Real Estate France | Buying and Renting Property in France

Charming countryside home in France, a perfect retreat for expat buyers.|©iStock/pawel.gaul

The first rule of property buying in France is: Don’t rush in. Unless your heart is set on a home in the more popular areas of Provence or Paris, there are more than enough French castles, farmhouses, and village houses on the market for everybody. The supply is not going to dry up suddenly, so take your time.

Visit a range of properties to get an idea of prices. Clearly, you want to get as much maison as possible for your dollar. And note: It’s acceptable to make an offer below asking. Away from the really high-profile areas, houses often sell for less than their listing prices. Start off dramatically lower with your first offer—you may be pleasantly surprised.

Be selfish when deciding on the best area for your needs. There are so many properties on the market that you are sure to find something that suits your needs— even if you want a golf course or a ski resort next door.

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Hiring a notaire

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In France, the business of conveyancing (the buying and selling of property) is handled by a certified real estate attorney—un notaire. A notaire is a public official responsible for ensuring that all deeds are authentic and of incontestable value. You will have to appoint one to act for you. Because they are personally responsible for the contracts drawn up, they must be objective with advice and must act with impartiality toward the various contractual parties. Consequently, the same notaire often acts for both vendor and purchaser.

Engaging your own notaire is not obligatory but is common practice in France and the best way to ensure the transaction goes smoothly. Both parties may employ their own notaire at no extra cost. The fees (always paid by the purchaser) are fixed by law and will be split between the respective notaires. Although having your own independent notaire isn’t strictly necessary, it is in your best interest. You may be happy for their help, as they will guide you through the paperwork and can provide translations before you are required to sign anything. While a government notaire deals with conveyancing legalities, they often do not see the initial contract until after a purchaser has signed it.

The question is, have you asked the right questions before parting with your 10% deposit? Do you know if the town hall has plans for a landfill site or a nuclear power station next door to your newly purchased property? And is the house in as good a condition as it appears? Standard contracts in France state that you are purchasing a property “as seen.” You have no recourse against the vendor if you later discover that the house is heaving with woodworm and dry rot. To be safe, arrange a survey and make it a condition of the contract that you must be happy with the findings of the survey. With a carefully written contract, if a house isn’t in good shape, you’ll be entitled to withdraw and get your deposit back.

Taking a builder with you to the property may be another possibility. There are plenty of English-speaking builders as well as English expats who will spot a problem you may miss. Expect to pay around $250 for their service—it will be money well spent.

The function of a government notaire is only to make sure that a sale is properly completed under French law. As state officials, they are acting on behalf of both the purchaser and the seller. They are under no obligation to draw your attention to any potential problem areas.

A good real estate agent should be able to put you in touch with a notaire who speaks both French and English. If, on the other hand, your agent insists that you sign a contract before you’ve had time to seek legal advice, you have to wonder why. Don’t be pressured.

Buyer’s Checklist

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Once you’ve decided to buy a home in France, we recommend that you engage the services of the following:

An attorney or other real estate expert to represent your interests as against those of the seller, their notaire, and their real estate agent.
A financial expert to counsel and assist with obtaining financing.
An insurance agent to see that you are properly and sufficiently covered.

You will likely want to hire English speakers who have experience helping foreigners deal with the French system. Certainly, as far as Paris is concerned, there are huge numbers of Americans investing in real estate. Finding these people isn’t as difficult as it once was.

The Buying Process

As long as you are aware of the above points, buying a house in France is not a difficult process. In most cases, the procedure is completed within two to three months. So, let’s assume that you’ve discovered that idyllic cottage set among olive groves and fields of lavender and sunflowers. It has no viager attached, and you’ve agreed on terms.

Sellers are required by law to provide a diagnostics report on the property before sale. This extensive survey will let you know how energy efficient the property is, if there is asbestos or lead paint, and if the electricity, plumbing, and sewerage are compliant with current standards.

In rural areas, sewage is often disposed of through a septic tank or fosse septique. Compliance laws have changed over the years and if the system does need upgrading, it can cost upwards of $10,000. So, it’s important to take this into account when buying your country cottage.

The agent draws up an initial contract of sale, the compromis de vente. Remember, unless you absolutely and clearly understand the process, we recommend that you get your own lawyer to look it over before you sign it. Although the compromis de vente is the most usual, there are other types of preliminary contracts. There is no standard form.

