Bregeon EPC: French Property Search Consultants

THE COMPLETION

2007-08-24T17:35:56+02:00

Here we go! You are two steps away from being a French landlord/lady.

The completion of the contract will take approximately 2 to 3 months, according to the type of preliminary contract that you have signed and the agreed date of completion. This is the "Acte de Vente", for the final deeds. Once all documents have been returned to the solicitor, they will inform the buyer and request the full payment of the property price, minus the deposit and, if applicable the sum of the loan or mortgage. You will then have to pay the solicitor fees.

You must ensure the transfer of funds into the solicitors? account before the completion date to prove the availability of funds. Failing to meet the completion date or the payment will mean that you could lose the house and the deposit!

The completion process is an important formal procedure in France, held in the solicitors? office, with all parties present. Within French culture the meaning of property is very important, therefore such matters are taken seriously.

Once again, as a British citizen, it might make the process easier if you give your solicitor the power of attorney for the signing of the completion, as you can avoid having to be present at the signing, meaning you won?t have to pay for the trip, just to spend 2 hours in a solicitors office, when you should be sure of what you are buying at this stage in the proceedings anyway.

" Bon pour Accord " signed! Now you just have to pack up your belongings and come to enjoy your place under the sun!

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FINAL CHECK

2007-08-24T17:35:09+02:00

Make sure that nothing on the property has changed and that you are indeed getting the property that you signed for. The seller should have evacuated the premises, allowing your solicitor to check the state of the house, according to the contract you signed. Any damage or disagreements must be solved through negotiation between the seller and the buyer, through their respective solicitors, until the improvement is complete. The seller must pay for the reparation of any damage.

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THE BINDING CONTRACT

2007-08-24T17:34:35+02:00

The preliminary contract becomes automatically binding after 7 days, at which time you will be required to pay your deposit as agreed, and withdrawal of the buyer at this point will be at their own cost as they will lose the 10% deposit, according to suspensive clauses. There is a clause which can offer more protection towards the deposit and allow the buyer to, under certain circumstances, ensure the return of their deposit. An example of suspensive clauses: an unsatisfactory "plomb" (lead) survey, a French loan not accepted, an unauthorised extension by the local government, etc?

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THE COOL-OFF PERIOD

2007-08-24T17:33:54+02:00

After the preliminary contract has been signed, 7 days are given to afford the buyer an opportunity to withdraw themselves from the deal, without any penalties. If the seller should withdraw from the deal, they may be liable to some form of penalty.

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THE PRELIMINARY CONTACT

2007-08-24T17:33:18+02:00

There are various choices of preliminary contract, each with different ramifications.

The "Promess d?Achat" is intention, on the side of the buyer only, to purchase the property, without any financial commitment.

The "Offre de Vente" or "Offre d?Achat" is simply the making of an offer on a non-listed property, creating a non-binding contract, until such a time that both parties choose to accept it.

The "Compromise de Vente" is the most commonly used type of contract. The "Compromise de vente" will bind the buyer with the seller under what the seller views as an expression of strong interest in their buying the property. The contract ensures that the seller will keep the property available for the contracted buyer. In the first draft of the contract of sale, the "compromise de vente" will describe in detail the property and exactly what it is that you are buying. Also outlined will be the price and all fees involved, the commission of the French agent, how the purchase it to be financed and the date of completion. This must be signed by both parties, the seller and the buyer, with your local solicitor and that of the seller as witness. The date of completion, when the final contract will be signed, is generally 2 months after the signing of the "Compromis de Vente". It should include clauses and conditions, applicable to both parties, in the event of the break of the contract.

To secure the "compromise de vente" you will have to show your:

- Passport

- Marriage or divorce papers

- Property loan, mortgage or cash payment, with all the relevant paperwork.

