Many British buyers have restarted their French property hunt, and our recent Your Overseas Home webinars have attracted questions on everything from fees to house prices and residency. Here are the experts’ answers to your top questions.
To be put in touch with the experts featured in our Q&A, simply fill in our enquiry form below.
Questions about the current lockdown
Are you still able to work in the lockdown?
Tracey Hudson of Beaux Villages Immobilier: We are all still working in the current situation and we have recently had the announcement from the government that people are allowed to travel within France for the purpose of viewing homes, so we have seen quite a lot of activity on the domestic market already. For those abroad, we can also conduct virtual viewings, either through video or even livestream. That way, you can view our properties from the comfort of your own home and you make your viewing trip really count when you do come out.
Now’s the time to start the dialogue with agents you trust. Build a rapport with them – they are on the ground and have knowledge of the industry, the markets and can help you get a feel for the areas before you arrive.
When is travel likely to resume?
Tracey Hudson of Beaux Villages Immobilier: As above, we can now travel through France for the purpose of viewing homes. We anticipate further new in the coming days, as things are easing here. We’ve heard, although no guarantees, that car travel cross-border should recommence in June and flights likely in July.
Is coronavirus likely to affect property prices in France?
Tracey Hudson of Beaux Villages Immobilier: We have a lot of supply in the marketplace, but also a lot of demand. Because of that, property prices in the countryside are likely to remain stable. Remember that we don’t have long streets of identical houses, so every house is an individual case, as is every seller. That is where you might find yourself able to negotiate and where your agent can be extremely helpful. We can help you understand the vendor’s motivation to sell, and whether the property has already been drastically reduced, so there is less likely to be room for negotiation, or if it has been on for the same price for quite some time.
Kim Bingham of Private Rate: Credit markets in France did start to overheat in 2019 and so some of the lending markets have tightened up. Covid-19 has perhaps impacted some lenders in terms of the profiles they will look at, but interest rates are under 2% for the large majority and forecast to remain low for the foreseeable future.
Paul Harris of Smart Currency Exchange: Your price will be fixed in euros, but this constantly changes in pounds. So even if prices do not change particularly, or move slightly towards a buyer’s market, you will still have to contend with the risks of the currency market. A 10% movement can add thousands to your property – and, with the Brexit transition period ending on 31st December, we can expect a lot of movement. We can help you to protect your money with something called a forward contract, whereby we can lock you in a secured exchange rate for up to twelve months, so you always know exactly how much you’re paying.
Questions about Brexit
Can we still buy and move to France after Brexit?
Matthew Cameron of Ashtons Legal: Yes, you can still buy a property in France even after Brexit, just as clients from America or Australia do. To move there, there may be further hoops to jump through in terms of showing you have financial means to support yourself and so on, but it will not be impossible. However, the easiest option in terms of minimal extra work is to have moved by 31st December 2020.
Questions about your property hunt
What do I need to do before I come to France to look at properties?
Tracey Hudson of Beaux Villages Immobilier: Proof of funds is now really important. It’s essential that you can provide information on where your cash is coming from, whether from your broker or your bank account, as it will put you in a strong negotiating position when it comes to making offers. Clients want to know that the people viewing their properties in person have the budget to do so. If you’re not cash buyers, that’s fine, start talking to mortgage brokers to understand your affordability.
Kim Bingham of Private Rate: If you’re just planning your purchase, you can speak to us to understand your borrowing capacity. We will be able to perform an initial look at your finances and talk to you about lenders and rates. Then, once you have found your property, it’s time to start building your financial file. This is a fully fledged analysis, using tax statements, income statements and so on to present this to the lender when you sign the promesse de vente.
Is it worth using different notaires?
Matthew Cameron of Ashtons Legal: If it is the local notaire dealing with the transaction, there’s little need to use anyone else. They have the local knowledge and probably inherited their office from their parents, too. The main case when you might choose to use a second one would be if the seller lives far away (eg they have inherited a parent’s property in the South but live themselves in Paris) and use a notaire close to where they live. In that case, you might choose to use the village one instead.
Do you need to put down an initial deposit and, if so, when would this be paid?
Tracey Hudson of Beaux Villages Immobilier: When you offer and the vendor accepts, you will sign a compromis de vente. This gives you a ten-day reflection period in which you can withdraw if you want. Once that ten-day period has finished, you will pay a deposit, normally 10%. This will be lodged with the notaire in a secure escrow account. The account is in your name but within the banking framework of the notaire, so it’s extremely safe.
How much are the fees for buying a house?
