A guide to buying property in France

Welcome to our comprehensive guide on buying property in France. Whether you're seeking a charming countryside retreat, a luxurious villa on the French Riviera, or a cosy apartment in Paris, understanding the intricacies of the French property market is crucial. This guide provides detailed information on property prices, taxes, buying procedures, and more, helping you make informed decisions and smooth your journey to owning a piece of France.

The French Property Market

House Prices in France

The French property market is diverse, offering something for every taste and budget. In 2024, average house prices in France vary significantly depending on the region:

• Paris: Prices average around €11,000 per square metre. This market is highly competitive due to limited space and high demand, particularly in central areas like the Marais, Saint-Germain-des-Prés, and the Latin Quarter.
• South of France (Provence, Côte d'Azur): Prices range from €4,000 to €6,000 per square metre. Provence offers picturesque villages and vineyards, while the Côte d'Azur is known for its glamorous coastal towns such as Nice, Antibes, and Saint-Tropez.
• Dordogne: More affordable with prices around €1,500 to €2,500 per square metre. This region is famous for its medieval towns, castles, and beautiful countryside, making it a popular choice for those seeking a quieter lifestyle.
• Cannes: High-end market with prices ranging from €5,000 to €10,000 per square metre. Cannes is renowned for its international film festival, luxurious properties, and stunning Mediterranean views.

Recent trends show a steady increase in property values, particularly in popular regions like the Côte d'Azur and Paris. The demand for rural properties has also risen, driven by buyers looking for more space and a better quality of life post-pandemic. For detailed statistics, refer to the official government data on property prices here and here.

What’s it like owning a property in France?

Owning property in France comes with many benefits, from picturesque landscapes to vibrant cultural experiences. Residents enjoy a high quality of life, excellent healthcare, and a rich culinary tradition. However, it also involves understanding local property laws, maintenance requirements, and integrating into the local community.

French property laws can be complex, particularly regarding inheritance and taxation. Property owners must also adhere to local regulations regarding property maintenance and renovations, which can vary significantly from one region to another. Additionally, it is essential to consider ongoing costs such as property taxes (Taxe Foncière and Taxe d’Habitation) and maintenance expenses.

Living in France allows you to immerse yourself in the local culture, learn the language, and enjoy the diverse landscapes—from the Alps and Pyrenees mountains to the Mediterranean and Atlantic coasts. However, it also means navigating the French bureaucracy, which can be challenging for newcomers. Building relationships with local professionals, such as notaires, estate agents, and legal advisors, can help ease the process.

Cost of Buying Property in France

Overall Costs

When purchasing property in France, expect additional costs on top of the asking price. These include:

• Resale properties: Approximately 8% in taxes and fees. This includes the notaire’s fees, which are fixed by law and cover the cost of registering the property, as well as various taxes.
• New builds: Around 2.5% in taxes and fees. This is generally lower than for resale properties because new builds benefit from reduced notaire fees and are often exempt from certain taxes. VAT 20% add - this can be refunded if part of a sale & leaseback scheme.

Other costs to consider include:

• Notary fees: These are paid to the notaire and cover the legal work involved in the property transfer.
• Mortgage fees: If applicable, these include arrangement fees and insurance.
• Agent fees: Usually included in the list price but always check this with your agent.
• Financial adviser fees: Advisers can help navigate the financial aspects of buying property, especially for non-residents.
• Translator fees: If you are not fluent in French, hiring a translator is essential for understanding contracts and legal documents.
• Building surveyor costs: Although not mandatory, a survey can provide peace of mind about the property's condition.
• Travel costs: Budget for trips to France for viewings and the completion process.
• Currency exchange rates: Fluctuations in exchange rates can impact the final price in your home currency.
• Removals: Costs for moving your belongings to France.

Taxes When Buying Property in France

Taxes due at purchase include:

• Departmental tax: Up to 4.5% of the purchase price. This tax varies depending on the department.
• Communal tax: Up to 1.2%. This is set by the local municipality.
• Government charge: 2.37%. This charge is part of the overall notaire’s fees.
• Stamp duty: 5.8% for older properties, 0.7% plus 20% VAT for new properties. Stamp duty, or "droits de mutation," is applied to the transfer of property ownership.
• Notaire fee: Around 1%. Notaire fees are regulated and cover the legal aspects of the property transaction.

For detailed tax information, consult the official French government site.

