The French buying process differs from the UK system in several ways and costs a significant amount more. The legal systems of France and Britain have important differences, for example in their inheritance laws. And as with all overseas property purchases, buyers should ensure they use an independent and bilingual lawyer to protect their interests.
The buying process
The Code Napoléon, drawn up in 1804, forms the basis of French property law. Your first job will be to meet the notaire (the notary), who is at the heart of the French buying process. They are a neutral, government-employed figure who will handle the conveyancing and generally acts for both buyer and seller. Their fees are fixed by official guidelines. British buyers are strongly advised to employ their own lawyer as well who will work solely for them.
Once you have found a property and agreed a purchase price, the buyer and seller sign a Compromise de Vente. This is a legally binding contract and confirms the sale price and the completion date. It is subject to certain conditions, such as a satisfactory survey and obtaining a mortgage. There is a seven-day cooling-off period after which the buyer pays a 10 per cent deposit and the property is taken off the market.
The notaire will conduct searches, check the title deeds, ensure there are no outstanding debts on the property and ensure the buyer's ability to pay. Once all the fees and taxes have been paid, the final contract, the Acte de Vente, is signed in front of the notarire. The Acte de Vente is filed in the notaire’s office – the buyer is given a copy – and the property officially changes hands.
Unsuspecting British buyers will be surprised by the cost of buying property in France. As a rule you should budget to pay 15-20 per cent of the purchase price.
The main costs are:
Estate agent’s fees, often paid by the buyer: five to seven per cent
Notary’s fees: one to two per cent
Stamp duty, communal and regional taxes and land registry fees: seven per cent
Additional charges : may include mortgage fees and employing your own lawyer.
French VAT, known as taxe sur la valeur ajoutée (TVA), is charged at 19.6 per cent on most fees.
French inheritance laws mean that your children can be given precedence over your spouse on your death and even if you leave the property to your spouse there may be succession tax to pay. You can get round this by choosing to buy in joint names with your spouse or inserting a clause tontine in the Acte de Vente leaving the property to the surviving spouse. It is important to consider this when you buy the property and, despite recent changes to the law giving greater rights to the surviving spouse, you should get clear advice from an experienced lawyer.
Once you stay in France for more than 183 days in any one year (the tax year starts on 1 January), you will be considered a French resident for tax purposes and liable for French taxes on your worldwide assets and income. As a non-resident you are liable only for any income and assets in France.
The main tax rates are:
Income tax: 5.5 to 40 per cent
Capital gains tax: 16 per cent on the gain for EU residents; 26 per cent for French residents
Inheritance tax: five to 40 per cent
Wealth tax: payable on assets of more than €750,000 at 0.55 to 1.8 per cent.
Suggested further reading: The Blevins Franks Guide to Living in France, by Bill Blevins and David Franks, provides detailed tax advice.