Guide to buying
Buying property in France: Everything you need to know
A life of sun, sea, colourful countryside, excellent food, and fine wine. Recently we hosted the first Worldwide Wanderlust Webinar Series, exploring all you would need to know about buying property in France with Alice Watson-Smith, Managing Director of Fine & Country on the French Riviera.
Alice shared her expert knowledge on the local market while Daniel Harrington, Head of Fine & Country London & International, presented the discussion to hundreds of attendees. The webinar was a great success, as Alice covered a range of topics, including the great lifestyle the South of France has to offer and the variances in the property purchasing process in France.
To fulfil your dream of relocating or investing in property in France, here is everything you need to know.
Overview of the property market in France
After a long plateau period the real estate market started to change towards the end of 2019, when the property market saw a double-figure growth, giving the French market a very strong start to the year in 2020. This growth continued into 2021 and 2022. The COVID-19 pandemic took a toll on market sectors all over the world, including the property market in France, where it destabilised momentarily, while the pandemic was at its most uncertain. Following improvements in the economic climate in France and the lifting of lockdown rules, the bounce-back of the property market was notably quick.
Why buy a property in the South of France?
In the French Riviera, your lifestyle is elevated, from guaranteed sunny days to excellent fine food.
A fantastic benefit to living in the South of France, especially during this time where travel restrictions are widespread and uncertain, is accessibility. From London, it only takes less than a day to drive to the French Riviera. Once there, explore everything Provence has to offer, from rolling vineyards and fragrant lavender fields to excellent wine and food. From the coast of Monte Carlo, drive for only 1-2 hours if you fancy a day of skiing, then finish the day with an evening at the beach. If you want to explore traditional city markets for Italian cheese, it is just a one-hour drive from Nice to Sanremo, a cultural coastal city in north-western Italy.
A stable market
France is a mature, safe and stable market, making your property investment a secure one, particularly in the South of France. This is especially reassuring to know during the COVID-19 crisis.
Rental investments in central Cannes provide a very good rental return and allows the property owner to use the property themselves, as well as renting it out.
Property in the hills of Cannes will also generate a sufficient holiday rental return to cover the costs of owning the property in the South of France.
What to consider when buying property in France
There are no chains
When buying a property in France, the process of putting an offer on a house to reaching completion is different. Chains do not exist in France. Once the pre-sale agreement has been signed by the buyer and seller, there is a 10-day obligatory ‘cooling off’ period for the buyer to withdraw their offer before being bound by that contract.
Tip: If you are looking to relocate to France, complete a sale on your current home or at least exchange contracts, before buying in France.
The property purchase process takes a bit longer in France
During the property selling and buying process, a notary is chosen to draw up authenticated contracts for the buyer and seller. Due to a Napoleonic law, when the buyer and seller have passed the ten-day cooling off period and are ready to complete the sale, there is a two-month obligatory pause to let the council decide whether to buy the property before the buyer. Whilst the two-month wait is obligatory, it is extremely rare for the council to buy a property ahead of the buyer.
Property Ownership Tax
For those living and working in France, income tax is high, whereas property ownership tax is not as much as people might believe.
In France, there are two annual property taxes for a secondary residence:
1. Council rates
Annually a property owner pays for the Taxe Fonciere, which is not considered a tax, but is similar to council tax in the UK.
2. Habitation tax
The second annual tax is called Taxe d’Habitation, which is an owners' tax (or long-term tenants tax).
For a four-bedroom villa just outside of Cannes, a property owner will pay a total annual property ownership tax of about four to six thousand euros per year for relatively good land.
For a two-bedroom apartment in the centre of Cannes, a property owner will pay a total annual property ownership tax of about one and a half to two thousand euros per year.
Is there an equivalent of Stamp Duty in France?
All taxes for buying a house, including the equivalent of Stamp Duty, are grouped under one term, Notary fees - or Notaire fees, in French. Notary fees vary depending on the purchase price and type of property.
A buyer may expect to pay around 7-8% of the property value in tax for the purchase of an old property.
For newbuild properties, a buyer might pay around 2.5% of the property value in tax for an over and above price of the property.
Is there an equivalent to Capital Gains Tax in France?
There is Capital Gains Tax on secondary residences, but not on primary residences in France.
Capital Gains Tax is a set percentage of the cost of the property.
Purchasing fees, notarial fees and renovations will be deducted from the percentage to calculate the true gain of the property. The start rate is about 35% for non-French residents.
From the fifth year of ownership of the property, the tax will begin to decrease year on year.
A buyer may use a property ownership structure, called a société civile immobilière (SCI), to mitigate inheritance taxes in France.
Mortgage rates in France
Mortgage rates were historically low at the end of 2019 but rose in 2020.
A non-resident can secure a mortgage in France with financial backing. Mortgage rates are very good in France, granting a fixed rate of about 1.5%-2% for 20 years. These rates mean it usually makes more sense for any buyer to get a mortgage and keep money in the bank, even when they can afford not to.
What kind of deposit would you need to put down to get a fixed rate of 1.5-2%?
EU residents can normally get 80-90% depending on their file, while non-EU residents normally get 50%. Due to the UK leaving the EU, it is not certain what rates will look like for UK residents.
Can you get buy-to-let mortgages?
Banks in France are more risk-averse and will normally take 50% of the rental income quote into account for these types of mortgages.