Are you looking to sell your house or holiday property in France? In early 2020 ahead of the Coronavirus pandemic, the French property market was booming, and in fact the country was seeing almost double-figure growth in some places.
Despite the economy having been hit hard by COVID-19, potential buyers haven’t been deterred, as the property market in France has continued to grow although at a slower rate, with house prices increasing in the most popular regions.
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House prices in France – to sell or not to sell?
In the most populous Ile-de-France, house prices rose by 6.81%. Grand Couronne saw a 4.03% rise, Hauts-de-Seine experienced a 6.54% increase and Petit-Couronne saw a 6.55% increase (all inflation-adjusted).
Researching the local market of your French home and seeing what estate agents are saying is vital to ensure you sell at the best price and at the right time. Keep on top of the property prices where your property is located to make the most of the selling opportunity.
If you’re going to be moving your capital back to the UK, that ‘right time’ will depend on the EURGBP exchange rate. The ups and downs of this can pose a risk but they can also represent a great opportunity.
Using an estate agent in France
Estate agent fees in France are among the highest in Europe, but there’s room to haggle and even less to play hard-boules.
The commission can be anything from 4% to 12%. Only estate agents with a carte professionnelle are permitted to sell properties, although there are also agents commerciaux who are endorsed by registered agents.
Ask around for recommendations from friends and neighbours, and have a look online for reviews.
Like in the UK, agent fees will depend on whether you get a single agent to sell your home or engage several to increase your chances. Who pays the estate agent fees is also up for grabs in France – it can be the seller or the buyer, with agents keen to promote themselves as being ‘at no cost to you’. In reality, however, a buyer will only swallow those fees if you knock them off the house price.
Selling your French property privately
About 40% of all home sales in France are carried out privately because sellers want to dodge the hefty fees and instead utilise the power and reach of the internet. This works best for cheaper properties but is not so good for that restored chateau which demands slicker marketing, and could be attractive to an overseas househunter. You can hedge your bets and do both DIY and agency but make sure you’ve not signed an exclusive contract or the agent will still want paying.
A few sites worth checking out are:
Fortune favors the prepared
The French word for red tape is la bureaucratie and the bureaucracy you need to wade through when selling a home in France is not too dissimilar to the UK. Preparation is key. In France there are often a fair number of surveys that the seller is obliged to carry out in advance of contract signing.
These surveys, named the Dossier de Diagnostic Technique (DDT) include a healthcheck for asbestos and lead, termites and electrical wiring. There’s even one required for septic tanks, so the DDT is certainly not to be sniffed at.
Know about notaries?
Notaires are Government-appointed officials and they are involved in every house sale in France. They effectively do the job of the conveyancing solicitor. They check and rubberstamp the paperwork and make sure that all taxes are paid and that the deal is registered nationally. One notaire will usually act for both the seller and the buyer – a notion that takes a bit of getting used to.
They’ll go through all paperwork with you before contracts are signed. Notary fees are charged on a sliding scale of up to 10% of the selling price and are payable on completion. Because notaries are nationally appointed, the fees are fixed so there’s no need to shop around.
Once you sell and the contract is signed, the buyer has a ten-day cooling off period. That doesn’t apply to the seller who is bound by the terms of the contract.
Capital gains tax and social charges on French property sales
If you sell a property in France for more than you paid for it you are potentially liable to be taxed on the profit you’ve made. The gain is broadly calculated by deducting the purchase price from the sale price. This only applies if your French home is a secondary home. Before 2012 you avoided Capital Gains Tax (CGT) if you’d owned the property for at least 15 years but the good news is that this has now been increased to 30 years.
You need to use a notary when selling real estate. They will calculate the tax due, withhold it at time of sale, then help you to pay this tax
There are ways you can chip away at your CGT obligations. For example:
- If you bought a ‘doer-upper’ and invested in the property you are entitled to offset the costs involved. You’ll need to supply the builders’ invoices as proof
- The length of time you’ve lived in the property can be factored in. If you lived there for six years you can get 1.65% off your CGT bill
- Become a French citizen!
And then there are social charges…
Selling a second home in France became more expensive when the Government started applying prélèvements sociaux (social charges) to everyone selling a property. The French had always paid this tax but now those with second homes in France became liable too. That’s an additional 15.5% of the capital gains to budget for.
Getting your funds back to the UK cheaply
So, you’ve sold your French property. Congratulations. What happens next? If you want to move what’s left after taxes back into your UK bank account, don’t ask a bank to do it. They’re likely to charge you a hefty fee and use an unfavourable (to you!) exchange rate. Far better to use WorldFirst’s easy-to-use, three step currency exchange service which is up to 85% cheaper than High Street banks. WorldFirst offer simplicity and transparency, with just three pricing tiers for all of our customers:
- Register for free:Complete the simple online registration form. It takes 5 minutes.We’ll be in touch to verify some details and complete the process.
- Book a transfer:Let us know who to pay, how much, and in which currency. We’ll then confirm your fee so that you can book your payment.
- We make your payment: Send your money to us by bank transfer.We’ll then make the onward foreign currency payment to the account of your choosing.
Things to consider
As a result of Brexit, the UK remains in a transition period until 31 December 2020. Whilst the details are still unclear, this could have some bearing on British nationals looking to sell a house in France. So, if you’re looking to sell your French property you might have to pay capital gains tax – a tax on the profit you make. Not only will the amount of capital tax gains you pay change, but also the way you in which you pay it.
In addition to French capital gains, there are still some things that remain certain, in spite of Brexit. Key factors include:
- A French notaire must be used when selling your French property, as only the notaire is able to transfer the property between parties.
- VAT is no longer payable on the sale of a property that is less than five years old
- You will have to sign a compromis de vente (purchase contract) and an acte de vente (conveyance deed). These contracts legally bind the seller and the purchaser.
- If the property you are selling is worth over €150,000, you will be required to appoint a fiscal representative in France.
- As a seller, you will be responsible for for organising and providing technical reports relating to the status of the property. E.g. gas and electricity reports and energy reports.
Five golden rules to selling your property in France
- Do your research – from what your property is worth to who the best agents are in the area.
- Be on top of exchange rates – they’ll affect your final total unless you’re re-investing in the eurozone, so speak to WorldFirst when you are ready to get your funds back to the UK
- Be prepared – from sorting the house, to making sure it looks like a ‘must have’ to getting the numerous surveys sorted well in advance
- Calculate everything clearly – the levels of taxation on house sales in France can be tricky to understand. Work out exactly what will be deducted from the sale price so there are no nasty surprises
- Prepare to haggle on estate agency fees – a new breed of agents is challenging the establishment in France so there are deals to be had
Whether you are looking to sell your french home and move back to the UK, or sell your holiday property, WorldFirst’s competitive FX rates and fast and painless money transfer services can help you get more for your money when repatriating funds. To find out more, get in touch today.
Find Out More About Moving to and Living in France
- WorldFirst’s currency guide to buying or selling a property in Europe: what do you need to know?
- How to Move to France
- How to Buy a House in France
- How to Find a Job and Work in France
- How to Buy a Car in France
- How to Start a Business in France
- How to Retire to France
- Make Your Money Go Further in France – Money Tips
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