Ongoing Costs

Property owners in France must budget for ongoing costs, including:

• Taxe Foncière: An annual property tax based on the cadastral rental value of the property. It is set by local authorities and varies depending on the location and type of property.
• Taxe d’Habitation: Another annual tax for those who occupy the property as their main residence on January 1st each year. This tax applies to second homes and rental properties.
• Maintenance and Repairs: Regular upkeep is essential to maintain the property's value and avoid costly repairs in the future.
• Utilities: Costs for electricity, water, gas, and internet services.
• Insurance: Property insurance is mandatory and covers damage to the building and contents.

For residents, French tax laws also require declaring worldwide income, while non-residents are taxed only on income generated in France.

Steps to Buying Property in France

Research & Finances:

Define your buying purpose, preferred location, budget, and payment method. Consider why you want to buy property in France, whether for personal use, investment, or rental income.

View properties and gain local knowledge. Bring ID and proof of funds. Arrange viewings through reputable agents and take the time to explore the local area, including amenities, transport links, and community facilities.

Make an Offer:

Include conditions like mortgage approval or necessary repairs. Clearly state any contingencies in your offer to protect your interests.

You may be encouraged to sign an ‘Offre d’achat’, and use a translator if needed. This initial agreement signifies your intent to purchase and can include conditions such as obtaining financing or satisfactory property inspections.

Compris de Vente (Preliminary Contract):

Includes buyer and seller details, property description, agreed price, deposit (5-10%), and other terms. This legally binding document outlines the terms of the sale and is usually drawn up by the notaire.

Signed with a 7-10 day cooling-off period for the buyer. During this period, the buyer can withdraw from the agreement without penalty. After this period, the deposit is paid to the notaire.

Acte de Vente (Completion):

Usually three months after the Compris de Vente. This final contract transfers ownership of the property from the seller to the buyer.

Final signing at the notaire’s office, with the balance of funds transferred and insurance in place. The notaire ensures all legal requirements are met and oversees the payment of taxes and fees.

Property Surveys in France

The Dossier de Diagnostic Technique (DDT) covers 10 essential reports, including asbestos, lead, termites, energy efficiency, and more. These surveys are provided by the seller and checked by the notaire. Unlike in the UK, building surveys are not typically part of the buying process in France.

The DDT includes:

• Asbestos: Required for properties built before July 1997.
• Lead: Required for properties built before January 1949.
• Termites: Required in certain areas prone to termite infestations.
• Energy Efficiency: The DPE (Diagnostic de Performance Énergétique) rates the property's energy consumption and greenhouse gas emissions.
• Natural or Industrial Risks: Identifies risks such as flooding, earthquakes, and industrial pollution.
• Gas Installations: Required for properties with gas installations over 15 years old.
• Electrical Installations: Required for properties with electrical installations over 15 years old.
• Septic Tanks: For properties not connected to the mains sewer system.
• Radon: Required in areas with high radon levels.
• Geotechnical Survey: Required if there is a risk of land movement.

Do I need a bank account to buy property in France?

A French bank account is likely required if buying with a mortgage and will be advantageous for local tax, utilities and other regular payments. Non-residents from the EEA can open an account with certified identification, but be prepared for paperwork and a slow process. It's advisable to open an account early if seeking a mortgage.

Setting up a bank account involves providing proof of identity, proof of address, and proof of income. Non-residents should expect a more extended application process and may need to provide additional documentation. Once the account is open, regular transfers can help build a banking history, which is beneficial when applying for a mortgage.

French Mortgages

French mortgages offer up to 80% loan-to-value (LTV), reduced to 60-65% for non-EU citizens. We recommend you consult our specialists for the most up to date information and the best deals that may apply to your individual situation.

Generally, repayments must not exceed 33% of net income. Fees can be significant, and mortgage insurance is required. Obtaining a pre-application mortgage certificate can aid negotiations.

When applying for a mortgage in France, lenders will consider your income, credit history, and existing debts. French banks typically require:

• Proof of income: Recent payslips, tax returns, and bank statements.
• Proof of identity: Passport or ID card.
• Proof of address: Utility bills or rental agreements.
• Details of the property: Including the preliminary sale contract.

Mortgage types include fixed-rate, variable-rate, and interest-only mortgages. French lenders also offer mortgage insurance (assurance emprunteur), which covers repayments in case of death, disability, or unemployment. This insurance is mandatory and can be obtained from the lender or an external provider.