Tracey Hudson of Beaux Villages Immobilier: The industry fees are linked into the price you see online, so the only official extra cost is the notarial fees, which are about 8% of the property price, calculated on a rather complicated sliding scale. These fees include the French equivalent of Stamp Duty.
Kim Bingham of Private Rate: Mortgage brokers are paid upon success, so we will only invoice once the client transaction is done. It is normally on a percentage case-by-case basis.
Matthew Cameron of Ashtons Legal: We work on the basis of complexity, so it could range from a few hundred to a few thousand pounds. We will go through your specific needs at first contact and also discuss how you’d rather we charge. Some people prefer a fixed fee, some prefer hourly and some prefer to pay monthly installments and so on. Our fees are not shared with the notaire. The notaire acts as a neutral party representing the state, whereas we act specifically in the interest of the party who has instructed us, so it is right that we only invoice that party.
Paul Harris of Smart Currency Exchange: We do not charge a fee for a forward contract, nor do our traders work on commission. All we require is a 5-10% deposit which secures the contract, and then you can pay the remaining balance on completion.
Questions about mortgages
What rates are available for mortgages in France and how much deposit do you need?
Kim Bingham of Private Rate: As above, we have seen a small tightening in terms of the profiles lenders will look at, but largely the market is very positive for borrowers, with low interest rates below 2% and expected to stay there. You can fix a mortgage normally up to 20 years; 25 is the maximum.
Generally speaking, you can expect a personal contribution. For self-employed people, this would be around 10% and, for salaried, you could get 15%, but generally across the board, it will be 20%. Most lenders will lend a minimum of €100,000. As you’re not a French resident, you will need at the time of applying a household income of around €100,000, although I do have one lender that doesn’t have that requirement.
Can you get a mortgage if you want to both use the property as a holiday home and rent it out?
Kim Bingham of Private Rate: It depends on the initial purpose of the property. If you apply for a gite and it is presented as a business where you live in and also work in it, then it can be more difficult to finance as this becomes a business loan. If it’s your holiday home with a bit of airBNB as a secondary activity, then it’s much easier.
Questions about legalities
What are the benefits of using a solicitor, since a notaire is already drawing up the contract?
Matthew Cameron of Ashtons Legal: The notaire is an independent party, whereas we work specifically in your best interests. We can examine the terms of your contract and final purchase deeds, looking at the planning, for instance (is all work legal? Are the neighbours planning anything? Would you need any conditionality for works you want to undertake?). We can advise on inheritance tax, which an incredibly important subject. France has very different rules to the UK, but, with expert advice, you can apply some English or Scottish rules to your French estate (but, again, we can advise you where this might not actually be the most beneficial scenario for you).
We can also handle the dealing with the notaire. We know many of them very well and have a good rapport, as many of our clients are buying in the same areas.
Do I need a French will?
Matthew Cameron of Ashtons Legal: An English will is actually provable in France, based on a law going back to the 1960s. However, in many cases, it is preferable to have a separate will for your estate in France. Remember too that writing an English will will not invalidate French inheritance taxes, and there is a risk of this rising to the maximum of 60% if there are second marriages or couples who are neither married nor PACSed (in a civil partnership).
Is it true that the SAFER has the right to take over a purchase?
Matthew Cameron of Ashtons Legal: Yes, this is true. The SAFER or Société d’aménagement foncier et d’établissement rural is a sort of land agency who can take over the purchase in place of a buyer. The way it works is that any rights that do exist need to be cleared in a two-month period following the signature of the compromis de vente. If the SAFER does nothing during that period, then its rights lapse. Most of the time, they will respond and say they have no interest in exercising these rights of pre-emption. If they respond and do want to exercise their rights, you get your full deposit back. You can expedite their response for a fee of €100 to ensure they will definitely reply within one month.
What does the seller’s report include and is it legally binding?
Matthew Cameron of Ashtons Legal: They are binding but they do not necessarily give the full picture. What they include will depend on the individual circumstances. For example, in a property older than 1949, there will be a lead report (for lead paint), electrical and gas installations will be inspected if they are more than 15 years old, a property in the South will have a termite inspection and so on. However, for example, if they find there were termites, it won’t necessarily tell you the detail of what works were done, but we can find this out. Likewise, it could tell you there are natural risks in the area, but we can use insurance claims to find out if they’ve ever affected that property.
You will normally get the full diagnostiques before you sign the compromis de vente. If surprises come up before then, you have the opportunity to walk away or renegotiate the price.
If you have further questions about buying in France or you would like to be put in touch with the specialists featured in this article and the webinar, simply fill in our enquiry form below.