On Tuesday 22nd October, we were joined by a highly experienced set of panelists for an exclusive webinar to discover everything there is to know about buying in and relocating to France. France boasts both natural and man-made beauty, from breathtaking scenery to elegant Mediterranean architecture. With a rich and diverse culture and wonderful weather, people from all corners of the globe are drawn to its allure, and many are choosing to relocate and immerse themselves in its irresistible charm. Our panelists delved into the various elements to consider when looking to purchase a property in France.
Emilie Despois, Head of Brand Marketing at Fine & Country, opened the webinar by introducing the session’s esteemed guests – Alice Watson Smith, French Property Expert, Liam Wilkinson, Mortgage Expert from Fortier Finance, Tom Marron, Partner at Blevins Franks, Tracy Leonetti Relocation and French admin expert from LPM and Jonathan Watson, from Lumon - French Property Currency expert. Watch the full webinar here.
Buying in France
Alice advises that the first vital steps are to decide on a location and plan your budget by talking to an expert. Secondly, there are many different websites in France to find a property for sale rather than a handful of portals like the UK has, it is advantageous to meet with an experienced agent with good connections to begin the property search process because of this.
Once a property is found, there are three steps to buying a property in France;
1. The offer is agreed between buyer and seller; this is a simple agreement of terms, organised by the estate agent.
2. Documentation is given to the notaries, where a draft agreement is produced to be signed by the buyer and seller. It is important to note, there is a ten-day cooling off period for the buyer, not the seller, once the contract is signed.
3. Checks are then completed by the notary; it typically takes up to three months for the sale to complete, where the keys are handed over and the transfer of funds takes place.
A buyer can negotiate on advertised prices on a case-by-case basis, however generally if a property is well-priced in the market it is likely a property will sell for the price it is advertised at and not accept offers. Another reason it is important to work with an estate agent with a good knowledge of the local market. Find out which area Alice considers to be the best place in the South of France to invest here.
Applying for a French mortgage as an international resident
Mortgages are generally undertaken regionally, and you can expect different regions to accept a different minimum mortgage, Liam comments for example it is rare for banks in the Côte d'Azur to offer a mortgage for a non-resident below 300,000 euros. 30% down payments are assessed case by case and are based on affordability – listen to Liam explain the above here.
The mortgage application process can take between two to four months in France, so the sooner you speak to a mortgage advisor, the better. Pre-qualifying allows you to be financially assessed along with your assets, income, age, residency and employment status. It is strongly advised to have a mortgage expert with feet on the ground in France as their longstanding relationships with banks will help make a big difference.
Taxes
France can be very tax-friendly for second-home owners who are tax residents, particularly for retirees and people living on investment finances and finance earned outside of the country. This is due to a reduced liability to lifetime taxes such as Income tax and Capital Gains tax. It is worth being aware of wealth tax in France, which applies to property worth more than 1.3 million Euros. Listen to Tom explain more about how to plan for these taxes here. Main residences, in France, are not subject to Capital Gains tax, Tom comments therefore that living in a property is the best way to avoid paying taxes on selling your property. Alice adds that there two annual taxes for owning a property in France, including habitation tax.
Fees to consider
In France, agency fees are paid for by the seller (*under most circumstances) , whilst buyers will pay notary fees. This includes all transfer fees which are around 7.5% for resale properties and 2.5% for new build properties. The buyer and seller can share the same notary, or the buyer can have their own notary if this would be more reassuring for them. Notaries then share the fees in an equal split.
Another key consideration is the survey fees. In France, a diagnostic report is obligatory and charged to the seller. This takes care of superficial reports associated with the property which can include energy performance, asbestos, lead, official m2 amongst other environmental risks. However, this does not include structural surveys or roof surveys; if the buyer wants these surveys conducted, this can be done, but it is generally taken on a case-by-case basis.
Visas
A question many people have when looking to buy in Europe is the visa process post-Brexit. In France, there are around 29 visa options that you can apply for; these fall into around six categories. If you are retired or unemployed you can apply for a non-working visa, where you’ll need to demonstrate that you have around €1,400 net per month. This visa can be renewed yearly if you have the financial resources to do so. If you are looking to work in France, then there are five different types of visas which depend on factors such as the salary you are looking for and your education level. There is also a visa type for those who are self-employed in their own country and want to buy in France or work remotely. Once you arrive in France, you will be required to validate your visa online and attend medical exams to determine if you need immediate care in France. If you have pre-existing health conditions, you will not be rejected for this. Listen to Tracey tell us more here.
Choosing a broker
You should always seek professional advice when dealing with finances. For foreign exchange you should work with a broker, not just your bank, as a broker can mitigate risk. A currency specialist can represent savings on typical rates. Lumon enables you to purchase at a favourable rate, whereas with a bank, you must accept the current exchange rate on the day. Listen to Jonathan explain this in more detail in this video. Lumon provides a service which allows you to make an informed decision with your finances when you are looking to move. Listen to Jonathan explain the difference between using a broker over a bank for your international purchases here. Find out what a forward contract is.
Health insurance
Another element to factor into your research is health insurance. A visitor visa requires a one-year policy application of at least €30,000 with zero deductible. You can expect to pay €1,000- €2,000 for the policy per year. After three months of regular residency, you will have the option to join the French healthcare system. Our experts recommend sending the application for this after day 91 of your visa. By applying as early as possible, you can avoid having to renew your own policy after one year.
Pensions and investment income
It is important to understand your options for pensions and investments. French tax residents will have to declare their financial income including any rental income in France to top up their pensions. If you earn enough money for rental income to be considered a business, you will need to apply for this. The threshold for this is €23,000 per year.
In terms of investments, if you’ve been taxed on investment income in the UK, you can arrange for it to be paid without deduction of tax in the UK, on the basis that you are a French tax resident. It is worth noting that the kind of investments people typically have in the UK might work well in the UK system, but generally do not work well in the French system. Our experts suggest that restructuring your investments would be worth looking into during the process of moving.
Contact us
Looking to relocate, find a second home or invest in property in France? Contact Fine & Country French Riviera to get started today. You can watch back the webinar here.