Transaction costs are moderate to high in France

How high are realtors´ and lawyers´ fees in France? What about other property purchase costs?

This article is a short overview of the real estate purchase and sale process in France.

How difficult is the property purchase process in France?

France villas and chateau

There are no restrictions on foreign ownership. Most property is likely to be freehold. Apartments are likely to be held in two forms of freehold: co-ownership (which has meetings of co-owners, with votes taken and accounts kept), and volumes, adapted mostly for mixed-use developments. There are also leaseholds, for up to 99 years.

Once the parties have agreed on the price and what the sale relates to, the parties will be required to sign a preliminary agreement.

  1. The preliminary agreement usually takes the form of (in the North) an option (promesse unilatérale de vente), with a 5% to 10% penalty if the option is not exercised, usually secured by a deposit held by the notaire. If the seller withdraws, the buyer cannot sue for specific performance, only damages, unless the option has actually been exercised. To be valid, the option must either be notarized, or registered within ten days. In the South, a sale and purchase agreement is more common (promesse synallagmatique de vente), i.e., an agreement that allows the other party to sue for specific performance if the other defaults, with conditions precedent.
  2. There is a 7-day cooling-off period, in which the buyer can change his mind.
  3. This is the best time to conduct a structural survey.
  4. If a mortgage is being sought, the compromise de vente must contain a clause confirming that mortgage financing is being sought, then, if the mortgage is declined, the purchaser will not lose his deposit.
  5. Once preliminary contracts have been exchanged, there are pre-completion searches: land registry searches, local authority searches, planning permission searches, etc. If the dwelling has been sold by a "property professional" or is less than ten years old, the seller has a statutory liability to all future owners within the ten-year period for defects.
  6. On completion, the purchaser and vendor sign the Acte authentique de vente at the Notaire´s office. The notaire will see that the account is settled, and will accept his fee, and land registry fees if they are not included in the notaire´s fees.

Notaries often act as estate agents and are likely to be less expensive than immobiliers.

It takes an average of 58 days to complete all the procedures needed to register a property in France.

Property Buying Costs and Taxes in France

Transaction Costs
    Who Pays?
Property Transfer Fee 5.09% - 5.81% buyer
Legal Fees 1.00% - 1.50% buyer
Notary Fees 1.00% - 2.00% buyer
Real Estate Agent Fee 2.00% - 5.00%
2.00% - 5.00%
buyer
seller
Costs paid by Buyer 9.09% - 14.31%  
Costs paid by Seller 2.00% - 4.00%
ROUNDTRIP TRANSACTION COSTS 11.09% - 19.31%
Source: Global Property Guide, PWC

Footnotes to Transaction Costs Table

The round trip transaction costs include all costs of buying and then re-selling a property - lawyers´ fees, notaries´ fees, registration fees, taxes, agents´ fees, etc.

The use of a French notary is mandatory for property purchases. There are several costs that are collectively called notary fees or "frais de notaire" because they are all paid via the notary. These costs include a change of ownership fee (frais de mutation), charges of mortgage security (frais de garantie), and the notary fees or emoluments that also include various formalities and performance of certain acts. Most of these fees are fixed by the Chamber of Notaries and non-negotiable.

VAT:
Value Added Tax (VAT) is levied at 20% of the purchase price of a newly built property. Existing properties older than 5 years are not subject to VAT.

Notary Fee:
The use of a French notary is mandatory for property purchases. The purchaser pays the notary´s fees, which are fixed by law and non-negotiable. The notary fees are around 2% plus VAT for newly built properties.

There are several costs that are collectively called notary fees or "frais de notaire" because they are all paid via the notary. These costs include a change of ownership fee (frais de mutation), charges of mortgage security (frais de garantie), and the notary fees or emoluments that also include various formalities and performance of certain acts. Most of these fees are fixed by the Chamber of Notaries and non-negotiable.

If there are two notaries involved, there is no extra cost to the purchaser. The fees are shared between the two notaries.

Land Registry Fee (droits d´enregistrement)
Land registry fees vary but are usually around 0.10% of the property value.

Real Estate Agent´s Fee
Real estate agent´s fees are around 4% to 10% of the selling price of the property, plus VAT. This can also be split between buyer and seller. Most properties include the agent´s fee in the asking price and are indicated by the letters FAI ("Frais d´Agence Inclus") following the price.

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