Property is cheaper in France but you need to find out what's included in the asking price, and bear in mind the other costs that will be incurred. Our guide tells you all you need to know about legal and agency fees.
Having found your ideal French property at what seems like a very reasonable price, it can come as a bit of a shock to those used to the UK market that the buyer may have to pay the agency fees and is responsible for all the legal fees – this can make your French house up to 20% more expensive than you first thought. How does this come about? You need to find exactly what is included in the asking price, as well as bearing in mind the other costs that will be incurred.
The first things to ask a French estate agent offering houses for sale is ‘Does the price include commission?’ Many French estate agents (immobiliers) include the agent’s commission in the price displayed in their advertisement. ‘FAI’ means ‘frais d’agence inclus’ (agent’s fees included) ‘TTC’ means toutes taxes comprises (all taxes included). If the agent’s fees are included in the price then the vendor is responsible for paying them. If they are not included in the price then it is the purchaser’s responsibility to pay them. The custom varies from place to place.
Agent’s fees vary between 5% and 10%, much higher than an English agent’s fee. The fees you see quoted will very rarely include the legal fees (notaire’s fees).
Some notaire’s also act as agents and you may see properties advertised in their windows. The level of commission charged by notaire’s is often lower than agents so it is worth checking these out when searching for a property. Expect to pay between 5-6% in most cases.
Your English legal adviser will be able to tell you what level of notaire’s fees to expect. Although referred to as notaire’s fees, in fact the largest expense included in the ‘notaire’s fees’ is droits d’enregistrment or the equivalent of our stamp duty. This amounts to approximately 5% of the value of the property. The rest of the fees are mainly made up of expenses associated with registration at the land registry as well as payment for the notaire’s work.
If you are using a loan for the purchase, to be registered on the French property you will have to pay a loan registration fee, which can be 1-2% of the value of the loan depending on the type of charge taken by the lender. This may be a good reason for increasing the mortgage on your UK property instead.
Notaire’s fees are calculated on a sliding scale, which is fixed under French law. The percentage paid is more for lower value properties. For example
Property price of 150,000 €, - notaire’s fees 7.39% = 11,085 €
Property price of 300,000 € - notaire’s fees 6.69% = 20,070 €
It is the vendor’s prerogative to appoint the notaire. As a purchaser you may also appoint your own notaire. If you do, this will make no difference to the fees you pay, which are shared between the 2 notaires. However, using 2 notaires can sometimes slow down the process.
Legal representation in the UK
In most cases, it is well worth paying for legal representation in your own country. The notaire has a duty of care to all his clients but will not necessarily speak good enough English to make you fully aware of the contents of what you are signing. He/she will not necessarily understand the UK point of view with regard to succession and inheritance matters either. Your own lawyer will explain everything to you, liaise with the notaire for you and give advice on all aspects of the purchase. Fees vary. Some lawyers charge on a fixed fee basis, others on a time-spent basis. Find out exactly how you will be charged and what is covered in fixed fees.
Property finding fees
A few UK-based property-finding companies add on their own fee on top of the French agency commission; this can be upwards of £3500. If this is the case you should have been told up-front. Most UK agencies share commission with the French agent and don’t charge clients.
You will usually be asked for a deposit of 10% of the purchase price. For high value properties this is often reduced to 5%. It has become customary to pay the deposit at the time the initial contract is signed. It is safe to pay the deposit into a notaire’s account. If you are asked to pay it to an agent, ensure that they have a proper holding account for the purpose of keeping clients’ deposits (compte sequestre). If you withdraw during your 7-day cooling off period, the holder has a legal obligation to return the deposit to you within 21 days.
One other expense to bear in mind is the cost of converting your Pounds to Euros, and the implications of any exchange rate changes. A currency exchange company will allow you to set the rate in advance so you know exactly what you will pay. Therefore, it is a good idea to contact one as soon as you have signed your contract.
Although the costs associated with a French purchase are high, property prices are generally lower and as long as you are well-informed, there will be no nasty shocks.
For a more detailed guide to buying French property see A Guide to Buying French Property.