“Hotter than the French Riviera,” The Daily Express proclaimed and, for once, its headline was believable. On route to MoneyCorp’s headquarters near Victoria Station, the air was already stiflingly hot on an early Saturday morning while the streets were surprisingly empty. The hi-tech lift up to the fifth floor bafflingly had no push buttons inside to select the desired floor. “Those croissants are particularly good,” suggested a man next to us who said he was interested in Corsica. He was right. The buffet continental breakfast in a modern, air-conditioned office block proved a welcome relief when outside it was to be London’s hottest day of the year.
Almost all 20-odd participants in the first of the day’s two identical seminars indicated they were interested in buying properties in France for themselves, rather than as rental investments. The morning’s five snappy Powerpoint presentations proved informative and effective.
Fleur Buckley, Property Services Manager at French Entrée the Bath-based quarterly magazine and property portal, offered interesting facts and useful tips for potential buyers in France:
- 30% of those interested in buying property in France have sped up the process because of Bexit
- 32% of foreign buyer transactions in France in 2017 were made by Brits
- France is four times the size of England and has a more varied topography
- Brits booking an appointment to view a property have told the estate agent that they had already looked around the village … but it later transpired they had only looked on Google StreetView
- Two million properties are presently for sale in France
- Buyers who initially buy a property with a lot of land can find it too much work to maintain and have to downsize
- French estate agents often offer “interesting descriptions” of their properties in adverts and can underplay the degree of renovation necessary
- Allow 45 minutes to one hour to view a property, take notes and ask to take photos
- A formal offer to buy a property has to be made earlier in the process than in the UK and is not legally binding in France
- Properties can have multiple listing with several estate agents, so that one agent may not be aware of offers about to be made with a competitor
- Allow four months from making an offer to completion in France
- An additional 7 to 8% of the purchase price has to paid in fees to the notary
- Estate agents will often refuse to provide you with the exact address of a property to view it yourself
- ‘Negotiation’ is a relatively novel concept in France because homeowners move rarely and do not anticipate a seller will bargain.
Sally Dilks, head of the French team at Buckles Solicitors, had six important tips on the legal aspects of property buying:
- Use a UK solicitor as well as the notaire in France who is required to act for the buyer and seller simultaneously and does not dispense advice
- Ask lots of questions of the estate agent, the sellers and legal advisers. Visit the mayor’s office and ask what permissions are required or are already approved
- The conveyancing process is the reverse of the UK because the contract is drawn up early ad before a mortgage is confirmed. The preliminary contract is the most important document. Get a copy of the seller’s property title deeds to chek your rights. The deposit is usually 5% (10% for expensive properties)
- Buyer beware! You will buy the property in the same condition as it was in on the completion date. Review all the diagnostic reports.
- Consider the different ownership options before you buy. Ensure ownership is structured for the optimal inheritance tax consequences
- EU Succession Regulation makes inheritance issues more complex. UK law can be applied to French assets via a UK will rather than a French will.
Mar Bonnin-Palmer, Senior Key Account Manager at MoneyCorp, advised on the benefits of using a broker for currency conversions:
- MoneyCorp is headquartered in the UK, regulated by the FCA, with office worldwide
- 70% of UK buyers of overseas properties use their high street bank for currency transfers
- Ways to buy currency from MoneyCorp: spot rate, forward rate, market orders, regular payments or its online platform (for smaller transactions)
- Open an account even before you identify your desired property as there is no obligation to proceed.
Robert Holdeness, France General Manager at Blevins Franks, stressed how long he had lived and worked providing financial advice in France:
- Blevins Franks has 2,000 client households in France
- French tax laws apply to an individual’s worldwide income if they are considered resident in France
- Income Tax is “very reasonable” in France because it is levied on household income rather than individuals’ income
- Social Tax is similar to National Insurance but is levied on ALL income sources and with no automatic right to access the social security system
- Wealth Tax is only levied on properties worth more than €1.3m
- Capital Gains Tax is not levied on individuals’ principal residence but you need to be registered with France’s tax system to benefit from this exemption
- Inheritance Tax can now be mitigated by choosing the governing law of your will. There is no tax between spouses. Do not bequeath any assets to step-children in a French will as they are ineligible, so a separate solution requires planning
- Only half of all French households pay any Income Tax!
Overseas mortgage broker Simon Conn advised from 35 years’ experience:
- Mortgages to purchase properties overseas are available from local banks, international banks and private banks (the latter when valued at more than €1m)
- Minimum deposit is 15% but can extend to 30%
- UK high street banks no longer offer cross-border lending for French property
- Everyone in France takes holidays in August so do not expect any progress then
- Much more documentation is required in France to obtain a mortgage than in the UK
- France has more legal protections of the consumer in place than countries such as Spain and Portugal
- Lenders in France cannot be rushed or challenged, as intervention could compromise the outcome.
Then the seminar suddenly ended after less than two hours. No ‘Q&A’ session so we moved back to the croissant table in the lobby and had follow-up chats with lovely people from French Entrée and MoneyCorp. No hard sell here. Just practical advice and factual information that is sometimes hard to find amongst a sea of sales pitches on the web.
The man interested in Corsica was right. The croissants were scrumptious. We then proceeded to demolish the plate of malted milk biscuits. Never missing an opportunity for a freebie, Jemima lifted a thick paperback from a pile to the right of the food table and slid it nimbly into our MoneyCorp goodie bag. It turned out to be Blevins Franks’ 292-page ‘Living In France’ 2018 guide, priced £7.50 on its back cover. Ted spotted the accompanying A4-size, 14-page ‘Blevins Franks Guide to Taxes In France’ and purloined that too.
We were having such an interesting time (eating, talking and stealing) that we found we were almost the last to leave as staff started preparing for their next session. Down in the lift and spat out from air-conditioned cool into suffocating midday heat, the footpaths had become filled with rainbow people heading for the day’s Pride march, alongside football fans heading for pubs to watch the afternoon’s critical England match.
On the train headed home, Ted perused the Blevins Franks paperback and easily surmised that it could become the most essential of their reference materials once they were in France (after the Michelin map, of course). French bureaucracy is legendary and we would be in much need of up-to-date navigation aids.
It had been a wholly worthwhile morning. In three days’ time, we would be in France. Now we needed to start our packing.