Be sure about what you’re signing—and be sure that it contains any conditions suspensives that may be deemed necessary. These are conditions that, if not met, render a contract null and void and entitle the prospective purchaser to recover his deposit. For instance, there are laws to ensure that the preliminary contract can be conditional upon the prospective buyer being able to arrange a loan to purchase the property.

The promesse de vente (preliminary sales agreement) and promesse d’achat are options. These constitute a commitment to sell or buy, but in each case, the other party is not legally bound. On the other hand, the compromis de vente is a binding agreement that fixes the price and obligates both vendor and purchaser to come to an eventual completion. However, with a promesse de vente or a promesse d’achat (preliminary sales agreements), a purchaser who decides to back out won’t lose his deposit and may be subject to a claim for damages. The same applies to the vendor. If he pulls out, he can be liable for compensation up to an amount equivalent to the buyer’s deposit.

If you’re wise, you may also want to structure a contract that is “subject to a surveyor’s report.” You should engage a surveyor—even if you’ve applied for financing. Although valuation appraisals are carried out by lenders in most instances, these are usually performed by valuers, not professionally qualified surveyors. In many instances, property inspections are not undertaken; consequently, any structural defects might not be identified. For lenders, the purpose of a valuation appraisal is for internal risk assessment only, and the results aren’t normally released to applicants.

Step 1

When the compromis de vente is signed, the purchaser pays a deposit, usually 10% of the price of the property. This deposit is put into an escrow account held by the notaire or real estate agent. If paying cash, the contract is considered definitive. If you pull out, you lose your 10%.

If you’re applying for financing, you have a maximum of 45 days to arrange a mortgage. If the bank refuses to lend you money, then the contract is null and void and you get your deposit back. If, however, the bank accepts, then the conditions are the same as a cash buy. Another condition suspensive that may apply relates to farming properties with a large acreage: the sale can be opposed in order to reserve it for a farmer. Again, if this happens, your 10% deposit is refunded.

Even after you pay your 10% deposit, there is a 10-day cooling off period during which you (the buyer) can change your mind, pull out, and get your deposit back. The same period does not apply to sellers, who are committed once the compromis de vente is signed.

Step 2

Once you’ve signed the compromis, the notaire gets down to business. Various searches are carried out relating to the freehold of the property. During this intermediary stage, you will be required to provide the notaire with copies of your birth and (if relevant) marriage certificates. Sounds odd, we know...

Step 3

Once searches have been conducted and everything is judged to be in order, both purchaser and vendor are called to the notaire’s office. The notaire reads the final deed of sale, the acte de vente, aloud. Both parties, as well as the notaire, sign this deed. If you have given your notaire or the real estate agent power of attorney (par procuration), he can sign on your behalf. You pay the balance, receive the keys, and become owner of the property. (Note that the balance monies are required to be in place before final sale day.) You will be given a proof-of-ownership paper and, approximately six to eight weeks later, receive a copy of the deed once it has been recorded into the French administration system. The original document is kept at the notaire’s office.

Once you’ve signed the final acte, you’re responsible for the insurance of the buildings. This, by law, must include third-party liability insurance. You’re responsible for paying local and land taxes (taxe d’habitation and taxe foncière). The taxe d’habitation is charged to the person occupying the property on the first of January. The taxe foncière is charged to the person who owned the property on that same date. (Owners of new properties are exempt from the taxe foncière for the first two years.)

Property Taxes: What to Expect

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Paid annually in arrears, these taxes vary from place to place. They relate mainly to the location—which city or administrative district the property is located in—but also take into account its size. In rural Provence, a village house on the market was levied $412 per annum for taxes, water, and waste disposal. A large house situated in the Toulouse suburbs was taxed at $825 per year.

However, an 18th-century castle priced at over $650,000 in Lot-et-Garonne comes with an annual taxe foncière of $1,357.

Other tax implications you should be aware of are:

You may be liable for French taxes when you sell the property or if you derive any rental income from it.
French tax may also be due if you die or if you transfer the property to someone else.
As stated earlier, French inheritance laws are very different from those in the US and most other countries, and you will be subject to these laws with respect to your property if you purchase in France.
There may also be tax implications in your home country. However, France has taxation treaties with many countries, including the US and Canada, which ensure that you do not have to pay taxes twice under most circumstances.
For any additional information on tax implications, we recommend that you seek professional advice.

