So, you've found the perfect French property for your new life and holidays abroad. It's within your budget, and all your finances are in place. But have you accurately estimated the various costs of property buying in France? Before you commit to anything, it is important to check that you have budgeted for all of the costs involved with your notary.
Legal costs in France
Anyone buying a home in France will need to appoint a notaire, who will ensure that the transaction is legally compliant and that all of the associated property taxes are paid in full. A notaire's fee is often the single largest expense you will need to cover when purchasing a property in France. However, the majority of this fee is not devoted to the legal costs of buying a home - rather to the French equivalent of stamp duty.
Unfortunately, you won't be able to shop around for the cheapest notaire in your area, as their fees are fixed by law. You are, however, free to choose your notary. It is often useful to check that there is a fluent English speaker within the notary’s office as this can be very helpful if your French is not up to scratch. How much these fees end up costing you depends on the price of your new home, and on whether it is a new-build property or a re-sale. For instance, buying an existing property in France will likely cost you between seven and eight percent of the purchase price. This fee is usually around two percent for new properties, but there will be the French equivalent of VAT to pay - at a rate of 20 percent. It is always best to check with your notary regarding all of the costs.
Commission from agencies
Estate agents in France charge for their services in a very different way to those in the UK and the rest of Europe. As soon as you approach an agent in France about a house you're interested in buying, you should ascertain whether or not the listing price includes the agent's commission. Most asking prices include commission, but you should look for the term 'FAI', which stands for 'frais d'agence inclus'. This denotes that all of the agent's fees are included (paid for by the buyer as opposed to the UK system). However, if you see 'TTC' as part of a property listing (which stands for toutes taxes comprises), you should be aware that you will need to pay the agent's fee on top of the purchase price.
Most agents in France will charge between five and ten percent of the purchase price for their services. However, it's important to remember that this is usually in addition to the notaire's fee. If you're looking for a real bargain, it may be worth checking with local notaires in your chosen area of France, as many of them act as agents too. Choosing a notaire to also act as your agent could save you hundreds of Euros in commission.
If you are flexible on exactly where in France your new home will be, hiring the services of a buyer's agent may be a cost-effective move. A professional buyer's agent will scour the country in search of properties that meet your criteria, which will help you to find real value for money in the market.
Paying a deposit
The vast majority of property purchases in France require that a ten percent deposit is paid at the time of signing the preliminary contract. If you're buying a particularly expensive home, this may be reduced to five percent. It is advisable to request that this payment is made to the vendor's notaire - and held in escrow until the end of the cooling-off period (usually seven days). If you must hand over a deposit to an agent, you should ensure that it will be held in an account specifically designed for holding deposits - a 'compte séquestre' account. If you change your mind about the purchase within the cooling-off period, your deposit must be returned to you in full within 21 days.
Converting your currency
Although you may have a rough idea of what your finances can stretch to in France, even the slightest shift in the value of the Euro in comparison with your home currency can translate to a significant difference in the price you pay for property. It may be a good idea to employ the services of a currency exchange provider in order to set a rate in advance. BNP Paribas International Buyers has a partnership with Moneycorp for over 10 years now. They will be able to advise you for any foreign exchange matters at advantageous rates. Please click here for more information. There is a chance that this will result in you paying a little more than you need to for your French home, but it provides you with a degree of certainty when it comes to calculating the total cost of your new home.
At a time when property prices in southern England are among the highest in the world, this could be a great time to buy a home in France. Whilst the various charges involved may seem high, property values in France are still generally lower than they are in the UK. With some careful budgeting and the right professional advice, there is no reason why your foray into the French property market can't be a total success.