Historically, France has been a very popular location for second homes / holiday homes, with well over 70 million tourists a year. While the majority of overseas or foreign national buyers purchasing property from France have been Expats from the UK , interest from other areas of Europe is starting to pick up. The country itself is perfectly placed for easy access to many parts of Europe and the country offers an array of climates and landscapes to suit all.
The country has a very liberal property market with no restrictions on foreign ownership, although there are restrictions on the resale of certain types of property, e.g. Vineyards, etc (these should be checked with a French based solicitor who is in touch with local laws). The process for actually buying a property is fairly straight forward, with buyer and seller agreeing a price, then a solicitor is appointed to take the deal forward.
A 10% deposit will be held in a secure account by the solicitor (notary) prior to various checks and paperwork being completed. If for some reason the buyer pulls out without good reasons then the 10% deposit will be lost. The current financial crisis though has made property investment in France being driven by the need for better value for the investment making for significant changes in prices especially in the prime real estate areas of the country.
French Property Market Performance
While the French property market is still very active, the increase in house prices has slowed somewhat over the last 3 years. A rise of 15% in 2004 was replaced by a rise of 11% in 2005, with 2006 seeing a rise of only 7%. In 2009, the prices of property in France have only increased by 0.6% in January. This trend is expected to continue with many observers worried abut a general slowdown in the world economy, with the UK market a strong contributor to French house prices. While many UK citizens have relocated to France full time, the market for cross channel flights and ferries is strong, with many people choosing to work in France through the week and commute at weekends.
As you would expect in a country that takes in the mountainous regions of the Alps and the sunnier climbs of St. Tropez, the variation in house prices is quite marked. Areas such as Paris, and its many suburbs, are still very popular with employment being a great pull for this area. This was reflected in a post at the France Expat Forum last June 18, 2008:
you will have to pay at least 300-350EUR for a one room flat in France. Good apartments will cost much more than 400EUR and please note that Paris or Nice are more expensive than any other property in france a good alternative to a small apartment with one bedroom is sharing a flat with others. you’ll have your own room but share bathroom and kitchen. you’ll get more (nicer location, view, …) for money. especially university students share their flats, so it is perfect if you are young and/or if you are searching for a cheap solution
The county does however have an excellent transport network, allowing more foreign nationals to acquire property on the outskirts of the area and travel by public transport.
Whether the ongoing French election will impact on the property market in the short term remains to be seen, although France’s location in the center of Europe and the firm demand for property in the holiday regions should offer some support for the market.
Property Costs in France
France appears to be one of the most expensive property markets in Europe, with charges including :-
Solicitor (Notary) Fees 3%
Estate Agent Fee up to 15% (normally between 7% and 8%)
Transfer Tax 7.5% (under 1% for new builds)
Registration Fees 6%
The capital gains tax system is also fairly severe with nationals being charged 26% of their profit after taking onto account various allowances from the Authorities. It is slightly different for non-resident members of the EU who are charged in the region of 16%. The charge for non-EU residents is a massive 33.3%, which is payable on the overall profit.
In order to control the turnover of properties, which has become a problem over the years. In the long run, the property market expectations are still healthy and stable, as the inflation in the country has been under control compared to other countries, allowing for better confluence of terms regarding property purchases in France. The costs, both monetary and otherwise is summed up in a post at the France Expat Forum last September 30, 2009:
I could go on, but it really depends on the nature and location of the property!