Making An Offer On French Property
There is scope for making offers that are lower than asking prices, and ultimately having those offers accepted. This is because transaction prices never exceed a property’s asking price. Legally, if an agent secures the asking price, the vendor is obliged to accept it. Because of this, more room for negotiation is introduced into an asking price in France than you may be used to elsewhere.
Ultimately of course, the price is dictated by the market – ie what a buyer is prepared to offer and a vendor is prepared to accept. Factors specific to the two parties, and perhaps outside the norms can result in transaction prices below or above what might be expected, and there are circumstances in which we would certainly recommend negotiating the asking price.
An
offer to purchase can include conditions, a common one is the obtaining
of a mortgage. This is so common that if you are not applying for a
mortgage you will have to insert a special paragraph in your contract to
confirm this. A French mortgage application cannot be made without a
signed first contract accompanying the application form. Be aware that
when purchasing with a mortgage, the Notaire will make a further charge
to register the lender’s interest on the property, normally about 1.5%
of the mortgage amount.
Buyer Costs
The fees associated with buying a property in France can be alarming.
This page provides a checklist of what you as a buyer can expect to pay.
The main factors that affect the level of fees are:
- the age of the property (new houses attract lower charges) - the number of people involved (lawyers, mortgage companies, surveyors etc)
- whether you buy through an estate agent
Total
fees can be as low as 2% of the price of the property, but can be as
high as 20%. Typically, you can expect to pay around 6-9% of the net
value of the property on an older property and around 2-3% on a new
build (less than five years old). Please note that most fees are paid by
the buyer. However, since the introduction of a series of diagnostic
tests on any property to be advertised for sale, the seller too has a
liability to bear this cost (see below).
Immobilliers or Estate Agent Sales Commission (usually paid by the buyer of the property) Where an agent is involved - allow between 5 and 10%.
10% is quite commonly charged.
10% is quite commonly charged.
Notaire Sales Commission (usually paid by the buyer)
The
system tends to work satisfactorily in practice, but you can elect to
have a ‘notaire accompagnant’ at no extra cost. The Notaire will not
especially appreciate this as he will have to share a single fee, but it
can be an idea especially if the vendor’s notaire lives away from where
the property is situated and is in consequence not aware of what is
going on in the area such as proposed new roads, railways or airports.
The
whole process is rather long-winded, at least by UK standards, as
contracts are signed very early on but completion can take place up to
three months later. This is because certain rights of pre-emption which
may exist have to be ‘purged.
We
can recommend a UK/France based solicitor who has 10 years conveyancing
experience for property distance purchases in France and is fluent in
French. He can assist you in the process by reading the contract and
supporting papers before they are signed. This does not involve any
delay as they can be faxed or scanned then emailed and the solicitor can
normally look at them the same day. He can also liaise between the
client, the agent and the notaire so as to avoid any
misunderstanding. He will then check through the conveyance to see that
it too contains nothing untoward. Contact Us if you require assistance.
Stamp Duty
(paid by the buyer) 0.6% for property less than five years old, 5.9%
for older properties. This is included in the fees paid to the Notaire.
Land Registry (paid by the buyer) Land registry fees are approximately 4.89%. These are included in the fees paid to the Notaire.
Safer
(paid by the buyer) Safer is the agricultural organisation who may
become involved if the property has a certain amount of land over one
hectare. Any associated cost is usually included in the fees paid to the
Notaire and is usually only a few hundred Euros.
New Diagnostic Tests
or Diagnostics Immobiliers (paid by the seller) Unusually for France,
the burden of payment for these does not fall on the buyer, but on the
seller. Before a property is advertised, approved experts must be called
to report on the energy efficiency, presence of dangerous and outdated
materials such as asbestos, tests on the provision for gas, electricity
and sewage, and tests to establish if there is evidence of termite
activity or other natural risks. Costs vary from area to area and from
expert to expert, but expect to pay between 400-900 Euros for a Dossier
Diagnostique Technique, or DDT.
Possible Additional Costs
Where an Estate agent is not used - allow up to 5%
Notaires' Conveyancing Fees (paid by the buyer)
A
Notaire's fees are calculated on a sliding scale. Thus, the higher the
price of the property, the lower the percentage the Notaire will take.
The amount is usually in the region of 1% (plus TVA at 19.6%). The other
fees that are paid to the Notaire but do not, in fact, ultimately go to
the Notaire, are fees for stamp duty, land registry fees and other
disbursements. All the Notaire's fees are usually paid by the buyer,
even if the Notaire acts for both parties, which is normal as they are
not supposed to protect the interests of either party over the other. If
the seller instructs a different Notaire to the buyer, the fee for both
Notaires is paid by the buyer. (In this case the work and fee is split
between the two Notaires, it does not mean a higher cost for Notaires'
fees).
The Notaire & Your Solicitor as a Notaire Accompagnant
The
notaire acting for both sides sounds like a conflict of interest, but
is not as bad as it sounds. UK solicitors regularly did this until it
was outlawed in about 1975. The notaire is in fact an appointee of the
state, and as such owes his duties to the state, in particular to record
who owns what land within France and to collect any taxes due -
especially capital gains tax.
Structural Surveys:
It is not common practice in France to have a structural survey
performed before buying a property, but the buyer has this option at his
own expense should he wish. They vary greatly in price according to
size of property etc. but as a rough guide, a basic survey may be as
little as 200 Euros, while a full survey could be as much as 1,500 Euros
or even higher for a very large property.
The other option is to have
a registered builder's opinion on the property, and this is what the
French sometimes do.
Legal Advice:
If there are complicated clauses in the sale, or other complex issues,
additional legal advice may be required, again at additional expense.
This cost may be paid by both buyer and seller, or one or the other.
Legal fees vary hugely, depending on the solicitor and also on how much
work is involved.
You
should also take advice on your inheritance provision. Whatever your
nationality, the inheritance of your property is subject to French law
and the provision made has to be included in the house-buying contract.
We advise consulting a legal representative on this as French
inheritance law is extremely complex and you don't want to find a
surviving partner paying unnecessarily high death duties if the worst
should occur. Again we can arrange this advice for you.
Geometra's charge:
This may or may not be necessary to ascertain and mark or realign the
exact boundaries of the property, for example if the seller has sold
some of his land, or if the boundaries are unclear. Expect to pay around
200 Euros for a simple job on an average sized property, more for a
more complex job. This charge is paid by the seller.
Additionally if you need a French mortgage:
Mortgage Arrangement and Administration Fee - Commonly 2%
Mortgage Registration Fee - Commonly 1-2%
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