Buying a house in France
Many people dream of owning a home in France: an old Provençal or Charentais farmhouse, a seaside home in Brittany or an apartment in a town or city. Perhaps you have browsed in the windows of local estate agents while you are on holiday and been amazed at how much more you get for your money in France. You may even have started to think about buying and arranged to view a few houses that look interesting possibilities.
When you walk through the door of a French estate agency, you are venturing into dangerous territory. Buying a house in France is very different from buying a house in England.
A binding contract is signed at a much earlier stage before you have even arranged your finance. The contract, known as a compromis de vente, is often prepared by the estate agent, and you may be asked to sign one soon after you have viewed a property and said you like it. Never sign anything until you have had an opportunity to think about the details of the transaction, especially if you are on holiday at the time. Sunshine and the local wine do not always lead to sensible decisions. Although French law provides a cooling off period after the contract has been signed, it is only seven days, so if you sign a contract near the beginning of your holiday, it will be too late to withdraw when you arrive home ten days later.
Surveys are virtually unheard of in France and you will get a frosty reception if you suggest that you need one. You buy as seen. On the other hand, the vendor is obliged to give you a certificate that the property is free of termites and other pests.
The contract must provide a period for you to arrange finance; if you cannot obtain a mortgage in the time agreed, you can cancel the contract and ask for your deposit back. Although you can state that you do not require finance (in a clause which you must write into the contract by hand in French) this is not advisable. Always keep your options open.
Although you sign the contract at early stage, it will be two or three months before you can complete your purchase. Partly this is to allow the notaire to make searches and enquiries, and partly to allow certain public authorities with rights of pre-emption to decide whether they wish to buy the property from the vendor. If you are pre-empted, tough. Start looking for another house.
The notaire is the lawyer who deals with the conveyancing, but he or she does not work on the same basis as an English solicitor. For a start he acts for both parties. And he is also an officer of the French state, responsible for collecting stamp duties and registering the purchase. He will advise the parties, but do not expect him to take your side in arguments over fixtures and fittings.
You have to attend the notaire’s office on completion. If you are unable to go to France in person you will have to sign a power of attorney (which the notaire will prepare) to enable the purchase to be completed in your absence. But it is better to be there. You can check the property before you complete and you will be able to collect the keys and arrange the transfer of utilities.
Before you commit yourself to buying a house in France there are many more things to consider than just the legal procedure and inheritance rules. Here are a few thoughts.
- If you are buying a holiday home, think carefully about maintenance. An old farmhouse might look idyllic, but it is likely to need extensive and ongoing maintenance and repairs. French plumbing can be idiosyncratic, to say the least, and many plumbers make a good living from sorting out the plumbing problems of absentee English owners. Are you confident about arranging for builders to work on the house in your absence?
- Swimming pools need care and maintenance on a regular basis every few days when they are in use. If you are not living in your French home you will need to pay someone to visit regularly to look after the pool. New laws introduced in 2004 require you to install safety fencing and child proof gates round swimming pools. You can get a higher rental income with a pool but you have higher overheads.
- Do you need a mortgage? You have two choices a French mortgage secured on your French house or a further advance on your English mortgage. If you arrange a French mortgage you will have to make the repayments in Euros, which will involve transferring money from England. While the exchange rate has been favourable in recent years there is no guarantee that it will remain so. As a rule of thumb, if all your income is in sterling, an English mortgage repayable in sterling will probably be safer.
- Both British and French banks will need to know that you can afford the additional borrowing. French banks apply stricter tests than English banks and in general will not lend if your total monthly payments on mortgages, both in England and France exceed one-third of your gross income. Potential letting income will not be taken into account by banks in either country.
- You will need a French bank account in order to pay the utility bills and any builders, gardeners, or cleaners you need to employ. Fortunately there is now an easy way to do this. Crédit Agricole have a dedicated English speaking telephone branch in Caen set up especially to cater for British people requiring a French account. Visit britline.com phone 00 33 2 31 55 67 89. Internet banking is available as a matter of course.
- If you plan to rent the house out for holidays, do your research into the market. Brochures from agencies which offer self-catering holiday accommodation in France will give you a good idea of what the current market rents are in your area. It is always worth ringing them up for advice; they will see you as a potential client and will often give you a lot of useful information. Check how long the season is in that part of France. It is dangerous to rely on letting income to cover all your outgoings and mortgage payments on the house. With careful marketing you may do so, but there are no guarantees.
You will have to pay income tax in France and Britain on the profit you make from letting, even if all the rental income is paid to you in Britain. Any tax you have paid in France can be set off against your UK tax liability. You will not be able to claim all your expenses against the rent because some will relate to the periods when you are using the house yourself. If you are not confident about dealing with property income on your tax return you will probably need to use an accountant.
For information about French inheritance laws, click here.
We recommend that you take advice before you sign any contract to purchase property in France. For further information and advice please contact Chris Wallworth at our City Centre office.