Additional Purchase Costs

In France, the buyer is normally solely responsible for all legal costs, taxes, and fees incurred in relation to property transfers, including those costs incurred by the seller. These vary, depending on whether you buy a new home or an older property. It’s difficult to give an exact calculation of total costs, but generally you can expect to pay 7% to 10% for a traditional village house or rural cottage, and 2% to 3% for a newly built house or apartment, excluding agency fees.

Legal fees

Legal fees include not only notaire’s fees (frais de notaire) but also disbursements, taxes, and various duties, as well as searches at the land and mortgage registry. In addition, sales tax may be payable for properties under five years old where there has been no previous sale.

The notaire’s fees are set by the government and are 8% of the purchase price (between 2% to 3% for property under five years old). Contacts on the ground in France have warned us that some notaires try to charge additional fees to English speakers, but as a general rule, they will be upfront about their fees and charges. Obviously, you must expect to pay more than a French person if documents need translation, but determine what the fees are before you proceed.

The notaire will give you a full quote of what you will have to pay out. It is rare that after receiving this quot,e you will be charged extras.

Commission Charges

Commission charges are the fees charged by the real estate agent for the purchase, and usually represent between 4% and 10% of the purchase price. French real estate agents are allowed to set their own commissions. This cost is payable by the purchaser—there is no standard practice. Commission fees are often built into the selling price. Ask about this when you make initial contact with an agent and begin inspecting properties. You’ll want to know if you are liable for a real estate agent’s commission fee before signing any preliminary contract.

A point worth noting is that you can shave some euros off purchase costs by deducting the agency commission fee from the sale price and paying it directly to them. This will save on notaire’s costs.

For example: Say you have your eye on a $100,000 property. To make things simple, we assume that the agent has included their 10% commission fee in this price and that the notaire will be charging 5% on top of that. You will obviously be charged $105,000.

However, if you pay the agent $10,000 separately, the notaire is left with 5% of $90,000. You’ve saved $500. This must be made clear before you sign the initial agreement.

Insurance

Insurance is legally required for homeowners and renters (car owners too). The industry is being gobbled up by huge insurers like AXA, but there are also mutuelles, which are a kind of cooperative and independent insurance agent.

It is worth shopping around for the best deal. But you also need to suit your own circumstances. Expat Stewart Richmond used his bank for all his insurance needs: “We could have probably saved a few dollars shopping around but decided the convenience of having everything in one place—and for premiums to be automatically deducted from our accounts—outweighed potential financial benefit,” he says. “Have a discussion with your bank—it may be worth it.”

Homeowner’s and renter’s insurance policies are fairly standard—your premiums will depend, obviously, on where you are living and the value of the home and its contents.

Financing Your French Home

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Many foreigners don’t know that they can get financing from French banks or loan companies (établissements de prêt). This may be worth considering, especially if interest rates are lower in France than in your home country. And as of this writing, interest rates are very low: Fixed term rates for 20-year loans can be as low as 2.39% with 15-year loan rates starting at 2.42%.

Depending on your personal circumstances, you may be able to borrow up to 85% of the purchase price of a house from a French bank—although this sum usually applies only to EU nationals taking up residence in France. All French banks and loan companies tend to follow the same rules. Financing is based on your capacity to borrow (capacité d’emprunt) in terms of income. Collateral, assets, and liens on other property add to your credibility, but by no means can be the basis for a loan.

Foreigners Living in France

If you have a carte de séjour (a visa allowing you to legally reside in France), banks and loan companies will consider you equal to a national. Most banks require a 15% to 20% down payment, and, in the last year or so, obtaining a French mortgage has become more challenging. It’s a good idea to seek professional assistance when trying to secure a loan. Notaire fees (setting-up fees, state taxes, etc.) are not financed by the bank and are not considered as a down payment, which from a banker’s point of view, is a percentage of the sale price. So, you must set aside approximately 8% to pay fees that will not go into the property price.

Non-Residents

EU nationals and non-residents are expected by most banks to come up with a 20% down payment (sometimes 15%). Non-EU nationals (and this includes Americans) must also come up with 15% to 20%, depending on residence status. Banks and loan companies seem to be more flexible with EU non-residents, as they have a better grasp of income source. For the first two years of your residence in France, you are considered a non-resident by the bank, especially regarding loan applications.