The "Promesse de Vente" is the second most common contract. It works under the same principle as the "Compromis de Vente" but you don?t have to show your funds or have a property loan or mortgage in place, as you will give a deposit as insurance to the seller of your intention to buy the property. This contract allows you up to 3 month in which to organise your finances and pay the deposit. After the 3 months you will be required to sign a final contract committing you to the sale, where you will also have to pay the full amount of the property. This contract involves financial insurance to secure the deal and you will have to pay 10% of the net purchase price of the house. If you retract yourself from buying the house the seller will keep the 10% deposit as compensation for your withdrawal.

If you have taken a U.K. loan/ mortgage or are paying with cash, you will be obliged to deal through your French solicitor who will insure the seller of being paid. Your French solicitor must be covered by insurance for this.

The "compromise de vente" can take up to 4 weeks to be completed, at which time you may have returned to the U.K. In such instances, to speed up the process, a useful option is to give power of attorney to your French solicitor, and to make sure that you get all the relevant paperwork translated into English.

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LEGAL CHECK LIST

2007-08-24T17:32:37+02:00

Before signing anything, you have to make sure of the viability of choosing such a property.

What is the background of the owner?

Are there any depts or mortgage costs related to the property?

Will you be able to rent it?

Is the property classified and protected as an historical building? If so, future renovation projects will be greatly limited.

If you plan to build on or renovate your property, you will need to be aware of all the local building rules and regulations.

Do you understand tax system?

Do you know about inheritance law?

What do you understand about capital gain tax?

Do you comprehend all the legal jargon within the papers and contracts you must sign?

Will all the paperwork be translated into English? Employing a buyer?s agent to assist you through this process would really help.

Before being able to sell the property, the seller must first pay for the completion of four main surveys:

"Plomb" survey: This is a survey regarding the level of lead in the property, assessing the possible toxic effect.

"Amiante" survey: To check if the property contains any traces of asbestos, a toxic substance now made illegal by European law.

"Careze" survey: All living surface areas must be checked and approved as meeting regulations as regards the size of the property, as shown on the house deeds and in reality.

"Insectes" survey: This survey assesses the condition of the property, ensuring that it is at no risk of insect infestation, etc, that would damage the residence.

The solicitor must ensure that all the above surveys have been completed, and that the property has met each of the regulation standards, as it will become their responsibility if anything adverse should happen, allowing you to cancel the sale until such a time as the seller will pay to resolve any problems that may have led to the failure to meet survey requirements.

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VISIT PROPERTIES

2007-08-24T17:31:56+02:00

The viewing of the property is very important, even more so if you buying a holiday home. You want to be certain of what you are purchasing. The only exception will be if you are buying an off-plan investment, yet even in such a circumstance it would be beneficial to have a preview. Such a visit must be taken seriously, with careful consideration and strict organisation, as you will certainly incur travel costs and must follow a set schedule.

The search and selection of property to visit is paramount so as not to waste time and money.

Some agents may offer support in this area, helping to organise the trip and dealing with the annoying details, this can substantially ease your burden and allow you more quality time, for ultimately your time abroad should be a pleasant experience.

Organising a viewing.

Once you know your needs, your budget, the place you want to go, and have selected a number of properties which fit your requirements, it is time to organise the visit for a viewing.

Book your holiday first, along with your plane, T.G.V or ferry ticket. This will help you to avoid rushing or paying too much for last-minute transport. It is much easier to organise a viewing when you are certain of the dates on which you will be there.

Organise 1, or a maximum of 2 viewings per day, as you will have to take into consideration the commuting time between viewings, whilst ensuring a sensible amount of time to properly view each of them. To facilitate this, the agent can be asked to organise the visits, as he should know the region, road networks and estimated journey/visit times better than you, with increased ability/facility to deal in French with all the different French estate agencies related to all of the individual properties that you will view. If you organise the viewing yourself, you have to make sure that you have a sufficient knowledge of French culture, language and organisation, otherwise the visit could become a hectic race to stick to a rigid timetable, and not the pleasant trip that it should be.

Allow yourself a few days, free from house visits, to simply explore, appreciate and enjoy the area. Just take the time to familiarise yourself with your future holiday home area and its? people.

For each property visit you make, we advise that you take notes and photographs to keep the image fresh in your mind, allowing comparisons to be made without confusion and helping to make the final decision an easier one.

