My Experience of Buying a House in France - what to expect?
This month (July 2018), we bought a house in the South of France. I have to say, overall, the experience has been relatively smooth and straightforward, and I would heartily recommend it. That's not to say there hasn't been stress; buying a house and moving is, after all, up there as one of the most stressful life events. However, the process is quite different to what I know from the UK, and I am sure elsewhere, so here is my description of our experience to hopefully give you an idea of what to expect if you are thinking about it too.
Talk to your bank or potential mortgage lender
The very first thing we did was have a conversation with our Bank Manager at HSBC and tell him about our intention to buy. He was able to give us an idea of the likely amount we could borrow, as well as rates and terms.
It was very useful to get an overview of what costs to expect as well. There were surprises, as costs (legal, agents, and taxes) are higher than in the UK. i.e. for us we needed to make sure we had a 10% deposit and that we budgeted 8-10% for the Notaire’s fees - which include all taxes to be paid. A Notaire is like a Solicitor in the UK. In addition estate agents fees are significantly higher in France than in the UK.
Estate Agents here are quite territorial. You will understand why when you see their fees! They won’t give you the address of the property, and you very rarely see “for sale” signs up. They generally meet you at the local Mairie and then take you to the property. They will also ask you to sign a document to say that they were the agent who showed you the property - this is to ensure you don't then try and buy direct from the seller once you know where it is, and that should you buy it they receive the fees!
I looked at LOADS of houses over a few months, some weeks I was dragging my daughter to about 5 or 6 - often co-ordinating 2 or 3 viewings in a row. As well as looking online, I also popped into local estate agents and asked what they had. I found I had researched so extensively that I was always familiar with the ones they had already advertised online, but a couple came up that hadn’t been listed yet.
Be aware if you are looking in more rural areas that some listings will say a house is in a certain area (usually a desirable one!), but in fact when you get there it is quite some way away and the link to this area is tenuous! This caught me out a few times - it’s just a tactic to get more interest. Ask for more details of the general location in advance so you don’t waste everyone’s time.
After kissing a lot of frogs, I found a house I loved. My husband also loved it. But as so often happens on a house hunting journey - it had a negative…. the distance from school/work. Boy did we try to make it work - we did the commutes in the morning traffic, twice each. Alas, it was just too far.
Back on the hunt I went, and the very next week I was pretty sure I had found our dream…
Sign an Offer with the Estate Agent
You make your offers through the estate agent in France, and you sign a document with them when doing so, to confirm what you want to offer and what it is to include etc. I knew that at an early stage in the buying process in France you signed a contract, and I found it confusing at the time whether what I was signing with the estate agent was the binding one. But it is the first signing with the Notaire (see below) that is binding, akin to the “exchanging contracts” stage of buying a house in the UK. It is useful to have an agent who speaks English, or use a translator. That said, the negotiations through the estate agent form the basis of the price you agree and what will be included, so ask all of your questions and do your research beforehand to be thorough.
BE AWARE: If the particulars say that the agents fees are payable by the seller - this may be technically so, BUT effectively they are paid by you, the buyer. This is because the seller will just build these into the price they will accept. We found, with our mortgage lender (and I don't think this is unusual), that as this amount is not considered the capital value of the property we could not borrow it on the mortgage. So we had to fund this ourselves separately, and yet we had no control over how much it was because the contract and fees are between the seller and the agent. They are generally high. Eyewateringly so.
A survey is not (normally) required in France, by either the Notaire or the Bank.
However, it is often wise to get one done before you sign with the Notaire. We did, particularly as the property we bought is old.
First signing meeting at the Notaire’s office
The next step is to choose a Notaire. You can instruct any you like, or you can opt to use the same Notaire as the seller. Nether is cheaper than the other, as both parties still pay their fees. We chose to use the same one, because we anticipated it to all be straightforward (and indeed it was).
When you sign the contract at the Notaire’s it is a binding contract of your intent to buy the property, as I said above, akin to the “exchanging contracts” stage of buying a house in the UK. This has the wonderful bonus of giving everyone relative certainty from a very early stage.
We had an experienced property/relocation expert at the Notaire’s meetings to aid us with translating (we shared the cost with the sellers) - although the Notaire did also provide a translator. She was absolutely brilliant in so many ways. She translated and advised us, including telling us about the benefits of executing a French Marriage Contract (see below).
If you are reading this and considering buying in the Toulouse area - I cannot recommend highly enough our relocation expert: Heather Hughes Mc-Veigh.
The contract you sign is binding, and requires you to pay a large sum of money on account, like a deposit really, subject to some conditions that are written into it. For example, there is a 10 day cooling off period after signing, and it is standard to include a term that if you cannot get a mortgage offer (within a certain number of attempts and limited to a specified rate) then you are released from the contract.
