Costs Associated with Buying in France

Buying & Selling Property in France

From a barn restoration in Bordeaux, to a mazot conversion in the mountains there's many reasons why people are interested in purchasing property in France. Make sure that before you attempt the process of purchasing your property in France you are fully armed with the knowledge of how to locate, purchase and even live in it!

[First] [Previous] 1 2 [Next] [Last]

Jump To:

Fees Associated with Purchasing Property

We're always hearing about ‘location, location, location' when it comes to the property market so it comes as no surprise that the cost of buying a property in overseas locations are similarly related to its location, its size, condition, and nearby transport links. The introduction of low cost airlines and changes in the perception of air travel been instrumental in introducing new buyers to previously unexplored property areas across Europe. As a result, there are parts of the country which have seen substantial property investments and price rises over the past few years.

The UK Newspapers are full of success stories of Britains who have packed up and moved abroad for better property prices and an all round improved quality of life. Recent developments in communications and technology have prompted some employees to look for suitable ‘work from home solutions’. When you combine this with cheap flights and train journeys it means that many people are now actually able to ‘commute’ from European countries for their work in the UK with little or no issues. From Autumn 2007, the Eurostar between Lille (France) and London Paddington (UK) will only take 1 hour and 20 mins, that’s less than some journeys on public transport in London!

In buying your dream property you should expect to pay several fees and taxes. Are you aware of all the fees, taxes, commissions and financial commitments you may have to pay when venturing down the foreign property purchasing route? Typical costs may include some of the following:

Solicitor's fees and commission

Estate agent fees

Property registration fees

Tax

Foreign currency exchange costs (if applicable)

Survey fees (if applicable)

As taxation and governments change from country to country so will these costs. It's always best to make sure you have fully researched applicable fees and taxation rules so that you don't have any hidden charges that spring up along the way.

last updated 8-Feb-2008

Fees Associated with Purchasing Property in France

Regional Differences
Biarritz, Bordeaux, Montpellier, Grenoble and Lyon are all areas where house price inflation was relatively stable until the low cost airlines started flying into nearby regional airports. Over the past few years, property prices in these areas have increased significantly, with some as much as 40 per cent!

In buying your dream property in France you should also expect to pay several fees and taxes, which may include some of the following:

Solicitor's ('Notaire') fees and commission
Estate agent fees
Property registration fees (Droits d'Enregistrement)
Taxes - 'TVA' (French VAT)
Foreign currency exchange costs (if applicable)
Surveyors fees (if applicable)
Mortgage fees

Solicitor's Notaire Fees
The Notaire's fees (frais de Notaire) are fixed at the outset and are payable by the purchaser. The deposit of the property is paid to the Notaire upon signing the compromise de vente however additional notaire fees are required to be paid to cover local and national government taxes. Although they can vary slightly, fees are generally around 8% of the property price for older property and 4% if the property is less than 5 years old (Frais Reduit).

If you buy a property from the Notaire directly you should still expect to pay them a commission. This can be anything up to 5%.

Estate Agent Fees
It is not unusual for the property’s sale price to include the commission of the estate agent which is payable by the buyer. In fact, this is a question you should ask the estate agent at the beginning of your purchasing process. If you as the buyer are then responsible for this element you should make sure that this is clearly stated within your contract particulars so that it is not added to the sale price on which the Notaires fees are based. Estate agents can charge anything from 4 to 12 per cent of a properties selling price.

Property Registration Fees (Droits d'Enregistrement)
Land registry fees are similar to the UK's stamp duty, and are are dependant on the price and age of your property. If you are buying a property that is more than 5 years old, you can expect to pay a 'droits d'enregistrement' of approximately 5 per cent. Property less than 5 years old will be subject to fees of less than 1 per cent.

TVA
TVA is France’s VAT. It is currently paid at the rate of 19.6% and will be charged on most fees and commissions.

Foreign Currency – Foreign Exchange Rate Fluctuations
If you are planning to purchase your overseas property with some equity you have released from the remortgage of your UK property or other cash funds, then you may need to convert your sterling cash into Euros. This can be expensive and risky though, as you leave yourself open to currency exchange rate fluctuations. From the initial signing of the contract until the completion date, the amount of UK pounds required to buy the property in euros can fluctuate substantially. Yes, sometimes you could end up in pocket if the UK pound goes up against the Euro, however you could also end up significantly out of pocket should the Euro rate move the other way. There are steps you can take to minimise these risks such as using a company to effectively ‘lock’ your exchange rate months in advance. Today, there are a lot of companies that provide currency exchange risk solutions. Some are better than others, but here’s a few we found operating in the marketplace Caxton FX, HiFX and new to the market Ireland FX. All of the above specialist companies will generally have competitive deals to entice the business of French property buyers from the high street banks.

Surveys
For those of us who are used to buying in the UK we like to have a survey done on the property to be sure of what we are spending our hard earned cash on. Unlike UK banks and building societies, French banks and building societies do not routinely ask for surveys to be completed on the property before issuing the loan. Do not be put off by people that say you don’t need to have a survey done either.

It is advisable to have your survey conducted BEFORE you sign the Compromise de Vente. Although as buyer you have your seven day cooling off period, it’s not always possible to arrange this during that time so you run the risk of forfeiting your deposit should you wish to pull out at a later date after any survey results. Clauses suspensives may give you recompense however should not wish to go ahead with the sale after the survey.

The Notaire is responsible for conducting all other searches on the property such as land boundaries, public rights of way, asbestos and termites. Your seller is responsible for these costs too.

last updated 12-Feb-2008

[First] [Previous] 1 2 [Next] [Last]