Avoid bringing friends with you to property visits, as it is not your friends who are choosing to buy and live here, and they could influence your decision.

Be frank and honest on Your first impression is often right, so be honest with your agent/estate agent as they can change or re-arrange any visits to fit your requirements, but only if you are frank with them.

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CHOOSING THE RIGHT ADVISER

2007-08-24T17:31:19+02:00

Buying a property is not easy, purchasing property abroad is even less so. You really must know what you are doing to avoid risk, and to transform your adventure into an odyssey. Assess what it is personally can do before then seeking support from other sources. If you speak French fluently, as perhaps you have had the fortune to have spent every summer in France since childhood, and your parents may have bought a house in France, then you might just be able to do it yourself. Otherwise ask for support and guidance.

By recommendation or references

Have you got friends who have bought a house in France? Can you get some references for an estate agent in France? You must take care as to the source of the information, as the interests of the estate agent interest are o persuade you to buy a house which they have to offer, or to purchase the one you have visited. Maybe the recommendation of your friend as to a good solicitor or estate agent is made with the incentive of them earning a monetary reward for the giving of your name. Solicitors may have property to sell, although certainly less property than an estate agent. They will of course have the advantage of legal knowledge but, once again their interests will be for you to buy one of the properties in their possession. Always remember that the estate agent or solicitor will be working for the seller, not the buyer.

With experienced and specialised agents

Ideally you should choose an agent with the necessary understanding of French culture and way of thinking, whilst also appreciating your needs and desires. The most important factor is the agents? level of local knowledge, and an extensive network of relations throughout France would be of further benefit. The perfect solution would be to use a French agent, based in the U.K. This is, however, often hard to find as the majority of agents operating in the U.K are English with some knowledge of France. The advantage of using an agent is that we will be protecting your interests. Unlike an estate agent or solicitor, we will be working for you and not the seller, dealing with them on your behalf. An agent that can view the entire, bigger picture, supporting and guiding you through the sale and after, is rare to find yet invaluable, as although they will require some fees, the time and effort they can save you throughout the buying process will be priceless.

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FIND THE RIGHT PLACE

2007-08-24T17:30:25+02:00

The right place according to your requirements?

Choosing the right place for you is very important and depends upon your needs/requirements. There are principally 2 possible requirements:

- Holiday home

If you are not looking for a high investment opportunity, but a holiday home, the world is your oyster. Simply pick the location you dream of.

- Investment

If you looking for an investment opportunity, then the right location is crucial as you must be aware of locations where your investment will be gaining the most in value over the years, with optimal opportunity for rentals.

- Which country:

If you require a long-term investment, France is a sensible choice as the market increase there is stable and constant. However, if you would rather opt for a short-term investment, Eastern countries would better suit your needs, although with increased risk, due to their developing status. France is a low-risk country with steadily increasing market trend and sure capital gain. Eastern countries are high risk with higher increases in market trend but also without sure capital gain.

- Which Region / Town:

The choice of the region and town is important. Are you looking to rent your property to tourists or local workers? Will you be looking to rent your investment all the year round, or would you require certain weeks for you and your family? From one region to another, the economy can change drastically. For example, if you were to choose to invest within Normandy, your focus would be better directed towards the holiday resort/tourism sector which is much higher than those of economy and employment. If Nantes would be your preferred location, a residential investment would be more advisable as Nantes has high economy and employment rates, leading to rental opportunities directed at local working people.

- Which Town / Area:

Within the same town, the interest on the investment property can vary greatly depending on area. How can you know which areas are better? Help from an agent, or local people would be invaluable as they can provide real and up-to-date information, such as prospective regeneration, etc.

- Area / Building:

What state is the building in, both inside and out? Is the area noisy, or does the property boast a disappointing view on a wall? Does the sunshine reach and warm your terraces? Are your neighbours warm and welcoming, or are they the neighbours from hell? Once again, only the locals will know the answer to such questions, so get involved in local life and make friends.

What recreational activities are you looking for?

