Guide to buying a property in France. Money transfer management can save thousands.

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  • You can save thousands by choosing the correct money transfer provider
  • The property market in France is still an attractive investment
  • You need to be aware of the legal procedures and costs

Buying a property in France is a very attractive proposition to Brits, even in the case of Brexit, this has not proved to be a detractor in purchases within the country. According to research carried out by BNP Paribas, published in their 9th annual report into foreign property investment in France, they reported that over 65% said they would not abandon their project of buying a property in France and 28% indicated that they would move on with their project more quickly.

France has a relatively strong property market, the country is awash with attractive houses in quaint rural France, or apartments in vibrant cities. The rental market is also strong in France as close to 60% of French people rent. This also means that the system is skewed towards tenants and could cause issues if you buy as an investment and encounter difficulties with your tenants. It is also worth bearing in mind, that unlike the property market in the UK or Australia, the idea of flipping houses, doing them up and then putting them back on the market for sale does not necessarily add value to your property. Be sure to keep all receipts in relation to any works that you have carried out on the property. It is worth bearing in mind, that the demand may not necessarily exist for the renovated property when you come to sell it.

It is important to research your areas properly and consider things such as education and employment. There may be a village primary school but where is the closest lycee (secondary school)? What are the taxation levels in France on income and are you or your family fully covered with health insurance? You will find an abundance of information online about buying a property in France. However, the information is scattered, with many sites to visit to understand the complicated process of buying a house in France. It varies greatly from the house buying process in England and Wales, therefore it is vital that you understand your obligations, what you are signing and how that binds you to the purchase of the property. There are also different fees and taxes to consider. This guide aims to cover most of the elements of the buying process and identify those parts that you may not yet have thought about. In order to get more for your money transfer, you should consider using a foreign exchange currency broker. The need for more stability in exchange rates before you make your purchase, so you know what you are getting for your currency exchange transfer, makes it an opportune time to partner with a currency broker.

Legal proceedings

A notaire (solicitor) will oversee the process of the sale, however, don’t think that they are there to advise you as to whether you should purchase the property or flag any potential pitfalls. The notaire is acting a representative of the state, not on your behalf. Their responsibilities are to ensure that all relevant laws are respected and that any associated taxes and costs are paid, in full, on completion of the sale. The compris de vente is an important document as part of the process, because it sets out the full terms of the sale/purchase and as below, once signed binds you to the purchase. It sets out any obligations that you have as the buyer and must complete before purchasing the property. You may also need to consider the different levels of property ownership in France and which one best suits you. You should receive translated copies of the contracts that you sign throughout the process but you need to make sure you understand your obligations, otherwise failure could prove costly. Therefore, it is advisable to seek the services of a solicitor who can support on property purchases in France, or instruct your own notaire to act on your behalf.

The compris de vente (compris) is a legally binding document and ties you to the purchase

The compris can be drafted either by the estate agents, acting on behalf of the sale, or the notaire. Don’t be fooled into thinking that this does not make it legally binding. This document is the equivalent to exchange of contracts in England and Wales, so you will be legally bound to the purchase of the property. It is also a quick part of the process, don’t be surprised if you are asked to sign this within a couple of weeks following your offer being accepted. By signing this document, you will be legally bound to the purchase. Failure to complete the purchase will see you forfeiting your deposit. Make sure you include anything you need to cover you, such as your mortgage or surveys, so that you are covered, this will not be done automatically.


You will need to provide various levels of documentation, such as a copy of marriage certificate (if relevant), as well as passports for identification purposes, perhaps even details of divorced partners, and full details of your profession. The compris will include details such as how much the property is being purchased for, the value of the deposit being paid, and where this is to be held, as again it can fall between notaire or estate agent in some unique circumstances. t will also cover an inventory of things included in the purchase price and if there are any other items that will be purchased at a separate cost. At this point, you will receive details as to how to send your money transfer for the deposit. Be sure to confirm that you have the right details. Given the rise in financial fraud, you do not want to fall into the trap of sending finances to the wrong account, if for example; your emails had been intercepted. This is a growing problem and it is easy to fall victim to fraud when you are mostly reliant on email communications.

Cooling off period

There is a ten day cooling off period, from the time that you receive a signed copy of the compris, during which time, if you change your mind you are able to communicate this in writing the notaire, or estate agent (if they drew up the contract). You will be able to do this without penalty or forfeit of deposit as long as it is received in the right format.

Surveys and mortgages

Before you sign the compris, you will want to make sure that you are completely happy with the state of the property, that you have either carried out all surveys and understand the costs of any renovations that may be required or that you make provisions for these. If you have not had enough time to do this before the compris is issued, you can make a provision for the outcome of surveys or approval of relevant planning permission before complete of purchase. It is possible to include clauses within the compris de vente, which relate to successfully obtaining all building permits, such as the “permi de construire” and “certificate d’urbanisme” for your intended renovations and any changes to property usage. It is worth remembering that France has very few listed buildings and regulations are more relaxed that their anglo-neighbours. However, if you enlist the services of an architect or Maitre d'Oeuvre, you will be able to confirm this with them.

You also need to consider whether you will need to take out a mortgage for the purchase. If for example you are reliant on the sale of a property in the UK, be warned that if something were to happen to that sale, you would still be tied to the property purchase in France. You would not be able to add a mortgage after the compris has been signed if you had not included a provision for it in the compris. Therefore, make sure that you are completely happy with every part of the purchase agreement and that you have covered all financial areas too, as failure to do so, could cost you your deposit.

