Property buying fees
When buying your dream property in France you should take into account the various fees and taxes. Here are some examples:
solicitor (or 'notaire') fees and commission
estate agent fees
property registration fees (droits d'enregistrement)
taxes - 'TVA' (French VAT)
foreign currency exchange costs (if applicable)
surveyors fees (if applicable)
Solicitor or 'notaire' fees
The notaire's fees (frais de notaire) are fixed at the outset and are payable by the purchaser. The deposit of the property is paid to the notaire upon signing the compromis de vente, however, additional notaire fees are payable in the form of local and national government taxes. Although they can vary slightly, fees are generally around 8% of the property price for older property and 4% if the property is less than 5 years old (frais réduits).
If you buy a property direct from the notaire you should still expect to pay a commission. This can be anything up to 5%.
Estate agent fees
It is not unusual for the property’s sale price to include the commission of the estate agent, often payable in France by the buyer. In fact, this is a question you should ask the estate agent at the beginning of your purchasing process. If you, the buyer, are then responsible for this element you should make sure that this is clearly stated within your contract particulars so that it is not added to the sale price on which the notaire's fees are based. Estate agents can charge anything from 4 to 12% of a property's selling price.
Property registration fees (droits d'enregistrement)
Land registry fees are similar to the UK's stamp duty and are are dependant on the price and age of your property. If you are buying a property that is more than 5 years old, you can expect to pay a 'droits d'enregistrement' of approximately 5%. Property less than 5 years old will be subject to fees of less than 1 per cent.
TVA is France’s equivalent of VAT. As at January 2014 the rate is 20% and will be charged on most fees and commissions.
Foreign currency – foreign exchange rate fluctuations
If you are planning to purchase your overseas property with equity released from the remortgage of a UK property or other cash funds, then you may need to convert your sterling cash into euros. This can be expensive and risky as you leave yourself open to currency exchange rate fluctuations. For example from the initial signing of the contract until the completion date, if you are using UK pounds then the amount required to buy the property in euros can change substantially. Yes, sometimes you can end up in pocket if the UK pound goes up against the euro. However, you can also end up significantly out of pocket should the euro rate move the other way. There are steps you can take to minimise these risks, such as using a company to effectively ‘lock’ your exchange rate months in advance. Today, there are a lot of companies that provide currency exchange risk solutions.
In the UK buyers will generally have a survey done on a property. But unlike UK banks and building societies, French banks and building societies do not routinely ask for surveys to be completed on properties before issuing loans. Do not be discouraged by people who tell you there is no need to have a survey done.
It is advisable to have your survey conducted BEFORE you sign the compromis de vente. Although as a buyer you have your seven day cooling-off period, it’s not always possible to arrange a survey during that time. In other words you run the risk of forfeiting your deposit should you wish to pull out at a later date, after any survey results. However 'clauses suspensives' may give you recompense should you change your mind about going ahead with the sale after the survey.
The notaire is responsible for conducting all other searches on the property such as land boundaries, public rights of way, asbestos and termites. The seller is responsible for these costs.