The activities on offer in an area are important considerations when attracting people to rent your investment property. You may buy near the seaside with its? sandy beaches, encouraging summer holiday seekers, or perhaps a property in a calm and quiet local village, where people will come to relax and unwind. Maybe property within a business centre would hold more appeal.

In any case, if the property is for you and your family, you should ask just exactly what it is that attracts you? Are there organised activities for your children, or outside play areas? Will there be enough space in your new house to hold receptions and friendly gatherings, or would it be preferential to be in the close vicinity of restaurants and shopping areas.

Nearby specialised activities such as Golf, Skiing, boating, and countryside treks (by horse or foot) are highly desirable commodities for both investment and holiday homes. Are you a keen golfer who enjoys sailing, with children who would love to ride horses? According to place, price and activities available, you will find your dream home.

What about accessibility?

You might like to have a house hidden in the depths of the French country side as you enjoy taking long, solitary walks through the forest, but you may have to drive a great distance to reach there, spending a large part of your holiday travelling. An accessible home is always preferred, unless of course you really wish to immerse yourself wholeheartedly in the French culture, living in an isolated area where there will be few other British people, if any. If you plan to rent your property, it would be best if it was situated near to an airport, therefore being easily accessible and attracting more holiday-makers. As a rule, the break-even point for a holiday property is, for most travellers, within a distance of 1 hour to an airport.

You might want to look at:

- Airport

- Train

- Ferry

- Road network

- Regional and local Public transport

- Hire car

Planning the future of your investment

To increase your investment you must be aware of any other new developments which may be around yours, as these will attract more investors, sight-seers, tourism. Alternatively, if your interest is in a quiet country village, you have to know of any future plans, such as the building of a new Disneyland in the plot of land next to your house. In France, the government have the power and the right of expropriation, insisting you move from the site if they have plans to build on your land a school, etc, or if your house lies in the trajectory of a new super motorway. Understand that investors will look to take advantage of such new developments as easy access routes (motorways, airlines, etc), particular those that are inexpensive as they have the potential to transform a little coastal village into a busy holiday resort.

The only way to gain knowledge of prospective plans is through the local people, local press, or by visiting the town hall and asking for information on any potential future developments in the region.

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DEFINE YOUR BUDGET

2007-08-24T17:26:29+02:00

How much does it cost?

You need to know where, how and what you are buying, as often the cost of buying abroad can escalate above that which you originally expected. Some of the extra costs will be included in the sales price, however others won?t, and It?s normal to assume an additional 15-20% on top of the house price to cover all the extra services involved. Below we have outlined the different types of cost you may incur:

- Estate Agent

The fees for the estate agent are normally included in the sale price of the property. Therefore you will pay it without affecting your initial budget. This inclusive fee can vary from 7 to 15% of the property price.

- Buyer's agent

This professional consultant is here to ensure that you receive valuable support throughout the buying process. If you don?t have the necessary knowledge of the local market and its rules, this kind of help is invaluable to avoid any nasty surprises that may be lurking, ready to transform you dream into a nightmare. You can choose to take on an English consultant, but he will be more expensive and will need to be linked to a French one anyway. Alternatively you can take on a French consultant directly (even better would be if they are based in the UK as they will better understand your needs) as their local connections will be invaluable to you when buying the property. The fees normally vary between 2 to 5% of the price of the property, rather than as a fixed price on the property sale. It is however better find a middle-ground by paying a small fixed entry cost, and therefore a lower percentage upon the sale of the property as this will bestow a token of good will, ensuring the work of the consultant to be of a high standard.

- Solicitor

The solicitor fees are related to the price of your property and can range from between 5 and 8% fees. Dealing directly with a French solicitor will reduce these fees, and the work will subsequently be more profitable. Again, you can choose to take on an English solicitor, but there will be a necessary increase in fees as they will need to be linked with a French solicitor to enable the sale. Therefore, the ideal situation to ensure that your interests are well managed, for a reasonable price, would be to use an English-speaking French solicitor.

