French Property Purchase Fees
The high level of costs involved with property purchase is one of the main reasons that property prices do not go up very fast in France. The fees and taxes that have to be paid to the notaire and to the state are inaccurately referred to as frais de notaire, when only a part of them go to the notaire. The notaire’s own emoluments are based in a sliding scale between 5% and 0.825% + TVA at 19.6%, depending on the value of the property. Some properties, so-called Group 2 and Group 3, attract smaller notaire’s fees, but most fall into Group 1. The notaire’s fees are fixed by the state, and are not negotiable. It is normal practice for the notaire to ask in advance for more than the final bill, to cover for all eventualities, so you will probably receive a small repayment.NOTARY’S FEES
up to 3,049€ 5%
3,049€ - 6,098€ 3.3%
6,098€ - 16,769€ 1.65%
16,769 and above 0.825%
It follows from the above, that the notaire’s fees will come to about 1% of the sale price, except for very cheap properties, where it will be slightly more.In addition there are the droits de mutation – transfer taxes – that add up to 4.89% on old property, made up of:
taxe départementale 3.60%
frais de recouvrement 0.09% (2.5% of the above)
taxe communale 1.20%
4.89%
The frais de recouvement are the expenses involved in collecting the taxe départmentale. TVA (Valued Added Tax) is levied at 19.6% on new properties. The same rate is applied to extensions, garages and outbuildings added on by the seller in the last 10 years, which could come to a substantial amount.
There are some other fees to be paid, namely:
The salary of the keeper of the land registry: 0.10% of the sale price;
Costs of registering a mortgage, at about 2% (see chapter 4, Finance);
Costs of paper, official forms, stamps, extracts from the land register, etc. paid by the notaire.
Finally, there is the commission payable to the estate agent or immobilier, which can range from 3% to 10% or even more with very cheap properties.
Before signing the acte de vente, it is advisable for you or your representative to check again on what is included in the sale price. The contract will state whether you will have vacant possession – possession libre – or if there are any tenants present. In the UK it is assumed that once the final contract is signed the property is available to move into, but this does not always happen in France. If the sellers wish to remain for a few weeks, you can expect them to pay you something as compensation. The date by which the property is ready to move into should be stated in the acte de vente.
After the Sale
Once the acte de vente has been signed, the notaire has to pay all the taxes and commissions (unless you are paying the immobilier directly) out of the sums that you have passed over to him. The title is registered with the bureau des hypothèques – the register of deeds and mortgages, as well as the mortgage, if any. Eventually you will receive a certificate informing you that the title has been registered. The whole process will take some months. The original title deed – la minute – remains with the notaire. He is authorised to make authentic copies if necessary.
Under-Declaring the Sale Price
It was once common practice to under-declare the sale price so as to save on taxes and fees, while paying a part ‘under the table’, or sous la table. There is no advantage in the long run to the buyer, since they will be penalised with higher Capital Gains Tax in the future when they resell. The penalties for under-declaring are serious. The one way around this is for the seller to leave some furniture or other moveable goods in the property, which can then be given a slightly inflated value, thus reducing taxes payable. This is acceptable to the authorities, as long as you do not go too far.
Special Procedures in Relation to Copropriétés
The subject of copropriétés or multiple ownership has been covered in chapter 6, Which Type of Property to Buy. Apart from the asbestos report, there is also a requirement for the copropriété to draw up a report on the solidity of the structure, and many other aspects – the diagnostic technique- at the time of setting-up the copropriété where the property is more than 15 years old. This is a measure to prevent unsound blocks of flats being turned into copropriétés without proper repairs. You should also ask to see the carnet d’entretien, or log-book of the building, to see what kind of repairs have been carried out in recent years.
The manager of the copropriété will most likely be present at the signing of the acte de vente. This should contain details of what percentage of the communal charges will be required to pay.
Notaires as Estate Agents
It might come as a surprise to Brits that notaires also act as estate agents, especially in western France and in country areas. Many French wouldn’t dream of using an agent immobilier to find property. Notaires keep lists of properties; they often have the best deals around. They make very good estate agents: they have the best database on property prices, they are more likely to give an honest description of the property, compared with an immobilier, who will try to embellish on its merits. The notaire will require a commission on the sale, but not as much as an immobilier; the commission is on a sliding of scale of 5% on the first 50,000€ and then 2.5% above, plus TVA. One can reckon on paying 3% of the sale price.
Some properties held by notaires have ‘problems’ associated with them. This mainly happens when legatees find themselves in a situation known as indivision after someone has died, when two or more people have rights to the proceeds of a sale, and neither can sell without the other’s agreement.
There are also properties, which have servitudes or obligations attached to them e.g. someone has the right to live in the property for the rest of their life, or someone has a right to use the land or rights of way.
Few Brits deal directly with notaires: it takes a long time to set up appointments and viewings, and the notary will probably not speak much English. For this reason, English-speaking immobiliers and agents can seize the opportunity to act as middlemen in deals and make a handsome profit. The only way to deal directly with the notary is to stay in the area for a few months, and have a French-speaker on hand to translate if you can’t manage yourself.
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