Things to think about before you sign on the dotted line
With the rise of online property portals, it has never been easier to find a home in France online, whether through an agent or via a private vendor.
Private sales have been commonplace for years in France and are now very often marketed via social media too.
Once you have found the right property for your investment or second home, you will naturally want to seal the deal as soon as possible. However, it is worth taking a step back and considering a number of issues before signing anything on the dotted line.
Bank on it
If you are looking for finance, French banks have long been lending to UK non-residents, and mortgage rates in France are lower than they have been for many years. However, the lending criteria can be strict, so it is worth talking your project through with a bank or broker before entering into price negotiations.
If you are not from the UK, it is worth verifying which banks have a policy of lending to people from your country and whether their criteria are likely to change. For example, BNP Paribas has recently begun to lend to residents of Australia, New Zealand and South Africa.
When looking to buy an apartment, an important thing to do before negotiating on price is to ask to see the minutes of the meetings between other owners and the management body – le syndic de copropriété.
In these documents you will find details of any problems with the structure of the overall block and any discussions on future works. If there are works that will need to be carried out – the building needs re-rendering, for example – the cost will be shared out among the owners and you will need to make sure that you have allocated funds.
Once you have a full picture of any spending you might be liable for in the coming months and years, you can negotiate the sale price accordingly.
For both apartments and houses, the vendor must provide a number of diagnostique tests. These provide clarity on certain aspects of the property, such as whether it has any serious issues with asbestos, termites, lead in the paint or pipes etc.
These do not amount to a structural survey though; you will have to appoint a surveyor should you wish to have a structural report carried out.
One of the first things you will be asked to do once the price has been agreed is to sign a compromis de vente or a promesse de vente. These are preliminary contracts and you can lose your deposit if you do not proceed for reasons that have not been outlined in the clauses suspensives or getout-clauses.
Unless you are fluent in French, it is highly advisable to appoint an English-speaking notaire to make sure you fully understand your rights and any documents you are signing.
Tax and inheritance planning are worth considering from the outset; an English-speaking specialist will be able to take you through the various ways of buying and the issues to consider from an inheritance perspective.
There are also standard taxes to take into consideration as the owner of a French property; these are known as taxe foncière (land tax) and taxe d’habitation (resident tax). The agent or vendor will be able to provide you with historic figures so that you can factor these into your future running costs.
Taxe foncière is payable by the property owner regardless of whether or not it is being let whereas taxe d’habitation is paid by tenants if the property is let on a long lease.
To let or not to let
Looking ahead to managing the property once you have bought it, it is well worth doing research into local rental agents. If you do not intend to let, is there a local keyholder who would be able to keep an eye on the property while you are not there?
There have recently been restrictions on lettings made through Airbnb and similar websites in Paris and Lyon, with other cities following suit, and this is worth taking into account if you were considering this rental model and are looking at investing in the larger cities.
If you are considering a leaseback investment, it is wise to look into who will manage the property once it has been built, just to make sure that you have full confidence in the project and trust that the management company will deliver on their rental return promises.
When you are getting closer to completion, you will need to think about insuring the property. It is worth seeking out Englishspeaking French property insurance services in order to make sure that you fully understand the contract.
Currency exchange will also be at the top of your agenda; there is a wide offering of foreign exchange companies who will guide you in trading into euros as and when necessary.