- Travel costs

It is recommended that you allow for travel expenses, as a visit to properties of interest would be beneficial. Many combine their property visits with holidays, which leaves them with little time for either relaxation or for focussed property assessment. Ideally, your holiday should be to increase your appreciation of the culture and way of life, whilst a trip to prospect properties should be just that. The travel costs are varied, being as high or low as you wish to make them. Those who choose not to visit the property of interest are often regular visitors to the area, having a clear idea as to their investment. Similarly, an off-plan property need not be seen in person if the surroundings are known to them.

- Refurbishment

This cost may not be applicable to buyers of new or well-maintained properties, however for those who are buying an older property, possibly presenting a renovation project, refurbishment costs must be totalled into the budget. Yet again there are many advantages to employing local workmen/builders as they should be less expensive and have a greater understanding of local regulations and restrictions. This would of course be much easier if you have a grasp of the language, although some buyers? agents can assist with such matters, indeed a good agent should be able to guide and support you, even after the sale of the property!

- Insurance

It is always wise to insure against any unforeseen circumstances that may occur abroad, such as a natural disaster, or even you car rusting due to exposure to the salty sea-front weather. The fees all vary according to what you looking for. The simplest method is to use the familiar services of your current insurers, if they will extend abroad.

- Tax

Tax for holiday homes is not high, but it does exist and will have to be paid either at the time of property purchase, or at an agreed time after. When exactly is dependant on the region. When purchasing in France, any sales taxes will have to be payed by the seller, not the buyer. However the buyer will have to declare their new status as a landlord both in England and France.

How to finance your project?

There are many choices of how to finance your overseas property. The three most common are:

- Buying with Cash

- This is by far the simplest, most straightforward way to buy a property.

- Re-mortgaging your UK property

- This may be the least expensive choice but you put your home at risk.

- French mortgage on the French property

There may be a little more expense, depending on the transfer rate of currency. Paying a deposit will lower the interest of your mortgage repayments. This method, however will ensure the safety of your U.K. property as any risk will remain in France.

Whichever option you choose, you must have the mortgage in place before buying or signing for the property.

Taxes you can expect:

Here we introduce the different types of tax that are payable in France and in England. The two main taxes, to be payed annually in France, are the "Tax d?habitation" and the "impot foncier". If you renting the property you will have to pay rental income and capital gain tax if you sell the property. If any rental income is brought back to the U.K. you will be required to pay English tax on this profit.

- "Tax d?habitation"

This is the local residential tax, payable when the property is occupied, which has a minimum rate of 300? to 500? per annum, payable by the tenant if rented, or yourself.

- "Impot foncier"

This is the land tax, the rate of which is a minimum of 300? to 500? per annum.

- Income tax

In France the income tax can vary according to your investment. However, if you earn less than 8,385? per annum, from this income there will be no income tax to pay (except if it?s a leaseback, in which case it will be automatically paid over the years by your leasing company, unless you haven?t taken a French mortgage) Above 8,385? per annum the income tax is at a common basis of 25%.

If you have a U.K. mortgage or will be bringing the income into the U.K., then you will be obliged to pay income tax in both France and the U.K.

- Capital Gain Tax

This is the tax payable when you sell the property. In France they take16% tax on the profit if you sell your house (as your second home and none-residence), this has been in place since 2004 and is digressive over 15 years, at which time the tax payable will be 0%. In the case of leaseback it is 16% before 5 years and will reduce every year until, after 15 years, it also will be at 0%.

- Inheritance tax

This is the tax you must pay to secure ownership of the property upon the death of your relative. In France this tax will generally be at about 40% of the property value, rising to 60% in some cases. You can avoid inheritance tax in France, for rental investments, if you create a "SCI" Societe Commune D?investissement, which is a property management company.

Never accept a deal so as to lower the contracted property price, exchanging cash to make up the difference. This is illegal and if you wish later to sell the property, you will have to pay more capital gain. Your solicitor should deal with all of these matters, ensuring they all stay above board.

