Please note: this article does not apply to new build property either bought
prior to completion or within five years of completion.
If you are thinking of buying French property, and trying to set a budget for doing so, you must be aware of the fees you will be expected to pay in addition to the raw purchase price. As a rule of thumb, advisers usually say that an extra 10% be allowed. So, if your dream property is on the market for 200,000, euros you must budget for around 220,000 euros.
What is this 10% made up of ? It sometimes seems a mystery and that figures are plucked out of the air. Here's the answer:
1. Registration fees (broadly equivalent to UK stamp duty)
In whatever form you purchase a French property, stamp duty is payable at a maximum of 4.89% of the purchase price. This comprises 3.6% to the Departement, 0.09% to the State and 1.2% to the Commune.
2. Mortgage fees
In addition to any fees charged by your lender (whether in the UK or France), a further registration fee of 0.1% of the purchase price is payable to the French mortgage registry (only, of course, if the mortgage is over the French property being bought).
3. Notaire's fees
A French property cannot be conveyed without the involvement of a notaire. His fees are calculated on the purchase price in the following way:
Portion of purchase price
First 3,050 euros or part thereof 5%
Second 3,050 euros or part thereof 3.3%
Next 10,670 euros or part thereof 1.65%
Above 16,770 euros, with no upper limit 0.825%
For any price over 16,770 euros, use the following formula to work out the notaire's fees: (x-16770) x 0.825% + 429.21 euros, where x is the purchase price.
VAT at 19.6% must be added to this, so overall allow around 1.1% of the purchase price for notaire's fees. Please note that notaries can charge extra if they have negotiated the sale or if there are any exceptional difficulties; it is a good idea to reach agreement on this at the outset, if you can.
4. Estate agent's fees
Under a 1986 administrative order, these are not fixed by law. Therefore, they depend on the deal the seller has reached with his agent, although they are most often paid by the buyer. However, they are often in fact deducted from the purchase price so the seller pays de facto.
Our experience is that the fees are around 4% although we have seen as high as 7%.
5. UK solicitors fees
If you retain Sykes Anderson LLP our costs will be in addition to the above. We can give you an estimate upon request.
Please note that taxation and national insurance is a complex subject and you should not take or refrain from taking any step without full independent advice on the particular facts of your case. The content of this article is of a general nature and no liability is accepted in connection with it.
By Saul Brownstein, tax and French property solicitor at Sykes Anderson LLP.
Sykes Anderson has experience in advising on French property purchases and how to reduce the fees relating to them.
Please contact us at email@example.com or on 020 7398 4700.
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Please note: this article does not apply to new build property either bought prior to completion or within five years of completion. If you are thinking of buying French...