Inheriting a French Property

Inheritance considerations include:

• En Tontine: Equal ownership, where the survivor becomes the sole owner. This arrangement can simplify inheritance but may lead to complications if there are children from previous relationships.
• En Division: Ownership ratios can be allocated, allowing inheritance as per the will. This offers more flexibility in estate planning and can help manage inheritance taxes.
• SCI (Société Civile Immobilière): Ownership through a company, although less popular now due to tax changes. An SCI can facilitate property management and transfer but involves administrative and financial complexities.

French inheritance laws differ from those in the UK, with strict rules on the distribution of assets. The "forced heirship" rules mandate that a portion of the estate must go to the children, which can limit the freedom to bequeath property to a spouse or other relatives. Consulting a French legal expert is essential to navigate these laws and plan your estate effectively.

Capital Gains Tax in France

Capital gains tax (CGT) is exempt for the main residence. For non-residents, CGT is 33.33%, tapering off after 5 years, with no CGT after 22 years of ownership. Consult a tax specialist for detailed advice.

The CGT is calculated based on the difference between the purchase price and the selling price, minus allowable expenses such as renovation costs, notaire fees, and agent commissions. The tax rate decreases over time, with a full exemption after 22 years of ownership for EU residents and 30 years for non-EU residents.

To benefit from the principal residence exemption, the property must be your main home at the time of sale. Non-residents should be aware that different rules apply, and it is advisable to seek professional tax advice to understand your obligations and potential liabilities.

Currency Exchange in France When Buying Property

Consider using currency exchange services to manage exchange rates and reduce costs when transferring large sums of money for property purchases. We recommend our specialist partners, Key Currency - contact us to set up a no obligation consultation!

Currency exchange brokers can offer better rates than traditional banks and provide tools to manage exchange rate fluctuations, such as forward contracts and limit orders.

When planning your property purchase, monitor exchange rates and consider locking in a favourable rate in advance. This can protect you from market volatility and ensure that you know the exact amount you will need to transfer in your home currency.

Frequently Asked Questions (FAQ)

Q: What is the typical duration for completing a property purchase in France?

A: The process usually takes at least three months from signing the Compris de Vente to the Acte de Vente. This timeframe can vary depending on the complexity of the transaction and any conditions that need to be met.

Q: Are there any restrictions on foreigners buying property in France?

A: No, there are no restrictions. However, non-residents may face different mortgage conditions and should be aware of inheritance laws that affect property ownership. Third country nationals need to check entry & visa restrictions and, if planning to generate income in France, consult specialists to advise on differing laws & income tax rates.

Q: What additional costs should I budget for when buying property in France?

A: Budget for conveyancing fees, notaire fees, taxes, agent fees, survey costs, travel expenses, and currency exchange rates. Additionally, consider ongoing costs such as property taxes, maintenance, and insurance.

Q: Can I rent out my property in France?

A: Yes, but you must comply with local regulations, including registering the rental with the town hall and paying any applicable taxes. Short-term rentals may be subject to stricter regulations in popular tourist areas.

Q: What are the ongoing taxes for property owners in France?

A: Property owners pay Taxe Foncière and Taxe d’Habitation, based on the cadastral income of the property. Taxe d’Habitation is payable for secondary and rental property only. Residents are also subject to income tax on worldwide income, while non-residents pay tax on French-source income.

Q: Do I need to hire a notaire when buying property in France?

A: Yes, a notaire is essential and a legal requirement in the property buying process. They are responsible for preparing the legal documents, ensuring the property is free of debts, and overseeing the payment of taxes and fees.

Jargon Buster

• Notaire: A public official appointed by the Ministry of Justice, responsible for legal matters in property transactions. They ensure the legality of the sale and collect taxes.
• Compris de Vente: Preliminary contract of sale. This document outlines the terms of the sale and is legally binding once signed.
• Acte de Vente: Final deed of sale. This contract transfers ownership of the property from the seller to the buyer.
• Dossier de Diagnostic Technique (DDT): A set of mandatory property surveys. These reports provide essential information about the property's condition and any potential risks.
• Cadastral Income: The estimated rental income value used for tax calculations. This value is used to determine property taxes such as Taxe Foncière and Taxe d’Habitation.

Please check details with qualified specialists – this information is intended only as a guide. Especially when it comes to immigration, tax, financial and legal affairs. We are unable to accept responsibility for any mistakes or misinformation.

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