Buying a property is a big deal for most people; even if you are a ‘seasoned’ homeowner, the buying process can be nerve wracking, and is made even more so if you are doing it abroad.
With almost 20 years of experience helping buyers and sellers with their real estate projects in France however, we can assure you that buying a property in France as a foreigner is easier than you may think, and here’s why;
1.) The Notary
The Notary in France takes care of, and responsibility for, all property transactions. He / She is charged by the government and the tax office to ensure that all property transactions are paid for legitimately, and that the tax laws are correctly applied. In addition, the notary is required to do all necessary checks on the property, to ensure there are no outstanding debts when it transfers, no legal problems, no unwanted servitudes, etc. The responsibility is substantial and the “Notaire” is a luminary, highly regarded and highly respected role in French society. The result is that when buying in France as a French person or as a foreigner, you can be sure that your best interests are being taken care of by highly qualified and competent people.
As the buyer or seller you can choose your own notary – and in doing so, you can choose a notary who speaks your language. Your estate agent will be able to make recommendations to you and of course, it is usually worth getting a recommendation.
- A note on Taxes – Many international buyers have a misconception that French taxes on properties are exorbitant. In fact this is NOT the case. There are two annual taxes payable to the state; a council tax (taxe fonciere) and a habitation tax. To give you an idea, for a two bedroom flat in Cannes, these might amount to to €2000/year together, and for a villa in the countryside, it depends on the size of the property and location, but as a guide, together these could be approximately €4000 – €6000/year. Compared with the USA for example, the annual property taxes are not enormous.
- Then there is a Wealth Tax, the Impôt sur la Fortune Immobilière (IFI) which replaced the ISF in 2018 and reduced by nearly a half the number of households who are liable. French-Property.com describes it as ‘a tax that has attracted a lot of adverse publicity, much of it misinformed’. The scope of the old ISF was substantially reduced in 2018, with liability to the tax now based solely on personal real estate assets and investments. It is an annual progressive tax, with rates from 0.5% to 1.5%, and is triggered when net personal real estate wealth is greater than €1.3m, when it is then applied on net assets above €800,000. (So, financing your purchase through a ‘loan’ can be a good idea, to reduce one’s net real estate asset worth.)
- Lastly, Capital Gains Tax is payable on the net gain when a property sells (after renovation works, fees paid, and on a sliding scale after 6 years) – there are few countries in the world that do not apply a Capital Gains Tax on secondary residences.
2.) Language doesn’t have to be a barrier
Countless foreigners who do not speak French have successfully and happily completed on property purchases in France – often with a goal to start learning some French post purchase. The French have learnt English in school for decades. The result is that most French people have a basic understanding of English, even if just school level. Additionally, because foreigners have been such a large and important factor in the real estate market in France for hundreds of years, professionals working in the property sector, including real estate agents and notaries, more often that not have a reasonable grasp of English, if not a good proficiency.
3.) Property Management is an option
A primary worry of many foreign buyers in France, is how they are going to manage their property when they are back at home. The long history of foreign property ownership in France has created many niche jobs, one of which being Property Management, especially in the South of France where there are so many holiday homes and secondary residences. Property Management can take on many forms, from just the simple administration of paying taxes, electricity bills and body corporates, to scheduled property checks, and rental management (which we will come to in point 5).
4.) French banks lend to foreigners at enticingly low rates
While French residents tend to get the highest LTV (loan to value) and lowest interest rates, international buyers can still get very attractive terms, depending on their file (assets and income). So, although the banks are tightening up, with fixed interest rates still below 2%, even buyers who have “money in the bank” for a purchase might be better off taking a 15 – 20 year loan to benefit from the fixed low rates, while their money in the bank or invested may be earning upward of 5%. Working with a mortgage broker specialised in international clients and portfolios is the best option in this case, as they will have relationships with French and Monegasque banks, and be able to find the best solution for each client’s situation.
5.) You can cover your costs with short term rentals
In most of the South of France, there is a very viable option for home owners, which is to earn rental income; if the property is in Cannes itself this would include congress and summer rentals, and if the property is outside of Cannes (in the countryside or along the coast), then this would refer predominantly to summer rentals (June – September), and the odd holiday period throughout the rest of the year. Renting the property on a weekly basis can bring in good rental income which can help considerably to offset the running costs.
If the intention of the purchase is investment only, then a different strategy is needed – and we can advise on that, but for the purpose of this blog post, we’re talking about second homes, with rental possibilities, not investment-only purchases.
Owning a property in another country, especially in France, is a dream for so many; which is why TV programmes such as “A Place in the Sun” and “House Hunters International” are so popular.
Over the last 19 years, we have helped hundreds of international clients, not only to find their dream home in the South of France, but to make the whole process of buying the property, financing it, managing and renting it as stress-free as possible. After all, that’s what life in the South of France should be.
* With over 18 years of experience, we offer an in house turn-key property solution on the French Riviera and into Provence, including a full buyers search service, accompaniment through the entire purchase process, property management after purchase, and rentals. Additionally, we have established trusted partnerships with English speaking mortgage brokers, currency experts, lawyers, financial advisors, banks and more; all of whom we would be delighted to introduce you to, to facilitate your property purchase in the South of France.
We look after your property investment on the Cote d’Azur, as if it were our own, and if you want to hear it straight from the horse’s mouth, this is what Ross W. had to say; “Fine & Country take the stress out of buying property in France. Friendly, professional and very helpful in all aspects so there are no nasty surprises. I warmly recommend them.“
Telephone: `+33 4 925 925 93