Because of this, the Notaire will take you through every paragraph of the contract, explain it, and make sure you understand and are happy. This can take some time.
Just before you sign the contract you all agree on an end date for completing the sale/purchase transaction. Generally this is not less than 3 months from the first signing, on account of the various conveyancing steps that need to take place. This date represents the latest date you can complete the property purchase without potential penalties. You can bring the date of the second signing forward if you want to. We all agreed to sign the week before our contract date, for various logistical reasons.
If you can find a Notaire with the facilities for you to sign once electronically, rather than having to initial every page and then sign the end of each document, this is time saving and convenient.
Moving house plans
Now is a good time to make your plans for removals, give notice to a landlord on your current house if necessary (double check your notice period), and make all other necessary arrangements to move house. Don't forget to arrange house insurance for your new property as well. A mail redirect with La Poste can be organised in advance. It is very easy to do, either online or in your local post office.
Mortgage and Life Insurance
Once you have signed with the Notaire, then the mortgage application process begins. We used HSBC for our mortgage, and overall had a very positive experience. We negotiated on the interest rate, by reference to a rate we had been given from another bank, and this resulted in a bit of a reduction. The application was simple, providing all the documentation they required (quite a lot!), and we were guided through the process by their advisor. I highly recommend HSBC France.
In France it is a legal requirement to have life insurance with a mortgage. You can get this from your lender, or you can shop around. This in fact was the part that lost us a couple of days in our timeline, as my husband had to get blood tests done and a medical report (which is standard).
The curious feature of the mortgage process here in France is the procedure of the cooling off period. I was very familiar with cooling off periods in general, but for a mortgage in France, once your life insurance is in place you will be sent the mortgage contract and associated documents by post to sign. You initial every single page, and sign some fully (sometimes with specific wording required). It is worth making sure you are absolutely sure how to do this, as one mistake will render it invalid. We could have gone into the bank for help, but our advisor talked us through it on the phone. Then you have to post them all back to the bank. They then process the documents, and then post them back to you again….
…Then you wait 10 clear days. Doing nothing.
On strictly no earlier than the 11th day, you can post the (all initialed and signed again!) documents back to the bank, along with the Notaire’s account (so the bank knows how much money to release to the Notaire), and your RIB (bank details). Double, and triple check that you have included all the things that are required (there might be more than this as this is just what we had to send), and that you have re-signed all the documents correctly.
We sent all of our paperwork to the Bank on a "next day before 10am" delivery service (in fact we did this each time), and our experience was that the funds were released on the same day that the HSBC mortgage department in Paris received them.
French Marriage contract - regime de communauté universelle with the clause d’attribution intégrale
The default inheritance position isn’t the same in France as in the UK (i.e. upon the death of one spouse, inheritance doesn’t automatically pass to just the surviving spouse, rather they become just one of the inheritors, along with the children). You can easily vary this by entering into a french marriage contract which, in short, says that all of the property of the couple in France is now the property of the marriage. So, in this situation, if one spouse dies all of the marriage property (house, car, clothes etc) automatically go to the other spouse. It is apparently easier to do this before you purchase property/land in France, but it is possible to do it afterwards.
There are inheritance tax benefits to doing this, and the procedure would be significantly simpler and cheaper with this in place, should one of us die, rather than having to effectively get the consent of minors (our children), via the Courts, to do anything with the estate. You do still need a Will for the children.
Our French marriage contract cost us a bit under €400, including tax.
I found the information on this website to be really useful (on this topic and more generally) https://www.french-property.com/guides/france/finance-taxation/inheritance/marriage
Pre-sign Property Check
It is prudent to arrange to view the property one last time before you finally sign for it and legal ownership passes. You can arrange this with the estate agent.
Final (2nd) signing at the Notaire’s Office
At the final signing the Notaire will confirm the funds have been received, go through the contract again, and confirm anything arising from the conveyancing. An extra financial point to be aware of is that the Notaire calculates the balance of the “tax fonciere” (tax property owners pay every year) from the point of your purchase to the end of the year, and you have to refund this to the sellers.
In the next 12-18 months there will be an accounting exercise undertaken of all the taxes due and paid, and then our Deeds will be received. It is so slow! If we are lucky we might even get a small refund of the payment on account made to the Notaire (as this is an estimated sum).
When the house is legally yours you will be given the keys.
You can move in and drink Champagne (obligatory in France!!!)
Setting up the utilities in your new home can be daunting if your French isn’t good - you can ask the estate agent to help you with this. I heard a friend did this and so I asked too and she was very happy to help.
Don’t forget to notify friends, family and all of your other important contacts with your new address.
And finally, enjoy your home and living in France.
p.s. Everything above comes from my experience, and is intended to be a helpful starting point/overview, but should not be relied on as all circumstances are different. Always seek legal advice when purchasing a property or entering into any type of contract as discussed above.