Deposit, Money Transfers, Regular Payments and Fees

Deposit

The deposit is usually around 10 percent of the purchase price and you will be asked to carry out a money transfer for this amount as soon as, or in time for signing the compris de vente. These will not be the only money transfers throughout the process and it is important to consider how you are going to send money abroad. If you stick with a transfer through your bank, you could lose out through unfavourable exchange rate movements as well as the high spreads that the banks charge over the interbank rate. You can save a considerable amount on a money transfer through a currency exchange provider. Given the large sums involved in buying a property, you could potentially save thousands on your currency exchange, through selecting a currency exchange provider for your money transfers. This could pay for renovations that you need to make on the property, or act as a fund for flights between the UK and France.

Fees

There are many fees to think about with the purchase, we have listed the most common ones below but you may want to consider other costs which may arise at the point of sale such as taxes like capital gains tax of c.16% and social charges of 11%.

 

  • You will be charged a fee for the notaire who completes the sale, which is typically 5-7% of the sale.

  • Costs to move your furniture and belonging abroad

  • In addition to this, estate agent fees range from 4-12% on the full value of the sale and in some cases, this may fall to the buyer to pick up, if negotiated at point of sale

 

This is one of the reasons why a large percentage of properties are sold privately in France, although there are some estate agents that are entering the marketplace, and trying to shake up the fee structure.

 

Money transfers and regular payments

You will find details of the completion date within the compris de vente, which will give you an idea as to when you need to send money to the notaire to complete the purchase of the property, such as any remaining balance before mortgage, less your ten per cent deposit. However, these are as an indication only and set in stone. So whilst you are bound to the purchase of the property, the completion date may vary from that in your contract.

There will be several payments that you will need to make throughout the transaction, so it would be advisable to shop around to see what currency deals you can get before you commit to the purchase and making money exchanges.

Take a look at french currency exchange brokers, who can save you a significant amount of money over carrying out the transaction with your bank. There are a number of payments to consider throughout the sale, not least the deposit, remaining purchase price, fees for surveys and any planning or building regulations. You should also consider the cost of on-going regular payments too, such as mortgages and pensions, if you are facilitating these from the UK. If you are reliant on your bank to cover these for you, there are likely to be costs associated with the transaction and then a less than favourable exchange rate. Then there is the cost of travel, such as flights back and forth, as well as costs to move any furniture and items from the UK to your chosen property in France. You may also want to buy a car when you are in France.

Solicitors costs are much more significant, +5% of the transaction cost, than in the UK. By electing to use a currency exchange provider, you can save significantly on your international money transfers. On average, from the moment you sign the compris de vente (your preliminary purchase contract) to the completion through the acte complete/authentique, it can take 10-12 weeks for your sale to go through. Sometimes this can be achieved in a shorter time frame, if both parties are keen to transact quickly, and the notaire is able to carry out all relevant searches and legal checks. Consider that during this time, a lot can happen to currency markets and exchange rates. Currency exchange brokers also have the ability to take out a future contract, where you can tie in an agreed rate, to be used at any time in the future (invariably between two days and two years). This helps you to guard against unfavourable exchange rate fluctuations and can be particularly useful when considering payment of the balance of the sale. When it comes to sending money abroad through a currency broker, they will give you a deal far in excess of what your high street bank can offer for an international money transfer. A bank will charge you a fee of £5 to £30. On top of this, you will also be charged a rate of at least 4% over the interbank rate. A currency exchange broker will charge closer to 0.5 to 1.0% and some do not charge fees for transactions or regular payments. Our comparison tool for sending money from the UK to France contains details of the most cost-effective money transfer companies globally.

Acte Complete/Authentique

This is the final step to relinquishing the keys to your new property in France. You will have made your final money transfer, for the full outstanding balance on the purchase, as well as any fees in relation to the purchase and have sent these to the notaire handling the sale. The Acte Authentique contract document contains similar details to the Compromis, which you signed some 10+ weeks ago. A draft copy of the contract will be supplied to each party, to ensure that everyone is happy with the contents. This can be provided in English. It is imperative that the contract is signed by each party to the contract in France. However, if this is not possible, you may be able to instruct a power of attorney, for a representative to attend on your behalf and sign the contract for you. Once this is complete and all parties have signed and monies have been paid, then welcome to your new home.

To buy or not to buy?

France represents an attractive country to purchase a property either privately or as an investment but make sure you have instructed legal support for your purchase as there are some costly pitfalls to avoid. Save money on your money transfers and use a currency provider to lock in exchange rates and cover your money transfers from fluctuating exchange rates.

Other guides:

  1. BUY AN OVERSEAS PROPERTY ABROAD
  2. GUIDE TO BUYING PROPERTY FOR SALE IN PORTUGAL
  3. GUIDE TO BUYING PROPERTY IN CHILE
  4. INTERNATIONAL PROPERTY SERIES: BUYING PROPERTY IN AUSTRALIA
  5. OVERSEAS PROPERTY INVESTMENT RISING FOR BRITS

 

 

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Rachel Doyle
Rachel Doyle
Senior Content Specialist
Rachel has over 10 years’ communications and writing experience, having started her career in financial services where she spent nine years working in various roles. She started out in fund… Read more

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