BUYING A PROPERTY
Whether you're looking to retire to a charming farmhouse in the Dordogne, or moving to Paris for work, buying property in France is never straightforward. The usual hazards of buying property in any country are compounded by the problems of translation and transcultural communication.
All the same, French housing is still relatively cheap compared to New York or London. Management consultants Runzheimer International estimate the average cost of a four to six bedroom dwelling, in areas where expatriates tend to live, as $36,000 in Paris, compared to $62,000 or $58,000 for an equivalent residence in London or New York respectively.
Be careful about buying old property. No matter how cheap it may seem at the time, the cost of renovation work can be enormous. There is also a much narrower market for rural property, especially expensive, recently renovated houses. The turnover of smaller, cheaper houses is much faster, and will cause fewer problems when it comes to selling up.
It's important not to buy anything near a serious nuisance. If you need to sell in a hurry, you can usually sell by lowering the price. But if there is a serious nuisance, it might still be difficult to sell, even at a reduced price.
"An error expatriates often make-in every town there are neighbourhoods that are harder to sell. So, if an expatriate is badly advised, he can easily buy something because it looks nice without realising that they are paying too much for the area."
In France, it is not obligatory to have a house inspected before purchase. In France, one buys a house in whatever state it happens to be, so if it turns out to have rotting beams, too bad. A buyer always has the right to get an architect to inspect the property. It might cost €500 or €600, but it could save a lot in the long run.
The notary's fees have been reduced by 1,6 per cent. When you buy old property, there are frais de mutation charged, which are called frais de notaire. There used to be a tax of 1,6 per cent levied by the Départment, but that is no longer the case.
Renting an Apartment
People moving from London will be amazed at how cheap it is to hire apartments in the centre of town. There is a lot of residential property, in or near the centre of Paris, available at very reasonable prices. The best place to find out about apartments for rent is De Particulier à Particulier, which comes out every Thursday morning. It pays to be quick, though, as most apartments will be gone by Thursday afternoon. For Minitel users, 3615 LOCAT also has details of properties for rent, but it costs nearly €,80 a minute to consult.
There are also a wide range of agencies offering furnished and non-furnished apartments. "I would advise everyone to compare the prices between different agencies carefully," says Francis Le Bars of Interlogement. "There are some wildly different prices."
There will always be lots of people competing for good apartments. So once you have found somewhere you like, there are various tricks to stay ahead of the pack. It is well worth taking the time to impress your landlord. Dressing well and being polite will make them much more willing to let you move in. If a landlord says an apartment you like is already rented, don't give up. The deal may fall through, so leave him your details.
Landlords are entitled to demand up to two month's caution, as deposit. Don't give them any more than this. If someone offers to let you move in without signing a contract, don't accept. A disagreement of some kind is bound to result, and you have no legal redress. Furthermore, without proof of a legal address, you will not be able to open a bank account.
Also, before the contract is signed a document called the état des lieux must be drawn up, detailing the state of repair of every part of the property. It is worth taking time over this. Every spot on the carpet that you miss will be blamed on you, and you will have to pay for them, at extravagant rates.
Apartments in France are rented either furnished, meublée, or non furnished, non-meublée. The markets for the two different types are very different. Furnished apartments are obviously more expensive, but the furnishing will often be in dubious taste. Anyone planning to stay in Paris for more than a year will be better off in a non-furnished apartment. Rents are much lower, and there are some truly amazing bargains to be had.
Arranging a Loan
If you are taking out a mortgage, there are lots of lenders to choose from. French banks are the traditional source of funding. The BNP, Crédit Lyonnais and the Société Générale all offer mortgage packages to expatriates. Banque Transatlantique offers property loans in any currency, and guidance with finding properties, taxes and legal work.
Banque Transatlantique is the exception in this case. As a rule French banks lend you the money, and that's it. UK institutions like the Banque Woolwich, Barclays and Abbey National France provide a fuller service. Woolwich, with highly competitive rates, leads customers through the buying process, provides documentation in English, and can assist in finding bilingual tax and legal specialists.
Lenders will not usually advance more than 85 per cent of the property price, and 80 per cent is the norm. Expatriates shouldn't have a problem securing such a high percentage, but non-residents are unlikely to get more than 60 to 70 per cent. As well as rate variation, consider administration charges and payment flexibility. Arrangement fees can be a fixed percentage of the loan or a set fee of between €458 and €1,527. If you opt for a variable rate loan, the rate will be more advantageous if you put down a large deposit on the property.
Every expatriate property buyer should be aware of the way inheritance in France works. If you own property in France, your estate will be subject to it even if you die in another country, though a treaty may prevent beneficiaries being taxed twice. Rates depend on estate value and the proximity of the relationship between the deceased and each beneficiary.
The main problem for expatriates is that French law insists that legacies are divided equally among the next of kin. This means that a husband cannot leave all his property to his wife. There are ways around this. You can purchase the property in the name of a Société Civile Immobilière (SCI), which also facilitates the purchase of the property for renting. If you are buying as a couple, you can hold the property in joint names. Your lender can explain the basics, but contacting a specialist is recommended.
If you are resident in France for tax purposes, you will be subject to French tax on the rental income from the property. However, the system for calculating tax is quite generous. There may not be any tax due on a net income of €3,814 or less. If the rental income is more than €3,814, your tax liability will depend on how many children you have.
USEFUL HOUSING TERMS
agent immobilier: estate agent
promoteur: property developer
promesse de vente: promise of sale
offre de vente: offer of sale
offre d'achat: offer of purchase
compromis de vente: sale agreement
vente en l'état futur d'achèvement: purchase of property not yet constructed
acte authentique de vente: deed of sale
l'échange de lettres: exchange of letters
contrat de réservation: reservation contract
condition suspensive: let-out clause
frais de dossier: mortgage arrangement fee
frais de notaire: notary's fees
clés en main: vacant possession
taxe foncière: local rates
taxe d'habitation: occupant's tax
taxes assimilées: sundry taxes