Topping the list of the most visited countries in the world (79.5 million visitors per year), France remains appealing to foreign buyers. There are numerous English-speaking estate agents (âgences immobilieres) in France, as well as helpful expats eager to share their buying experiences. Foreigners are buying homes in the ever-popular southern coastal areas, the Alps, and increasingly, off the-beaten track inland spots that offer value for money.
Although prices are relatively stable in France, there have been price drops in some areas. French banks predict a fall in values up to 6% in 2012 and an 8% drop in sales. Regions that are witnessing the biggest price falls, include Brittany, Lower Normandy and Picardy. New ‘hidden secrets’ are the Cevennes and Le Gard in the southern-central sector.
Half the population rent homes in France. However, with constraints on rental controls (rents can only be revised once a year), and high prices for apartments in Paris (up by 14.8%), yields are lower than in the UK (3.26-3.85%). The French government’s leaseback scheme, o?ering the buyer a fixed rate of rentals income (averaging 3-6%) annually and a refund on VAT (19.6%), has been popular with French and foreign buyers. You can use the property for a few weeks of the year, and it’s let and managed the rest of the time. This provides new build ski and coastal properties for visitors and the property reverts full- time to the buyer after a set period of typically 9-15 years.
Should you move to France, or spend more than 183 days here a year, you’ll become a French tax resident. French residents are subject to taxation on worldwide income (there’s a UK-France tax agreement), while non-residents with property in France are taxable on source income, gains and assets only. Your liability to French wealth tax depends on residency. If resident in France, your worldwide assets are taken into consideration, but if resident in the UK only property assets in France are included. Other taxes are capital gains and succession (inheritance) tax, where you should seek advice to make a will if you don’t want your property split evenly between your children.
KEY LEGAL ISSUES
The French legal system can be complex, so independent legal advice is crucial. A notaire oversees the sale of a property (sometimes the property is sold through the notaire, often at a better rate than through an agent), ensures conveyancing is carried out and collects relevant taxes on behalf of the government. They do not act for either side, so it’s sensible to employ a separate notaire, or UK- based solicitor specialising in French property. Remember that the preliminary contract (compromis de vente) is legally binding for both seller and buyer, and if the buyer drops out they will lose their deposit (usually 5-10% of the price).
Talk to small French agencies and locals to ?nd out about properties coming on the market.
French agents set their own commission rates (4-10%), which buyers sometimes pay - but remember that they’re negotiable.
Frequently, French developers do not install kitchens, so budget to put one into your new home.