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What you need to know about the procedure for buying property in France (particularly in French Catalonia) |
| Do I hold property? What to bring with you (inc making contact) Viewing properties (inc competition/spotting property elsewhere/The Bon de Visite/property details) Buying furnished properties Surveys Tax Advisory Service Making an offer (inc fees) Financing your dream home (inc conversion to Euros) The Notaire Checks carried out on the property Conditional Clauses Sale Agreed (inc the Cooling-off Period/Deposit) No Going Back Completion Insurance & Title Insurance Taxes (inc local taxes/CGT) Inheritance Laws Purchase Options (SCI/Rental/Leaseback/Offshore Co) Smaller, sought-after, value-for-money property (notably apartments and maisons de village) tends to move around so fast that sometimes agents don't even have time to register it on their computer! I do have a selection of property on this website to whet your appetite which I do my best to keep up to date. Take a look at the property listings but remember that there is no substitute for a fresh look at the market. What I do is carry out a detailed, tailor-made search working to your criteria approximately 7 days prior to your arrival in the P-O. I then liaise with you and organise viewings with your consent. It is useful if you can bring out copies of your passport, birth and marriage certificates (if applicable) since information contained therein will be required to complete the Sale Agreed document. Should you need to convert GBP to Euros in the UK, then don’t forget that Marks & Spencer bureaux de change offer competitive rates and no commission. Making contact To call a French number in France from an English mobile, follow
the same procedure as in the UK: dial 00 33 then minus the zero. Remember that the Catalan, indeed the French sieste, is very much alive and kicking! Everything (and I mean everything!) shuts down between 12/1230 hours and 1400/1430 hours (the Continental clock is widely used too). In some areas this can extend to 1500/1600 hours, particularly out of season. Lunch is considered an important affair – in keeping with dinner. Occasionally I have found that agents are willing to show property during the lunch break, but this is the exception rather than the rule. Sundays too are sacred and nothing much moves. Most agents are open all day on Saturday (lunchtime excepted, of course). Bank Holidays are definitely an occasion to celebrate en famille and head off on a mini-break. So, again everything shuts and should the holiday fall on a Thursday, which strangely enough it usually does, then the French like to ‘faire le pont’ or bridge the gap to the weekend by taking Friday off as well and making it a 4-day holiday. Vendors of course may decide to make a week of it. Experience therefore tells me that you would be wise to avoid bank holiday periods if you can or otherwise allow plenty of time either pre or post in order to view property. Bank Holidays in France 2004New Year's Day - Thursday January 1 Competition It is important to note that there is little exclusivity in France – in other words most agents have the same properties on their books. Therefore, if you do intend to organise viewings through other contacts apart from me, please let me know at the outset so that I do not duplicate on properties. Spotting property elsewhere (in an estate agent’s window or website/in a property magazine, etc) It is generally possible for me to act on your behalf if you identify
an attractive property, even when I do not have a prior arrangement with
the agent/vendor. The Bon de Visite As you may already be aware, the law in France dictates that agents ask clients to sign a Bon de Visite before visiting each property. That said, not all agents follow it, but it does act as a safeguard against a customer deciding to view the property afterwards with another agent (possibly at a lower price) or even approaching the vendor directly in a bid to cut the agent out altogether. In short, the Bon de Visite protects the estate agents’ livelihood. Property Details Depending on the agent, these can be rather vague and sometimes nothing is issued in writing at all (particularly in the case of smaller and ideal second properties that are good value and tend to sell within 2 weeks or less). Details that are standard elsewhere such as number of wall sockets, telephone points, etc do not feature. Note that external photos of the property will only be publicised where it is impossible to detect the location or where the adjoining title as to location is deliberately unclear. Agents have had their fingers burnt in the past by imparting too much information in this way. It is quite common for houses to be sold here complete with furniture, particularly if you register an interest in some of the items! The Catalans tend to either want to sell you everything or they take it all and more. However, by law, fitted kitchens must remain and normally anything that is truly fitted to the wall to the extent that removal would cause disfigurement to the property is left, although it is always wise to confirm this at the outset and have it included in future sale documents. Buying a furnished property has several advantages in terms of saving you additional outlay and potential delivery costs, notwithstanding time and energy - both looking for the items and then manoeuvring them into position! Another benefit is the reduced amount of notaire’s fees since they do not apply to the furnished element of the property. The French do not carry out surveys, unlike the British. They are of the opinion that they can see whether the prospective property is falling down or not. Note also that a French mortgage is not dependent on a survey either. Subsequently, surveyors are rare. Fortunately British surveyors operating in France have come to the rescue and should you wish to use a reliable source, please contact me at Fiona@canigoucountry.com Tax Advisory Service top of page It is important to know that property generally moves fast in France,
especially if it is in excellent condition and on the market for a good
price as opposed to an exhorbitant one. Rest assured that it certainly
won’t wait for you! Once you see your dream property, I can put
in an immediate offer on your behalf – in my experience everything
is negotiable to a degree. Be aware that cash is a plus - it speaks volumes as far as the vendor is concerned since he/she knows that the money is assured and so is the sale. For you, the purchaser, it is a useful bargaining tool at the negotiating stage. Plus you will avoid paying fixed charges of 1-2%, applicable to mortgages on French property. If you require a mortgage, I work with a London company that organises competitive mortgages abroad as well as an Overseas Payment Plan. I also have dealings with the Credit Agricole in Perpignan in respect of French mortgages. If you would like more information, please e-mail me at Fiona@canigoucountry.com Other possibilities, apart from approaching your own bank of course, include HSBC and Abbey National in the UK who both specialise in overseas mortgages. Converting your money into Euros
Currencies4less is a specialist foreign exchange broker, providing competitive rates of exchange on all major currencies for private clients. They offer a range of foreign exchange services including spot and forward contracts but above all pride themselves on giving a complete and personalised service. Deals up to the value of £5100 can be paid for using their online debit card payment system. The minimum transfer level is £1000 but you should note that any transfer under the value of £5000 (Sterling) will incur an additional £25 cost. Please note they are unable to accept or make cash payments or offer any advice to clients.
