move itself. The final cost of this will depend on how much you move and the level of service that you opt for. If you are moving for work, you may have your moving costs covered by your employer. For private moves you will need to cover the costs directly. It is always important to find a reputable mover, with plenty of experience moving customers to France. If you are moving from London, please contact our international removals team for a no obligation quote. With offices in Paris and the Côte d'Azur, we have a regular weekly shipping schedule to France and first-class services.

France has so much to offer. The overall cost of living is comparable to the UK, inevitably some aspects will be higher and others lower. The most important aspect is that the quality of life is what you are looking for. If the French lifestyle suits yours, you’ve done your homework on the financial considerations, and you have an experienced team to support you, you’ll make the move of a lifetime.

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