Buying a house in France.

Buying a house in France.

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Just a short hop from the UK, France offers so much as a destination with fantastic dining, stunning scenery, rugged Atlantic and sunny Mediterranean and coastlines. Foreign nationals have the right to buy in France without restrictions.

Making an offer.
Property purchase in France is well regulated. Once a price has been agreed a Compromise de Vente is normally used to form a contract between buyer and seller.

If you need a mortgage, the Compromise de Vente must contain a clause confirming that mortgage financing is being sought, then, if the mortgage is declined, you will not lose your deposit. You may have already sought an agreement in principal from a lender but if not it's good to seek advice from a specialist overseas mortgage broker.

Cooling off period.
After making the offer you have a seven-day cooling off period during which time you can withdraw from the purchase without penalty. In order to proceed the buyer is required to make a deposit of 10 percent of the agreed price (5 percent for a new build) and the Notaire will hold these funds on behalf of both parties. If you decide to have a survey, now is probably the best time to instruct a surveyor.

Instructing a solicitor.
The Notaire is a Government official responsible for the legalities of the purchase itself and acts on behalf of both the buyer and seller. Because of this many purchasers feel more comfortable instructing a UK based solicitor to act solely on their behalf to oversee the whole process.

Exchange of contracts.
The Compromise de Vente forms the initial contract between buyer and seller and after the 7 day cooling off period is legally binding. After the cooling off period the buyer may lose their deposit if they don't proceed. If the seller withdraws you can claim against them for financial compensation.

Completion.
After preliminary contracts have been exchanged, land registry searches, local authority searches and planning permission searches are completed. Once the searches are returned a completion date can be set. The completion itself involves both parties signing the "Acte de Vente" . All fees and the balance of the purchase price are now payable to the Notaire.

Most of us will need to raise some finance to complete the purchase of our French home. Nowadays both international lenders and local banks are willing to consider mortgage applications from foreign nationals hoping to buy a home in France.

Lending criteria.
The maximum loan to value for property in France is around 90% with most mortgages being offered on a repayment basis only.

Rental income is not normally taken into consideration when assessing the mortgage finance in France. Most mortgages in France must be repaid by the age of 70 and most French mortgage lenders will need you to take out life insurance. Lending criteria & rates vary between mortgage companies so it’s worth contacting an overseas mortgage broker for advice.

Mortgage term.
Mortgages are available over 25 years and lenders will not normally take into account rental income when calculating an applicants level of borrowing.

Compared to other countries, property transaction costs in France are moderate. You should set aside around 12-13% on top of the property price for fees.

Legal costs for buying property in France.
Legal fees in France vary depending on the price of a property – as a percentage these will be are higher on cheaper properties. Notarie's Fees are generally around 1% of the property purchase price. If you decide to use a solicitor to represent you, you can expect to pay fees in addition to the Notaire who’s services are mandatory.

Registration fees in France.
A land registry fee of around 5.00 percent is payable on completion (much less for new properties) together with mortgage registration fees of between 1 and 2%.

French estate agent’s fees.
A French estate agent will normally charge the buyer around between 4 and 10 percent for the services they provide. As this fee can vary greatly it is always worth clarifying this cost early, and always ask exactly what's included in the price. Look for "FAI" in the property details which should mean the agents fees have been included. Sometimes it may be possible to negotiate a lower fee, or to split the fees between buyer & vendor.