Real Estate

Property Values

Property values in Paris are appreciating rapidly at between 9%-10%. Values outside the city are appreciating more slowly, but they are steadily appreciating. Put simply, the demand for real estate in France is high, but the availability is low.

House sales of 700,000 in France were up in 2010 as opposed to 2009 when the National Federation of Estate Agents (FNAIM) logged less than 600,000 transactions. Looking to the future, the FNAIM anticipate that sales will improve by a further 100,000 in 2011.

An increase in demand for French property is also likely to help drive house prices back up. According to the FNAIM, they rose by an average of1.5% in 2010 in contrast to the two previous years, when prices fell (-4.9% in 2009 and -3.1% in 2008).

Renting Property

Renting a place to live in France is very simple in principle: You find a place you like, you sign a tenancy agreement and you move in. When you want to go somewhere else, you move out.

Most rentals are handled by an estate agent, but some landlords prefer cutting the agent out to save the fees. If an agent is involved and you have not already paid his fee, he certainly wants it now. Note that they are only entitled to their fee when a tenancy agreement is signed. It is illegal to keep any advance paid or request any payment if you end up not signing the agreement. That does not prevent some less scrupulous agents from trying to cash in their fee if you change your mind before signing. Note that what they call a réservation is not a tenancy agreement and it is not binding.

Some agents make you sign it when you decide to rent but before you sign the tenancy agreement. They sometimes ask for an advance payment at the time of signing theréservation. It is a declaration of intent, but you can change your mind freely and without any fees due, meaning that any advance must be refunded entirely if you back out. That is the law. The trick may be to make you feel obliged, but it is indeed a useless piece of paper.

Buying Property in France

There are two main ways of owning a property in France. Personal ownership (in sole or joint names) or corporate ownership.Once you have decided on a place you like at a mutually-agreed upon price, you and the seller sign a document known as a promesse de vente. This is a legally binding document that confirms that the seller must sell the property to the buyer. The buyer, however, has 11 days to change his mind. All sales in France are conducted with notaires. Both the buyer and seller has his own notaire and they confirm that all aspects of the sale are done according to law.

As a foreigner, it is advisable to hire an avocat, or lawyer, who specializes in real estate. In case of a disagreement, you are far better off having someone who knows the law and knows how to speak French.

Mortgages and Financing

In France there are two main mortgage options – borrow in your own country, through specialist lenders for overseas properties or by remortgaging with your existing lender – or borrow in France through French banks. Inevitably there are both advantages and disadvantages to these options and you should always obtain professional advice from a qualified mortgage adviser to review your own situation.

With a number of mortgage products on both the French and overseas markets, choosing the right one for your financial and personal circumstances is an important decision. While most mortgages are Repayment, French banks are increasingly offering interest-only options. The duration of the French mortgage plan varies from 5 to 30 years and deposits range from paying as much as possible to in certain circumstances nothing – 100% mortgage. Most French mortgages will allow you the choice of either a fixed or a variable rate mortgage.

Taxes

Before buying property in France, you should know that the Government of France has very specific inheritance laws. By law, on your death your property is divided equally between your spouse and your surviving children. There are some steps you can take to ensure that the surviving spouse can continue to live in the house or flat. Speak with a lawyer about this before you buy the property.

You will pay between 8 and10 percent in taxes and fees. If you buy an apartment less than five years old, however, you will pay only 3 to 5 percent or less. Ask also about property taxes, which tend to be less in Paris than in the country. Generally, you will be responsible for both a land and a habitation tax.

A larger question is your residency status. If you reside in France full time and earn a living there, you will become part of the French social system. The taxes are for this are more than 50%.