Purchasing a property in France may seem like a lengthy ordeal to you, however, the team here at Invest Property Chic are here to take the reins and guide you through each step of the process. Our team are dedicated to holding your hand through each stage and taking you from first viewing to receipt of keys in a way that ensures you experience none of the stress normally associated with completing a property transaction. The beauty of buying property in France is that when you purchase off-plan, your interests and funds are fully protected. Let’s talk through the steps involved in purchasing a newly built property:
Reserving your Dream Property
Once you have explored your options and decided on your dream property, the developers we work with will allow you to place an ‘option’. This means that the property is removed from the marketplace for a short timeframe to allow you the time to gather the relevant paperwork and get your finances in order. This option timeframe also allows the developer to draft a contract of reservation.
Signing the Reservation Contract
The next step in the process will be the signing of a reservation contract and the payment of your deposit to the developer. This deposit is calculated at 5% of the full purchase price. Any deposit that is handed over at this stage is kept in an escrow account held by an appointed notary. The team here at Invest Property Chic will be happy to refer you to a respected notary that we have worked with before. This notary is vital to the process as they will ensure a safe and legal transfer of ownership, without any risk to you or the seller. The developer will also need to sign the reservation contract for the next stage to kick in (the cooling-off period).
Time to Think
The cooling-off period follows after both parties have signed the reservation contract. This is generally a period of ten days and is necessary to give you time to be sure about your purchase. During this ten-day period, you may withdraw your offer at any time and your deposit will be returned to you by the notary. There is also the option to withdraw your offer should your mortgage application be refused after the ten-day cooling-off period.
Signing of the Notary Contract, the VEFA
French law stipulates that the notary’s contract must be signed in the office of the notary in France. However, it is possible to appoint a power of attorney should you be unable to travel; this power of attorney can sign the contract on your behalf. For non-EU citizens, you may have to have a French Government authority ratify the power of attorney. If this is the case, the team at Invest Property Chic will arrange everything for you. Once the signature has been made, you will then be required to transfer the remaining funds to the notary.
What are the costs associated with purchasing a property in France?
One of the many benefits of purchasing new build properties in France is the low cost associated with the process. Generally, purchase costs will work out at approximately 2.5% of the total property cost. These costs will include a fee paid to your notary, any land registration fees and property taxes.
For resale properties, you can expect to pay in the region of 6-8%.
Should you wish your notary to register the mortgage for you, this will incur an extra cost of 1% of the property price.
As in other jurisdictions, the cost for a notary will vary depending on the property price, this sliding scale means you can calculate costs easily based on the property cost.
Benefits of Purchasing New Property in France:
- Should you decide to rent out your new property, you can avail of a 20% VAT saving (TVA).
- There are lower costs and fees associated with buying new properties in France, which can be calculated as 2.5% of the property price, as opposed to 8% of purchasing a pre-owned building.
- There is no property tax due for the initial two years after the purchase of a new build.
- One of the most beneficial points is the 10-year guarantee, which comes as standard with new builds due to French consumer law.
- New build properties in France are of the highest quality and boast superb energy ratings, this, in turn, leads to lower energy costs for the owner.
- Very low maintenance required on new-build properties.
- When buying off-plan, you are the one who gets to choose the finishes in your dream property.
How safe is it to buy a property in France?
We are pleased to tell you that purchasing a property in France is one of the safest transactions you can make. The process of using a third party notary, to finalise all transactions means that funds are only transferred to a developer when they have an insurance policy in place. This insurance policy is water-tight and guarantees that the purchaser will always receive the agreed-upon, full-spec apartment, chalet or villa even if the developer were to become bankrupt at any stage. This guarantee is a unique selling point, and the reason why so many investors see France as one of the safest places to purchase a property in the world. The GFA (Financial Guarantee of Achievement) is incredibly important for banks and financial institutions as well as the purchaser, and funds will only be released once this is in place.
Is it possible to purchase a property in France using a company?
Yes, this is absolutely possible as there are no restrictions in France when it pertains to purchasing a property in the name of a company. Just another great reason to choose France for your property investment! The team here at Invest Property Chic work with some of the most respected notaries in the business, and we will be happy to introduce you to them when you are ready to take the next step. An expert notary will advise you on the best company structure to purchase your property, i.e. SARL, SARL de Famile, EURLs or SCI.
We find that the most common structure is an SCI (Société Civile Immobilière) when purchasing and occupying a residential home in France. It is important to note though that if you were considering using a furnished property to run a business, this would be considered a commercial enterprise and in these cases, the SARL structure would suit best for a joint ownership.
Are the Property Taxes in France High?
The short answer here is no. Property taxes in France are two-fold, the Taxe d’Habitation and the Taxe Foncière, both of which are due for payment during October and November each year. The cost of both of these taxes is based on the value of the property as per the French property register (the cadastral value). The rates of these taxes will vary depending on the district you are living in. Typically, you can expect to be taxed between €10-€20 per square metre of your property.
For those of you who are leasing your home through a management company, you may only have to look after the Taxe Foncière as the management company will pay the Taxe d’Habitation on your behalf. New-build property purchases are exempt from the Taxe Foncière for the first two years, another superb initiative from the French Government.
Have more questions?
Should you have any further questions about buying a property in France, the team at Invest Property Chic would love to hear from you. Our dedicated French property experts are always on hand to provide the very best service and advice. With a focus on taking the reins throughout the purchasing process, we want to assure you that purchasing a property in France can be a wonderful, stress-free experience.