"A terrific team of specialists that share high levels of knowledge
and commitment." As part of The 4Less Group plc, Currencies4less has an international support network. The 4Less Group plc has offices in the UK and Europe and specialises in currency exchange, overseas mortgages, car finance and migration. You can find more information on the Currencies4less website www.currencies4less.com or by calling them directly on +44 (0) 207 594 0 594. The Notaire Checks carried out on the Property There are 2 main controls that have to be satisfied before the sale can proceed: a check for termites and a check for asbestos. If the property was built prior to 1948, then a lead check must also be carried out. Should termites, asbestos or lead be found in harmful quantities, then steps must be taken to rectify the issues at the cost of the vendor. Note that obtaining a satisfactory mortgage is one of the conditions that must be fulfilled for the sale to go through and the notaire will automatically be advised accordingly. Should your mortgage application be refused, the deposit will be returned to you and you will be released from the sale. Other pre-requisites include the relinquishment of the property by the Mairie (which has first refusal on every property sold in its commune) and also you must be alive and kicking on the day of purchase. These will all be listed in the Sale Agreed document. Once your offer has been accepted, you proceed directly to signing the Sale Agreed document (Compromis de Vente). This first stage equates to the property being sold ‘subject to contract’ – once signed, it is legally binding on the part of the vendor – he/she cannot sell the property to anybody else. Hence it is generally a substantial document outlining the full legalities of the sale may take place either in the estate agency or otherwise at the notaire’s office. If circumstances do not allow this, it can be sent to your home address for signature and return to the notaire. It is preferable that you sign the document here in France since I can then translate and effectively talk you through it – answering any questions you may have as we go. Otherwise, I will provide a written translation of the salient points for you and will naturally be available to respond to your questions over the telephone. The Cooling-off Period In France, upon signing the Sale Agreed document, the purchaser is extremely well protected though a 7-day cooling-off period which came into effect in June 2001. It allows you to reflect and effectively pull out of the sale, no questions asked and with no penalty. Interesting enough, the vendor does not enjoy this benefit and conversely would be subject to considerable costs should he or she quash the sale. Note that the 7 days start from the day after you receive the Sale Agreed document in the UK. This means that often 7 days actually translates into 10 or 14 by the time the vendor has signed it too and it has been despatched to you. Deposit Once the cooling-off period has expired, a deposit is payable as per the Sale Agreed document (generally 10% of the sale price or 5% in the case of a new-build property). This is normally sent to the notaire by bank transfer for safekeeping in a locked account. Assuming this is definitely the house of your dreams, you should instruct your bank accordingly as soon as possible once you get home. Should you pull out of the sale after the 7-day cooling-off period has expired, you lose your deposit. However, if the vendor pulls out you are entitled to double the amount of your deposit back by way of compensation. Generally speaking, a property takes a maximum of 3 months to complete; it can be less in certain circumstances and is largely dependant on both the complexity of the sale (number of searches necessary, loan offer, etc which all take time) as well as the notaire’s workload. The anticipated date will be inserted into the Sale Agreed document. Completion takes place in person at the notaire’s office or otherwise
by power of attorney (par procuration). In the case of the latter, the
Completion document (Acte Authentique de Vente) will be sent to you for
signature which will need to be validated by a solicitor. You normally get several originals of the completion document (Attestation) – a 2-sided document – at Completion stage. This is a vital piece of paper since it proves that you are the legal owner of the property. The actual Title Deeds (Titre de Propriete) will follow later and can sometimes take up to 2 years to come through. Buildings and contents insurance MUST be in place at the time of completion. This is a legal requirement in France. If you would like to receive a competitive quote, please contact me at fiona@canigoucountry.com Title Insurance – Looking after your Property
Rights of Way It is a fact that French notaires are not legally obliged to check out every single detail of a property. Plus, of course, mistakes can be made. Title Insurance, provided by London & European Title Insurance Services Ltd (underwritten by AXA Courtage, France) allows for that and enables you to sleep at night. Covers properties up to €300,000. Title Insurance is simple, yet effective and it represents excellent value for money. Don’t wait any longer! To take out your policy, contact me at fiona@canigoucountry.com Local Taxes Houses in France are subject to two state taxes: Taxe d’Habitation is a residency tax, rather like the former Community Charge in the UK, payable by whosoever is the occupier (or owner if not rented out) of the property on 1st January of a tax year. Note: The French tax year runs from 1 January to 31 December. Taxe Fonciere is a buildings/land tax, comparable to the rates in the UK, and the purchaser is liable from the date of the Completion document. It is generally split pro-rata between vendor and purchaser, particularly if the sale takes place towards the beginning of the year; it is then claimed back by the vendor at the Completion stage. Bills for both taxes arrive around the end of September for the current year and are payable immediately. If you prefer, a monthly payment scheme is available. Both taxes contribute to the budget of the commune/departement/region and vary according to the wealth of the commune and level of facilities it possesses. Generally speaking, if you allow €750 per annum for both taxes you will get some change. Capital Gains Tax (Taxe des Plus-Values) CGT is charged at 33.33% for foreigners. Note that after the first two