Legal Structure of property ownership

You are obligated to register the property under a name, of your choosing, in order to legitimise ownership. As in the U.K. it is possible to register one name alone, or joined names (such as a couple). However, when registering under joined names, if in the future there is separation of the owners, this will adversely affect the inheritance tax.

If you invest in property for rental income, through residential or commercial investment, you may wish to consider the creation of a company. Creating a business may initially be more expensive, but it will ensure the protection of any profits you make, remove annual tax and cancel out inheritance tax.

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1- SEARCH FOR YOUR REQUIREMENTS

2007-08-24T17:24:56+02:00

Before doing anything else you should ask yourself what it is that you are looking for?

More than 300,000 British leave the country every year to set up a new life abroad, under the sun. However all these people differ in their goals and motivation. What are yours?

When considering the possible reasons for buying a property abroad, the following three are the most common:

- Holiday Home

This is for those with extra income, whom are looking for a second home in which to spend their holidays. Those in this category have already discovered an area in which they feel comfortable, and return to year after year. Buying property therefore saves them time and money in the long run, eliminating the hassle and uncertainty of making future holiday choices. Life is consequently much smoother as they have their own private space, containing all their own belongings, their personal haven under the sun. No more troubles with heavy luggage and excess baggage, and your neighbours can soon become your friends. They don?t just get a taste of a quality lifestyle, they live it. For some, the purchase of a Holiday home is the foundation for the future, a step towards retirement.

- Permanent Home

Had enough of England and the rainy weather?! Many people choose to get out of their grey life and to start afresh, or to retire from their old life in the comfort of France. This is a move of some consequence and requires careful consideration, particularly if the aim is to start a business abroad. It is imperative that you familiarise yourself with all the rules and regulations of the country, build an appreciation and understanding of the culture, social systems and tax. Don?t forget to formulate a back-up plan to secure against any doubts that you may have.

- Investment

Knowledge of the English property market can provide strong motivation for those who are looking for a bargain, an investment opportunity, rental income or even a renovation project to later sell for a profit. However, you must ensure that you know what you are doing. Certainly, the majority of Europe, including France, offer property with a much lower purchase price than the U.K., yet other factors must be considered, such as tax, property management fees or dealing with local businesses to do certain jobs. Without a grasp of the language, your costs can quickly escalate above that which they should be.

Which culture will suit you best?

Integration into another culture is often simple if you are willing to make the effort. If you intend to make a permanent move, this is of course of even greater importance, as is also true for those who wish to gain rental income. Buying a home for use in the holidays is much simpler, and you can just enjoy your time. Ultimately, the main barrier to such a move is the language, which is why many strive to buy in an area with an already established British community in the hopes of maintaining their British way of life. Do you fancy a pint, or a glass of red wine? Or are you searching for a home abroad in order to escape the life you know and to immerse yourself fully into another culture and way of life, far removed from that in Britain? Are you willing to learn the language? It would be much easier if you have friends already living where you wish to buy, or if you can receive support from an agent with an extensive local knowledge. Are you familiar with the customs and lifestyle of the country? Are you aware that shops tend to close at 7pm, as well as for lunch, and as a rule do not open on Sunday and Monday? Our strongest advice would be to form good relationships with the locales to ensure that you are adopted into the community as a neighbour, not simply as a foreigner.

Place and size matter.

Are you a city person at heart? Do you want to find a place where there is a lot of emphasis on the art of shopping. Is the party circuit an essential requirement or do you simply wish to be where everybody else is? Alternatively, are you more of a hermit, someone who enjoys their own company and is looking for a place where you will be able to relax, far from noise and distraction, removed from the hectic rush hour, possibly in a lovely, peaceful, countryside cottage? Are you looking to buy near the sea, bordering the mountains or in the country? Perhaps you?d like a bit of everything? If the purpose for buying property abroad is for a holiday home, the size of the property is less important than if you are buying to rent, or as a business investment, even so you will quickly realise that, once you have your place under the sun, you will soon attract many of your friends and family, and your property can easily begin to seem too small? For this reason it is normally recommended that you buy a property slightly bigger than too small.

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