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Purchase
costs in
France
This
issue of the week looks in detail at the costs of purchasing real estate
property in France. It is not
exhaustive and in certain cases there may be additional costs which are
not mentioned herein.
NOTAIRE’S
FEE
For
those
sales
not subject to VAT (see below), the notaire’s fee is
about 6% to 7% of the purchase price (being the net purchase price
following deduction of any furniture purchased).
The bulk of this fee is comprised of the taxes due to the
French
State
upon the transfer of ownership of real estate property
(equivalent of stamp duty), which the notaire collects on behalf of the
government. These taxes,
totalling 4.89%, break down as follows:
Departmental tax: 3.6%
Communal tax: 1.2%
Tax covering costs: 2.5% of the departmental tax.
In
addition, there is the fee paid to the mortgage registrar for registration
of the completion deed.
The
notaire’s fee is paid by the purchaser (save in the exceptional case
where the parties have expressly agreed to the contrary) at the time of
completion of the transaction.
It
is usually possible to obtain an indication of the approximate amount of
this fee at the first contract stage.
MORTGAGE
REGISTRATION FEE
This
fee is charged for the registration of a security against the property
taken by a mortgage lender. The
fee is collected by the notaire. It
is calculated in accordance with the type of security taken by the lender
on the basis of the amount borrowed. It
is typically in the region of ½% to 1%.
Security known as a ‘privilège de prêteur de deniers’ is
cheaper, with a full ‘hypothèque’ being more expensive.
This
fee is paid by the purchaser.
AGENT’S
FEE
This
can vary from 5% to 10% of the purchase price (cheaper properties often
attracting proportionately higher fees).
The amount of the same and the party responsible for paying it is
detailed in the mandate for the sale or search for a property (‘mandat
de vente’ or ‘mandat de recherche’).
The fee is to be paid at the time of completion of the transaction
when all conditions precedent have been met.
It is either paid to the notaire or the agent depending upon the
case (care should be taken in the latter situation).
An
agent cannot ask for payment of the fee, in whole or in part, prior
to this time nor can any other fee be claimed by an agent in relation to a
transaction, regardless of what it is called (legal advice fee, fee for
helping with services e.t.c). The
fee includes VAT and no payment should be made that does not include VAT.
If
payable by the vendor, the fee is in practice factored into the purchase
price. In this situation, the
notaire’s fee is calculated in accordance with the purchase price
including the agency fee which increases this fee slightly as a result.
If
payable by the purchaser, it features as a separate item outside of the
purchase price.
When
viewing property, agents should give the price including the agency fee
(the term to look out for is ‘FAI’ (frais d’agence inclus).
It is advisable to double check with an agent that this is indeed
the case.
VAT
For
certain properties, VAT is to be paid.
The most common transactions concerned include the sale of property
to be constructed (vente en état future d’achèvement) and sale post
construction within five year of completion.
The applicable VAT rate is currently 19.6%.
Although technically payable by the vendor, it is always factored
into the purchase price. It
may be possible to recoup VAT paid upon a later sale in turn subjected to
VAT and also via investment schemes commonly referred to in English as
‘leasebacks’. For such
transactions, the notaire’s fee is usually about 1 ½ to 2% of the
price.
OTHER
FEES AND COSTS
The
compulsory surveys (termites e.t.c.)
There
are compulsory surveys which have to be drawn up for certain properties
when situated in specific localities.
These surveys currently concern asbestos, lead and termites.
The vendor must pay for these so it is not (and must not be) a
separate charge for the purchaser. If,
however, the property is not subject to a compulsory survey but the
purchaser still wishes for one to be drawn up, he or she will then foot
the bill (such a survey commonly costing in the region of 100 Euros).
Land
division (bornage)
If
a land division is necessary (for example to divide a plot into two to
enable to vendor to retain part), the cost of the same is subject to
agreement between the parties. Often
it is borne by the vendor but the cost can be shared between the parties
or at the purchaser’s cost (the latter is typically when the purchaser
alone has requested it). Should
the purchaser wish for the boundaries to be marked out or the precise
surface area of the land to be determined by an expert land surveyor (géomètre),
he or she will bear the cost.
Survey
Surveys
are not common practice in
France
. It is
possible for a purchaser to commission one but this will inevitably be at
his or her own cost. Depending
on who undertakes the survey (e.g. builder, chartered surveyor, architect,
‘expert immobilier’ e.t.c.) a survey can generally cost anything from
100 Euros to 1,500 Euros.
08/10/2003
- Issue of the week
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