Introduction
One of the best ways to experience France and to enjoy its
people and way of life is to own a property there. With the
construction of the Channel Tunnel, and the EEC initiative to
create a "Europe without frontiers" it has never been easier.
These developments have put France into the
limelight. The Eurotunnel has given the British quick,
and efficient access to France. Also with the emergence of various budget airlines
serving numerous French destinations travel to France from the UK can now be both quick and cheap.
This activity has begun to result in investment in the whole of France,
particularly in property. Couple this growing demand to a limited
supply of rural houses, modern sea-front apartments and choice
of land and the stage is set for property values to rise. Perhaps
the most compelling attraction is the current difference between
house prices in France and those in Britain (often a third or less of the
price).
Surely, there is no better time than now for both investor
and Francophile to invest in France before house prices rise
and supply drops off.
Buying property is never a simple matter, especially when it
is overseas. We hope the following information will answer some
of the questions you may have. We provide this
information as a general guide only; it is accurate to the best
of our knowledge. We suggest that specialist advice required
should be sought from the professional in question.
PRICES QUOTED
Prices are quoted by owners and estate agents in Euros.
THE PURCHASE
On deciding to purchase, an offer can be made to the vendor.
If your offer is accepted by the Vendor a "Compromis de Vente" (intended sale) will be
signed and a 10% deposit put down by the buyer. When agreed to by the
seller, this then becomes legally binding (similar to Scottish
system) subject to certain let-out clauses (mortgage
acceptance, planning permission being obtained, surveyors'
reports, etc.). Hereon, no "gazumping" can take place; the
priced is fixed.
Once local planning searches and a certificate of "Free
Title" have been obtained from the Land Registry, completion
takes place. This requires the signing of the "Acte de Vente"
and confers immediately the change of title to the new owner.
At this point, the final amount is paid (90%) as well as French
Government taxes (see below) and the notaire's fee. The
purchaser then takes full responsibility for the property, and
of course...the keys!
It should be noted that the French Government taxes (Stamp
Duty and Registration) can vary.
-
On new houses (less than 5 years old). They amount to
about 2.5% of the purchase price (No Stamp Duty
payable).
-
On older houses (more than 5 years old). They amount
to about 10 to 12% of the purchase price.
-
On buiding land, no Stamp Duty is payable, providing
that the buyer undertakes to build within four years.
This period can be extended by agreement.
-
Agricultural land, including all relevant buildings,
bears a lower rate of Stamp Duty.
Please bear in mind that whilst the expenses of purchase are
high, they are one-off payments. Upon resale, the new buyer
pays the government taxes and the fees of the notaire.
RATES (Property taxes)
Rates are much lower than they are in the UK.
-
The "Taxe Fonciere" is a general rate payable by the owner
and collected annually in arrears by the local Council.
-
The "Taxe d'Habitation" is payable by the occupier; this, in
effect, is normally paid by the owner unless the property has
been leased out (but not for holiday rental only).
INSURANCE
Insurance of buildings and content taken out in France is
very price-competitive and varies slightly from region to region.
Liability for insurance starts from the date of the Acte
de Vente (completion) and NOT before.
SELLING YOUR FRENCH PROPERTY
As a non-resident of France, the vendor pays Capital.Gains
Tax (C.G.T.) on the Assessable Net Gain which is deducted from
the sale proceeds by the "Notaire" who pays it over to the local
tax authorities. C.G.T. payable varies and is calculated on the
basis of a number of factors including the length of ownership,
expenditure on the property and inflation indexation. At present,
C.G.T. is payable at 33.3% by all non-French residents and
declines by 3.30% p.a. on the final C.G.T. liability from the
third year onwards. Generally, the longer the term of ownership,
the greater will be the allowable tax advantages.
The double-taxation agreement between Britain and France
prevents excessive taxation. C.G.T. paid over in France is taken
into account against C.G.T. liabilities assessed in the UK.
Sale proceeds can then be repatriated to the UK or elsewhere.
There are no foreign exchange control or other restrictions on
the movement of the sale proceeds out of France.
CONVEYANCING IN FRANCE
The transfer of title is straightforward since:
-
All properties are freehold and are government registered.
-
Conveyance (legalities) is conducted by a "Notaire" who acts
independently and impartially of both parties as a
government-appointed official. Essentially, he draws up the
"Acte de Vente" (contract), witnesses its signatures,
collects and pays out the monies and then registers the
transfer.
Unlike the UK where the title deed proves ownership, proof of
ownership in France is provided by the Land Registry itself.
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