Remember, all banks and lending institutions will want evidence you have the income to support mortgage repayments.

Renting in France

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A location is a long-term rental, locations saisonnières are vacation rentals, and the word louer means “to rent.” Vacation rentals are always furnished. More and more larger cities, outside of Paris, offer furnished rentals, but it’s a good idea to research the rental market before making the move. Generally speaking, long-term rentals in rural France are unfurnished. Although it’s possible to rent furnished homes in the countryside, the choice is limited. In the countryside, most furnished rentals are available by the week or month as vacation homes. However, you can sometimes rent vacation homes for longer periods at discount rates during the winter.

Shorter rentals, of less than one year, will require less legwork and are easier to secure. Morning Croissant is a good website, in English, which lets users browse different offerings and book directly on the site. Prices range from €675 ($710) for a studio in Nice to €3,700 ($3,885) for a four-bedroom, three-bathroom apartment with a sea view.

For even better deals, check out the “Craigslist of France,” Le Bon Coin: www.leboncoin.fr. Here, potential renters deal directly with the owners themselves. It requires a little more savvy as the website is in French. Above all, don’t be afraid to contact the owners in English. French landlords are happy to muddle through a bit of broken English if it means saving on the fees they would have paid to a rental agency. In fact, as this is likely your first contact in France, many short-term renters establish a close connection with their landlords and return several times to the same property.

It’s also important to note that, for rentals over three months, you will need to be in possession of a long-stay French visa, which allows you to reside in France for 12 months and can be renewed, in France, at the 12-month mark.

It’s also possible to hire a professional immobilier (sales and rental agency) to help you with your search. The FNAIM website carries rentals as well as sales. Although many are unfurnished, you can find some furnished properties. Each property description lists the relevant realtor with an office address and phone number. Once you’ve chosen a home, the agent arranges all the rental details with the owner.

For this service, you’ll be charged a finder’s fee, normally amounting to one month’s rent. In return, the agency will draw up the lease for you and do an inventory on the contents of the property you’re renting. In addition, a realtor can help you arrange utilities and telephone service, housing insurance (required to be paid by the tenant for unfurnished properties), and cleaning services.

Long-term Leases

You will normally be required to sign a one-year lease for furnished properties and a three-year lease for unfurnished properties. French law protects tenants. Landlords cannot renege on an agreement without just cause. The scales are tilted in favor of the tenant, as rental agreements for both furnished and unfurnished properties can be broken by the renter with three months’ notice (one month’s notice in case of a job transfer). Rent is usually paid monthly, in advance. The owner cannot demand more than two months’ rent as a security deposit. Providing no damage has been incurred, this deposit must be returned to you within two months of the termination of the lease.

Although maintenance charges and habitation tax are usually included in short-term rental prices, this isn’t generally the case for yearly or three-year leases. Habitation tax varies from area to area and depends on a somewhat complicated formula but will likely be around 2.5% of the monthly rent. It’s charged to all tenants who are in situ on January 1 and is payable in a lump sum in November. However, President Emmanuel Macron announced the tax will be phased out over a three-year period and should be dropped completely by 2024.

Maintenance Charges

If you’re renting an apartment, you’ll probably also need to pay maintenance charges, which are usually listed separately from the rental cost. These cover things such as staircase cleaning, concierge charges, elevator repair, etc. A monthly charge of $50 to $120 is typical, although it depends on your building and neighborhood. You’ll also be required to produce proof that you can afford the rent. Most immobiliers and agencies require your monthly income to be at least three times as much as the rent.

Short-term furnished contracts are renewable at the landlord’s option, but tenants in unfurnished properties have a right to renew when the lease term expires. As mentioned above, if you rent an unfurnished property, you are responsible for insurance costs. A landlord is entitled to make you leave if you cannot produce proof of insurance.

Many English-language Facebook groups in France have homes for rent. There are literally hundreds of them and certainly one for each department as well as many towns and villages. You will be able to find somewhere to rent which is comfortable and renovated for between $800 and $2,600 a month, depending on what area of the country you plan to settle. Please remember, many French houses are hundreds of years old—so expect occasional plumbing problems!

That said, finding rentals in the more popular tourist locations like Cannes or Nice, in university cities like Pau, or in cities that are both university towns and tourist attractions, like Bordeaux, can be more challenging.