Buying luxury property in France is much more than just a real estate transaction. It’s an investment in your way of life, one that can influence and reflect your passions, prestige and capital.
Whether you’re looking for a breathtaking vineyard in Bordeaux, a deluxe apartment in Paris or a waterfront villa on the Riviera, any property purchase you make deserves discernment and scrutiny.
Due diligence when buying French property includes, and goes beyond property inspections. Included is the full scope of financial, legal and technical investigations needed to confirm the high-level transaction, the home’s worth, and potential risks.
At Home Hunts, our buyer’s agents guide clients through each stage of the home-buying process. This includes ensuring that due diligence is handled, from legal check boxes to financial negotiations and even post-purchase logistics. With our process, we help buyers move forward in their purchase with clarity and confidence.
In this guide, we’ll cover key considerations for buyers before they sign on the dotted line.
Table of Contents
What Is the Seller’s Title and Legal Standing?
In France, property sales involve notaires, legal officers who are responsible for verifying the property’s ownership and overseeing the title transfer. Moreover, the notaire will confirm that the property seller is also the legal owner, that there are no outstanding claims or debts, and that the property is able to be sold.
Standard checks that the notaire conducts include:
- Referencing the French Land Registry to confirm who owns the property and the title history.
- Verifying that relevant parties, including co-owners and heirs, agree to the sale.
- Ensuring there aren’t liens, mortgages or preemption rights that could impact the sale.
- Reviewing the boundaries of the property through a survey.
- Identifying access obligations, easements or rights of way, which can affect how the land is used.
- Confirming that the property’s fixtures and outbuildings are listed.
- Checking if extensions or renovations were carried out, and if so, if permits were valid.
Even though these due diligence steps are conducted and overseen by the notaire, it’s important that the buyer understands what takes place throughout the process. Knowing what’s being assessed and when to seek additional advice can keep the purchase moving along and prevent surprise issues from impacting plans.
It’s important for buyers to know that the notaire is considered a neutral representative; they’re not an advocate for either the seller or the buyer. However, buyers can secure their own notaire who will work along with the original appointed notaire for no additional cost.
Some buyers also opt to use an independent real estate lawyer who will have their best interests in mind. This is most common when the estate being purchased has complex issues or is particularly high-value.
What Technical and Condition Assessments Should Be Done?
The due diligence process will thoroughly review the condition of the property. There are two layers involved: mandatory diagnostics and optional surveys.
Mandatory Diagnostics
The seller must arrange mandatory diagnostics (Dossier de Diagnostic Technique, or DDT), including:
- Asbestos, lead and termite reports
- Electrical and gas safety
- Energy performance rating
- Natural or technological risks
- Pool and septic tank compliance
While these checks are legally required, they only give a basic overview of the property’s condition. It’s wise for buyers to also have the property surveyed by an independent party to get a fuller and more in-depth picture.
Optional Surveys
The buyer has the option to independently commission optional surveys, which is highly suggested. With a professional architect, engineer or surveyor, the following can be assessed more thoroughly:
- Drainage, electrical and heating systems
- Environmental studies that assess how the natural setting and site impact the property
- Heritage restrictions that may limit what can be built, changed or renovated
- Quality level of finishes and materials
- Structural soundness, including the foundation, roof and walls
- Emerging physical problems, such as excess moisture or a sinking foundation
- Water management evaluations to determine how water is supplied, drained and conserved
These extra assessments protect the buyer from purchasing a property they don’t know enough about while ensuring their new home has long-term value.
What Planning, Zoning, and Regulatory Constraints Exist?
Some properties in France have restrictions that impact how they can be used or developed.
Before making a purchase, it’s important to review local planning documents, such as the Plan Local d’Urbanisme (PLU) or carte communale. These documents cover permitted use of the land and zoning classifications while determining if the property is agricultural, residential or in a protected zone.
In addition to knowing how you can use the land, it’s also important to confirm that previous work on the property was approved and compliant. If an unauthorised change was made, such as a home extension or pool installation, you could end up dealing with a legal issue after you become the owner.
Buyers should also do the following:
- Determine if the property is in a coastal or environmental protection zone, which can limit the alterations you’re allowed to make.
- Review maintenance records and the règlement de copropriété if you’re buying a home in a co-owned building.
- Go over planned development and infrastructure projects that could impact the property’s level of privacy, value, or views.
If you hope to expand or renovate the property later on, knowing how you may be constrained is a necessary step when deciding on a home to purchase.
Which Financing, Currency, and Tax Matters Must Be Checked?
In addition to legal and physical matters, it’s also necessary to review financial and tax considerations.
If you’ll be taking out a French mortgage, carefully go over the terms of the loan, insurance requirements and clauses regarding early repayment.
Even if you’ll buy the property with cash, have a financial professional assess currency risks, especially if you’re keeping funds outside of the country. There are tools you may be able to access to lock exchange rates and protect you against market volatility.
Typically, property purchase costs include notaire fees, stamp duty and transfer taxes. These normally range between 7% to 10% of the purchase price for resale properties. However, if you’re buying a new-build property, you’ll also want to consider Value Added Tax (VAT).
Moreover, look into the following taxation areas:
- Capital gains tax, which determines how much you’d owe if you decide to sell the property
- Inheritance law, which includes who inherits a property, the tax due on it, and whether forced rules apply
- Wealth tax, which is applicable to properties valued over a certain amount
- Cross-border tax for non-residents, which means France and your home country could have tax claims on the same property
Also consider the ongoing costs of ownership, including insurance, maintenance, property taxes, staffing, and utilities.
What Market, Valuation, and Exit-Strategy Evaluation Should You Perform?
Buying luxury property in France differs from purchasing a home in the standard property market. In this section, we’ll cover some of the unique dynamics to consider.
Home buyers should research the area’s current demand and recent comparable sales. This determines if a property is aligned with market pricing or if it’s priced higher for its rare or uplevel features.
Consider rental potential, too, if you plan to purchase an investment property. Determine where you’re permitted to rent out your property, as well as long-term market trends. Also take into account accessibility to transport links, buyer demand and seasonal appeal.
It’s also important to consider your potential exit strategy should you decide to sell your property at some point. For example, too much customisation can limit your resale opportunities.
When, How, and by Whom Should Due Diligence Be Carried Out?
When you’re buying a luxury property in France, coordination and timing are essential. Professionals involved in the process often include:
- Financial Advisors: Guide currency, finance and tax decisions
- Notaire: Title verification and transaction management
- Real Estate Lawyer: Protect the buyer’s interests
- Surveyors: Assess the condition of the structure(s) and land
While it’s best to have as many due diligence checks as possible completed early in the process, some may take place closer to when the final contract is signed. In this case, adding conditions to the preliminary contract can give the buyer options if certain conditions aren’t met. For example, a survey clause may allow the buyer to withdraw from the purchase if compliance issues are found.
Additionally, costs can be handled in a similar way. For example, if a mortgage isn’t granted by a certain date, the buyer can have a clause in the contract allowing them to cancel the purchase.
Final Thoughts
Comprehensive due diligence in a real estate transaction protects your investment and your peace of mind. Instead of embarking on a path that’s disorganised and confusing, it can be systematic and transparent. While these checks may seem like they take a lot of time, they actually prevent the purchase from being delayed.
Home Hunts will coordinate and explain the financial, legal and technical aspects of your purchase. You’ll benefit from an enjoyable and smooth journey to finally owning your ideal home in France.
