Whether it’s been a lifelong dream of yours to live in France or you fell so in love with the country during your last holiday and spontaneously decided to start looking for a home there. Living there can seem like a dream come true but in order to make it a reality, the process of buying a property in France can seem like a very daunting and expensive undertaking.
At first, it may seem that property in France costs less than real estate elsewhere. However, while French property may well be within your means, the total cost – once hidden fees are added – can be a lot more than the first figure you were given. Knowing what add-on expenses to expect will give you a more realistic idea of what you can spend on the listing price while still leaving enough to cover everything else.
We’re here to explain everything you need to know about the hidden costs of buying property in France and the expenses that are not always known at the outset.
Hidden Costs of Buying Property in France
A deposit of 5% to 10% of the purchase price is usually required. It’s common to pay the deposit when the contract is signed. While you’ll probably pay it to the notaire, it’s possible you’ll be asked to pay the agent instead.
Make sure that they have a “compte sequestre,” which is the appropriate type of holding account for a deposit. If during the seven-day cool-off period every buyer is afforded, you decide you do not want the property, the deposit holder has to refund it within 21 days.
If you’re taking out a mortgage in France, you’ll have to put a deposit down for that, too, usually around 20% of the home’s value. Find out the repayment terms so you know how much interest you’ll be paying on the mortgage, which will raise the total cost of owning the property.
There are a few different fees that factor into the overall notaire’s fee. The fee usually comes to approximately 7% of the purchase price, but it can vary very slightly from area to area and property value etc.
The largest portion of the fee is the “droits d’enregistrment,” which is like France’s stamp duty (i.e., a tax on property purchases). This is usually around 5% of the property’s value.
The rest of the fee includes land registry costs and payment to the notaire for their work. If you’re purchasing the property with a loan, there will also be a loan registration fee of up to 2% of the loan value.
The seller will appoint a notaire, and you can have your own notaire as well if you wish. You won’t pay more in fees if there are two notaires working on the sale – the fees will be split between the two.
Property Agent’s Commission
The price of the property may or may not include commission. Commission can range from 5% to 10% of the property value, but the average is usually around 6%.
If you see “FAI” in the agent’s ad for the property, that stands for “frais d’agence inclus,” which means the agent’s fees are included. In that case, the seller will pay the agent out of the money they receive for the sale. However, if you don’t see “FAI” in the property listing, you may be responsible for paying the commission. It is always a good idea to check this with the agent
It’s common for overseas buyers to get legal representation in their home country. While the notaire has a duty of care to abide by for clients, it’s possible he or she won’t be fluent in your language, which makes it difficult for you to know exactly what you’re signing.
By having a lawyer, you’ll have someone who can explain everything to you in terms you understand. You’ll also get guidance on the different steps of the property purchase.
Lawyer fees will vary, but you can ask for a price quote before hiring. Some lawyers will charge a fixed fee, while others will charge for the time spent on the purchase.
Ownership Fees and Taxes
Once you’ve purchased the property, you’ll have to pay fees and taxes on a regular basis. This is important to know before you buy a home in France.
There are two types of taxes you’ll pay annually: taxe foncière, a land tax paid for by the property owner, and taxe d’habitation, a residence tax that the property owner pays unless they rent out the property long-term.
The rates for both taxes will vary based on a number of factors. The taxe foncière rate is based on factors like how much land the property includes and where it’s located in France. The taxe d’habitation rate is more complex, based on the property’s rental value and the fixed tax rate in that part of the country.
If you purchase a home that you plan on renting out, you may have to pay a tourist tax (“taxe de sejour”), which is based on how many nights in a year the home is occupied. The rental income you collect may also be taxed. The minimum tax rate is 20% for non-residents.
Lastly, know that it may cost you to convert your money in order to pay all of the expenses when buying property in France. As the exchange rate fluctuates, it may cost you more or less to exchange your money, too. A currency exchange company may let you set a rate ahead of time so that you know what you’ll pay.
At HOMEHUNTS, our property agents are available to help and guide you through every aspect of the property purchase process. If you are looking for a new home in France, then we can search the market and find you a beautiful selection of luxury French properties based on your specific search criteria. Whether you are looking for a city apartment or something in a more tranquil setting, there is French property that will meet your needs. Search our website and browse the selection of luxury homes that we have available. Alternatively, you can also speak directly to one of our property consultants by calling +33 (0)970 44 66 43.