years of acquisition, it reduces by 5% per year so that after 22 years,
any capital gain is tax-free. top of page French inheritance laws are complex in nature and quite different to those of the UK for instance. Effectively, whether you intend to live in France permanently or buy a second home here, you will be subject to French inheritance laws and tax, irrespective of what an English Will might say. Depending on your individual circumstances, there are several different agreements that can usually be drawn up at the time of purchase or otherwise afterwards, which will allow the surviving spouse to inherit and also minimise French inheritance tax due. Clearly it is vital to deal with this issue now, rather than when it is too late. Note that there can be an extra charge for this service. Find out more by contacting me at Fiona@canigoucountry.com Buying an SCI (Societe Civile Immobiliere) Buying an SCI effectively means that a group of people set up their own French company to purchase and manage a property. This option enables families or friends to jointly own a property without the complications of French Inheritance Tax. Each member holds shares in the company and may sell their shares to other parties as per the contract. AGMs must be held and accounts filed to the French equivalent of Companies House. Investing in a Rental Property It may be that you intend to purchase a property solely as an investment to rent out or as a part-investment, whereby you aim to spend some time in the property yourself too. You should be aware that in France renting out a furnished property gives you, as a landlord/lady, far more control than renting it out unfurnished (where the minimum tenancy agreement is 3 years, for instance). You need to consider who you wish to rent it out to (i.e. which nationalities), which market you want to go for (i.e. Summer season/year round – holidaymakers/resident workforce) and how you are going to rent it out in terms of advertising/taking bookings/key-holding/change-overs (via an agent or specialist contact or do you intend to do it yourself?). Two of the best areas for an investment property in the P-O are the coastal strip (especially the Cote Radieuse and the Cote Vermeille) and, of course, Perpignan itself. Although the season is short, averaging 2 months, it is highly lucrative. For more information, please contact me on Fiona@canigoucountry.com It is important that you seek specialist advice regarding renting out
your property, since there are tax implications on revenue earned. Find
out more by contacting Jane Hayward, Manager, UK & International Tax
Advisory Service at Blevins Franks Financial Management. Tel: +44 (0)20
7336 1116 or e-mail: jane.hayward@blevinsfranks.com Leaseback is an investment option which is becoming more popular in Roussillon as time passes - appealing to families or people with limited and/or fixed holidays each year as well as investors. Different versions exist: Typically you can either buy a fully furnished apartment at a reduced price and in return you are entitled to use it for 4-6 weeks per year over a 9 to 11-year period. The remainder of the time it is rented out to holidaymakers. Alternatively, you buy it at sale price excluding VAT (usually payable at 19.5% on new properties in France) and in return you are entitled to use it for 2-4 weeks per year over a 9 to 11-year period. This option also guarantees an annual rental income of 4-6% of the property price (excluding VAT). From the management company’s point of view, it is key that the properties rent out for most of the season since they are bound to deliver guaranteed incomes/discounts to all purchasers. Consequently, one can be assured that only quality apartments boasting excellent locations and/or facilities are eligible for this option. Another major advantage is the fact that during the leaseback period, apart from the taxe fonciere, you are exempt from all bills, maintenance fees and responsibility for replacement of damaged articles – all of which is guaranteed under the lease. Moreover, unlike Timeshare, the apartment belongs to the owner 100%. You hold the deeds and have the right to sell whenever you choose, but of course unless you do so once the leaseback period has expired, you would be selling the property subject to whatever period remains on the lease and the sale price would have to reflect this. Using an Offshore Company This is no longer an efficient option since the French government introduced a tax on deemed income which effectively equates to 3% of the value of your property on an annual basis. |
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Canigou Country
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Title
Insurance is, as the name indicates, a protection of the Title Deeds.
Essentially, it guards against: