Excerpted from “Buying a Home in France “
A ‘new’ house is generally defined as one built in the last five years, which is also the legal definition. Although new properties may lack the charm and character of older buildings, they offer attractive financial and other advantages:
A lower deposit (5 per cent rather than 10 per cent), Lower registration taxes; Two years’ exemption from property tax. A ten-year guarantee. Higher construction standards and therefore lower maintenance costs. Better insulation and therefore lower heating bills. Modern plumbing and electrics (including plenty of sockets), etc.. Better security. No costs or problems associated with renovation or modernisation. Greater resale potential, especially to French buyers, who generally prefer modern homes.
The standard of new buildings in France is strictly regulated and houses are built to official quality standards. They’re built to higher specifications than old houses and usually include roof, cavity and under-floor insulation, double-glazing, central heating, and ventilation and dehumidifying systems – it can cost up to three times as much to heat an old home without proper insulation as to heat a modern home. New properties are also covered by a ten-year guarantee (garantie décennale) against structural defects and it’s against the law to sell a new house without a warranty. Other systems and equipment are covered by a minimum two-year warranty.
It’s often cheaper to buy a new home than to restore a derelict property, as the price is fixed, unlike the cost of renovation which can soar way beyond original estimates.
Most new buildings use low maintenance materials and must (by law) have good insulation and ventilation, keeping them warmer in winter and cooler in summer. The French government encourages the building of energy-efficient homes, and France builds more new homes than most other European countries (some 60 per cent of French homes have been built since 1945). Security is a priority for most new developments (which usually have security gates) and homes often have security blinds and other security features.
On the other hand, there are a few disadvantages to buying a new home, including the following:
– VAT at 19.6 per cent must be paid on all homes under five years old sold for the first time (see page 142); this can be several thousand euros.- New homes are usually smaller than old properties and rarely come with a large plot.- The garden may lack mature trees and shrubs.- There may be ‘teething troubles’ with a very new building, such as cracking plaster. – Unless you’ve chosen the decor, you may wish to change it. – It may have less letting potential than an older building.
Most new properties are sold by developers (promoteurs) and builders, although they’re also marketed by estate agents. All new developments and builders must be underwritten by a bank (garantie extrinsèque) or the developer himself (garantie intrinsèque), who must meet certain liquidity and other requirements. These guarantees (known as garanties d’achèvement) protect buyers from defaulting builders and developers. Where applicable, the deposit is made out to the underwriting bank and cannot be used by the developer. It’s possible to check a developer’s financial status, although your best insurance when buying a new property is the reputation of the developer or builder. Most new developments have a sales office (bureau de vente) and a show house or apartment (maison/appartement témoin).
Buying Off Plan
When buying a new property in a development, you’re usually obliged to commit to a purchase before it’s completed (or even before it’s begun!) – a process known in English as buying off plan (also confusingly called ‘on plan’) and in French as une vente en état futur d’achèvement/VEFA (‘a sale in a future state of completion’). In fact, if a development is built and largely unsold, particularly a quality development in a popular area, it usually means that there’s something wrong with it!
Buying a home that hasn’t yet been built may seem a risky business, but the procedure is usually safe and there can be several advantages.
Off-plan properties are generally cheaper than built homes. You can usually choose your bathroom suite, kitchen, fireplace, wallpaper, paint, wall and floor tiles, and carpet in bedrooms, all of which may be included in the price. You may also be able to alter the interior room layout, although this will increase the price, but you won’t be able to make major structural alterations or changes of material or design. Most developers will negotiate over the price or include ‘free’ extras (such as a fitted kitchen when it isn’t included in the price), particularly if a development isn’t selling well.
Note that any changes or additions to a property, such as including an American kitchen, a chimney or an additional shower room, should be made during the design stage, as they will cost much more to install later.All fixtures and fittings will, of course, be brand new, and you will benefit from modern insulation, ventilation, heating and other materials and systems. And, of course, the building will have a ten-year guarantee. You will also pay a lower deposit and lower registration fees on an off-plan home , which will be exempt from property tax for two years from 1st January following the completion date.
Disadvantages of buying off plan include the fact that you must pay VAT at 19.6 per cent on building costs, although this is usually included in the price quoted to you, and you must start paying for your home long before you can actually live in it.
Note that the purchase procedure for a property yet to be built is different from that for a finished home.
Buying ‘new’ doesn’t necessarily mean buying a brand new home where you’re the first occupant. There can be many advantages in buying a modern resale home rather than a brand new one, including better value, an established development with a range of local services and facilities in place, more individual design and style, no ‘teething troubles’, furniture and other extras included in the price, a mature garden and trees, and a larger plot. With a resale property you can see exactly what you will get for your money and the previous owners may have made improvements or added extras such as a swimming pool that may not be fully reflected in the asking price.
The disadvantages of buying a resale home depend on its age and how well it has been maintained. They can include a poor state of repair and the need for refurbishment, redecoration or new carpets; inferior build quality and design, no warranty (i.e. with a home that’s more than ten years old), termite or other infestations, and (in the case of a community property) the possibility of incurring high assessments for repairs.
Buying an Old Home
In terms of the fees associated with buying a property, an ‘old’ property is one that’s over five years old that has already had at least one owner. However, the term ‘old home’ usually refers to a building that’s pre-second world war and possibly hundreds of years old and which is either in need of restoration and modernisation or has already been restored. If you want a property with abundant charm and character, a building for renovation or conversion, outbuildings, or a large plot, you must usually buy an old property. The advantages and disadvantages of buying a new home apply in reverse to an old home.
Many old properties purchased by foreigners in France are in need of restoration, renovation or modernisation. The most common examples are the many old farmhouses that have been neglected since they were built in the 18th or 19th centuries or even abandoned many years ago. In general, the French attitude to old buildings is one of almost total neglect until they’re literally in danger of falling down, when complete rebuilding is often necessary. In many rural areas it’s still possible to buy such a property for as little as E25,000.
When considering old properties that might be suitable, you should take vendors’ (and particularly agents’) descriptions with liberal amounts of salt: ‘à finir’ usually means there’s still plenty of work to be done; ‘habitable’ can mean ‘derelict’; ‘à rénover’ implies that major reconstruction is required; and, if anything is described as a ‘ruine’, you should be pleasantly surprised to find any walls still standing. Before spending time and money investigating old properties, you ask a lot of questions as to their condition. ‘Partly renovated’ usually means that part of a building is habitable, i.e. at least has sanitation, but the rest is in dire need of restoration. Bear in mind also that some rural properties lack basic services such as electricity, a reliable water supply and sanitation.
Before buying a property requiring restoration or modernisation, you should consider the alternatives. An extra E20,000 or E30,000 spent on a purchase is usually better value than spending a similar amount on building work. It’s often cheaper to buy a restored or partly restored property than a ruin in need of total restoration, unless you’re going to do most of the work yourself.
The price of most restored properties doesn’t reflect the cost and amount of work that went into them, and many people who have restored a ruin would never do it again and advise others against it.
If you’re planning to buy a property that needs restoration or renovation, obtain an accurate estimate of the costs before signing a contract.
Many foreign buyers are tempted by the low cost of old homes and believe they’re getting a wonderful bargain, without fully investigating the renovation costs. Don’t buy a derelict property unless you have the courage, determination and money to overcome the many problems you will certainly face.
Bear in mind that renovation or modernisation costs will invariably be higher than you imagined or planned!Taking on too large a task in terms of restoration is a common mistake among foreign buyers in all price ranges. Unless you’re prepared to wait until you can occupy it or are willing to live in a caravan for a long time while you work on it, it’s better to spend a bit more and buy something habitable but untidy than buy a property that needs completely gutting before you can live in it.
Bear in mind also that, if you buy and restore a property with the intention of selling it for a profit, you must take into account not only the purchase price and the restoration or modernisation costs, but also the fees and taxes included in the purchase, plus capital gains tax if it’s a second home. It’s difficult to sell an old renovated property at a higher than average market price, irrespective of the amount you’ve spent on it. The French have little interest in old restored properties, which is an important point if you need to sell an old home in a hurry in an area that isn’t popular with foreign buyers. If you want to make a profit, you’re better off buying a new home.
Nevertheless, old properties can be better value than new homes and there are still some good bargains around, although you must carefully check their quality and condition. Note also that work on a property over five years old attracts VAT at just 5.5 per cent instead of the standard 19.6 per cent. As with most things in life, you generally get what you pay for, so you shouldn’t expect a fully restored property for E25,000. Note that, if you want a restored home, you should buy one from someone who has lovingly and sensitively restored it, rather than from someone who has transformed it out of all recognition.
At the other end of the scale, for those who can afford them, there’s a wealth of beautiful châteaux, manor houses (manoir) and water mills (moulin), many costing no more than an average four-bedroom house in many other countries. However, if you aspire to live the life of the landed gentry in your own château or farm with umpteen outbuildings and several hectares of land, bear in mind that the reason there are so many on the market (and the relatively low prices) is that the cost of upkeep will almost certainly be astronomical!
In France, properties with common elements (whether a building, amenities or land) shared with other properties are owned outright through a system called ‘co-ownership’ (copropriété), similar to owning a condominium in the US, but are referred to here as community properties to avoid confusion with part-ownership schemes such as timeshare.
Community properties include apartments, townhouses, and detached homes on a private estate with communal areas and facilities. Almost all French properties that are part of a development are owned en copropriété. In general, the only properties that aren’t community properties are detached houses on individual plots in public streets or on rural land. Under the system of copropriété, owners of community properties own not only their homes (parties privatives) but also a share (quote-part or tantième) of the common elements (parties communes) of a building or development, including foyers, hallways, lifts, patios, gardens, roads, and leisure and sports facilities, according to the size or value of your property.
Some 45 per cent of the French population live in apartments in cities and towns. Many modern community developments are located near coastal or mountain resorts and they may offer a wide range of communal facilities, including a golf course, swimming pools, tennis and squash courts, a gymnasium or fitness club, and a restaurant. Most also have landscaped gardens, high security and a full-time caretaker (gardien/gardienne), and some even have their own ‘village’ and shops.
At the other extreme, some developments consist merely of numerous cramped, tiny studio apartments. Note that community developments planned as holiday homes may not be attractive as permanent homes. Other advantages and disadvantages of community properties are listed below. Further information about community properties can be obtained from the Association des Responsables de Copropriété (ARC), 29 rue Joseph-Python, 75020 Paris (01 40 30 12 82, http://www.unarc.asso.fr
The advantages of owning a community property may include the following: – Increased security.- Lower property taxes than detached homes. A range of community sports and leisure facilities. – Community living with lots of social contacts and the companionship of close neighbours.- No garden, lawn or pool maintenance.- Fewer of the responsibilities of individual home ownership.
Community properties are also often in locations where owning a single-family home would be prohibitively expensive, e.g. a beach-front or town centre.
The disadvantages of community properties may include the following:
– Restrictive rules and regulations. – Excessively high community fees (owners may have no control over increases). – A confining living and social environment and lack of privacy. – Noisy neighbours (particularly if neighbouring apartments are rented to holidaymakers). – Limited living and storage space.- Expensive covered or secure parking.- Acrimonious owners’ meetings, where management and factions may try to push through unpopular proposals.
Note also that communal facilities in a large development may be inundated during peak periods; for example, a large swimming pool won’t look so big when 100 people are using it, and getting a game of tennis or using a fitness room may be difficult.
Before buying a copropriété property, it’s wise to ask current owners about the community. For example:
– Do they like living there?- What are the fees and restrictions? Which is your parking space (if any)? Are owners required to pay part of the taxe foncière as well as the taxe d’habitation ? How noisy are other residents? Are the recreational facilities readily accessible? Would they buy there again (why or why not)? Is the community well managed?
You may also wish to check on your prospective neighbours. Permanent residents should avoid buying in a development with a high percentage of rental units, i.e. units that aren’t owner-occupied. If you’re planning to buy an apartment above the ground floor, you may wish to ensure that the building has an efficient lift. Note that upper floor apartments are both colder in winter and warmer in summer and may incur extra charges for the use of lifts. They do, however, offer more security than ground floor apartments. Note that an apartment that has apartments above and below it will generally be more noisy than a ground or top floor apartment.
Prices vary considerably with the location, for example from around E50,000 for a studio or one-bedroom apartment in an average location to hundreds of thousands of euros for a luxury apartment in a prime location. Garages and parking spaces must often be purchased separately in developments, a lock-up garage usually costing between E10,000 and E150,000 and a parking space from E3,000 to E5,000.
If you’re buying a resale property, check the price paid for similar properties in the same area or development in recent months, but bear in mind that the price you pay may have more to do with the seller’s circumstances than the price fetched by other properties. Find out how many properties are for sale in a particular development; if there are many on offer, you should investigate why, as there could be management or structural problems. If you’re still keen to buy, you can use any negative aspects to drive a hard bargain. Under the Carrez law, the exact surface area (excluding cellars, garages, parking areas or anything less than 8m2) must be stated in the preliminary contract.
Owners must pay service charges for the upkeep of communal areas and for communal services. Charges are calculated according to each owner’s share of the development and not whether they’re temporary or permanent residents. For example, 20 apartments of equal size in an apartment block would each pay 5 per cent of the community fees.
General charges cover such services as caretaking, upkeep of the garden and surrounds, swimming pool maintenance and refuse collection. In addition to general charges, there may also be special charges for collective services and common equipment such as lifts, central heating and hot water, which may be divided according to the share of the utility allocated to each apartment. Check the level of general and special charges before buying an apartment. If you’re buying a resale apartment, ask to see a copy of the service charges for previous years and the minutes of the last annual general meeting, as owners may be ‘economical with the truth’ when stating service charges, particularly if they’re high.
If you’re buying a holiday apartment that will be vacant for long periods (particularly in winter), don’t buy in an apartment block where heating and/or hot water charges are shared, or you will be subsidising your co-owners’ heating and hot water.If necessary, owners can be assessed an additional amount to make up any shortfall of funds for maintenance or repairs. You should check the condition of the common areas (including all amenities) in an old development and whether any major maintenance or capital expense is planned for which you could be assessed.
Beware of bargain apartments in buildings requiring a lot of maintenance work or refurbishment (note that properties in ski resorts usually require more maintenance than those in coastal areas). However, under French law, disclosure of impending expenditure must be made to prospective buyers before they sign a contract. Owners’ meetings can become rather heated when finances are discussed, particularly when assessments are being made to finance capital expenditure.Fees vary considerably and can be high for luxury developments with a range of amenities such as a swimming pool and tennis courts, e.g. E1,000 per year for a two-room apartment and double this for a four-room property.
However, high fees aren’t necessarily a negative point (assuming you can afford them), provided the community is well managed and maintained. The value of a community property depends to a large extent on how well the development is maintained and managed. Since January 2002, all copropriétaires have been required to pay service charges quarterly, the amount being adjusted at the end of the year when the annual accounts have been approved by the committee. Owners also have the right to make payments from a separate bank account.
The managing agent of a copropriété should send the notary handling the sale a statement of the seller’s account regarding the payment of community fees and any work in progress but not yet completed (for which owners are liable). The vendor should obtain a Certificat de l’Article 20 stating that he doesn’t owe any money to the copropriété; otherwise the notary must withhold payment to cover any fees due.
The management of a copropriété is regulated by French law, and the rules and regulations are contained in a document called the Règlement de Copropriété. If you don’t understand it, you should have it explained or get it translated. All decisions relating to the management and upkeep of a community development are decided by a general committee (syndicat des copropriétaires) presided over by a manager (gérant/syndic).
He’s responsible for the management, efficient daily running and the apportioning of charges relating to the building, e.g. insurance, repairs and maintenance. The manager bills individual owners for service charges and management fees. The committee must hold a meeting at least once a year to approve a budget, discuss other matters of importance such as capital expenditure and, if necessary, appoint a new manager. Owners must be given 15 days’ notice by registered letter of the annual meeting or a special meeting and the opportunity to add items to the agenda no later than six days before the meeting. All decisions are made by a majority vote. Owners who are unable to attend may vote by proxy.
If you’re planning to buy a community property, it’s important to ensure that it’s well managed and that there aren’t any outstanding major problems. If there are, you could be liable to contribute towards the cost of repairs, which could run into many thousands of euros.
The rules and regulations (règlement de copropriété) governing a community development allow owners to run their community in accordance with the wishes of the majority, while at the same time safeguarding the rights of the minority. Restrictions usually include such things as noise levels, the keeping of pets, renting, exterior decoration and plants (e.g. the placement of shrubs), rubbish disposal, the use of swimming pools and other recreational facilities, parking, business or professional use, and the hanging of laundry.
Note that French law doesn’t allow anything to be forbidden without good reason (for example, pets may be forbidden only if they cause a nuisance to other owners), so any such restrictions may be unenforceable. You should also check whether there are any rules regarding short or long-term rentals or leaving a property unoccupied for any length of time. If necessary, discuss any restrictions with residents.
Garages & Parking
A garage or private parking space isn’t usually included in the price when you buy a new apartment or townhouse in France, although secure parking is usually available at an additional cost, possibly in an underground garage. Modern detached homes usually have a basement (sous-sol) that can be used as a garage and cellar. Smaller homes usually have a single garage, while larger properties may have garaging for up to four cars. Parking isn’t usually a problem when buying an old home in a rural area, although there may not be a purpose-built garage.
Without a private garage or parking space, parking can be a nightmare, especially in cities or during the peak season in busy resorts or developments. Free on-street parking may be difficult or impossible to find in cities and large towns, and in any case be suitable only for a wreck.
When buying an apartment or townhouse in a new development, a lock-up garage usually costs an additional E10,000 or E15,000 and even a reserved parking space can cost E3,000 to E5,000. Note that the cost of a garage or parking space isn’t usually recouped when selling, although it makes a property more attractive. The cost of parking is an important consideration when buying in a town or resort in France, particularly if you have a number of cars. It may be possible to rent a garage or parking space, although this can be prohibitively expensive in cities. Bear in mind that in a large development the nearest parking area may be some distance from your home. This may be an important factor, particularly if you aren’t up to carrying heavy shopping hundreds of metres to your home and possibly up several flights of stairs.
A lock-up garage is important in areas with a high incidence of car theft and theft from cars (e.g. most cities and popular resorts) and is also useful to protect your car from climatic extremes such as ice, snow and intense heat.
France boasts extensive navigable waterways (rivers and canals), which are perfect for those whose ideal home is one that floats. Floating homes are usually restored and converted barges, which can offer extensive and luxurious accommodation. You can choose between a fixed mooring (there are even berths in the centre of Paris) and a peripatetic life, travelling from one part of the country to another.
Expect to pay upwards of E200,000 for a luxury houseboat. As well as the cost of fuel (if you plan to be moblie) and maintenance, you should allow between E25 and E60 per day, E100 to E200 per month or E1,000 to E2,000 per year (depending on the size of your boat) for moorings. You need a ‘driving licence’, which costs around E300, and permits for the use of waterways.
Excerpted from “Buying a Home in France 2006” The book can be purchased at survival books web site