FRENCH PROPERTY

AN INSIDER’S GUIDE

The Practical Guide to buying French property - written by insiders - to save you money, time and heartache. www.creme-de-langudoc.com

contents SECTION 1:

The Acid Test – what type of French property owner are you?

SECTION 2:

What and where are you buying? What you MUST know

SECTION 3:

The four pearls of French property wisdom

SECTION 4:

Cracking open those old chestnuts

SECTION 5:

Latest French property facts and figures – where to find them

SECTION 6:

What you MUST know about French estate agents

SECTION 7:

What you MUST know about notaires

SECTION 8:

Financial traps you MUST NOT fall into

SECTION 9:

Six French property pitfalls you MUST avoid

SECTION 10:

Five questions you MUST ask yourself before buying

SECTION 11:

Five mistakes you MUST avoid when house hunting in France

SECTION 12:

Five things you MUST do before letting out your French home

SECTION 13:

You got feedback? We want it!

SECTION 14:

For further reading

SECTION 15:

Special thanks

SECTION 16:

Disclaimer

This book is protected by all international copyright agreements, and reproduction is prohibited without specific permission of the authors.

1

THE ACID TEST: WHAT TYPE OF FRENCH PROPERTY OWNER ARE YOU? You take the test, we do the rest. This is a quiz to help you figure out WHAT YOU WANT to get out of owning a French home, and HOW TO GET IT.

QUESTIONS Where in France are you planning to buy? A)

In a pretty village with old stone homes in the middle of nowhere, in the south – we’re talking tradition, tranquillity, and a tan.

B)

In a village with a boulangerie and bar, within an hour’s drive of an airport and a train station, with good travel connections to the UK (or wherever it is you come from).

C)

In a large town where the local authorities have firm plans to invest, and where there’s a need for long-term rental accommodation. Or in an up-and-coming alpine resort that’s due to have its infrastructure revamped.

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What sort of property are you planning to buy? A)

An old farmhouse (or silk mill, or shepherd’s cottage, or water mill, or wine domaine), the bigger, the better!

B)

A modernised character home, or a recently built property, or even new build (you’re not planning on doing any DIY any time soon)

C)

An off-plan, two or three-bedroom apartment in a good location.

How often will you visit your French property? A)

As often as you possibly can! It’s going to be your bolt hole, your little piece of heaven on earth, your place in the sun – and when you’re not there in body, you’ll be there in spirit!

B)

Realistically, two or three times a year, during the summer and half-term holidays.

C)

Never, unless something goes seriously wrong. Buy–to-let is about buying and… letting someone else deal with the hassle of renting out your property. Maybe a leaseback scheme with no personal use and maximum rental income is what you’re looking for.

Who will occupy your French property? A)

You, of course! And your grown-up children, your grand-children, the cousins, and your dear friends. It’ll be like a home-from-home for family and close acquaintances.

B)

You, and perhaps strangers, too – it makes sense to earn some income when you’re not using it, and there’s no point in it sitting empty.

C)

Don’t know, don’t care, so long as they pay up! Joking aside, if it’s an apartment in town, it’ll be lived in long-term by a French couple with kids; if you decide to go down the alpine resort route, it’ll be occupied short term by French or overseas holidaymakers.

Who’s going to cut the grass, clean the pool, unblock the loo, mend the roof? A)

Oh! That’s a pessimistic way of looking at things, isn’t it?! You’ll cross that bridge when you come to it.

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B)

You plan to hire an odd-job man. You realise you can’t do all the maintenance yourselves, you won’t be there all the time and when you do visit, you want to spend your time in France enjoying yourself, rather than doing repairs and DIY. You’ve already factored this into your running costs.

C)

The management company. That’s what they’re there for.

Are you planning a trip to check out some areas and properties? A)

Gosh, yes! It’s your summer holiday. You can hardly wait!

B)

Yes. You’ve carefully checked out the best, most cost-effective way to travel to your chosen search area, and you’ve identified your criteria.

C)

Hardly. If the figures add up, that’s all that matters, frankly. Time is money – and you’re not going to waste yours traipsing around France.

ANSWERS Mainly As It’s purely personal. You want to revel in your French property. So whether we’re talking retirement, relocation or just plain old vacation, this is YOUR French home, loved, cherished and used just by YOU. Mainly Bs It’s personal, but you’re not averse to earning a little income. You’d like to own a French property, use it, enjoy it, maybe let it out a bit, sell it on one day and hopefully make something on the deal - or at least, not lose money. Mainly Cs It’s ALL about the money (you’re a serious property investor, or you’d like to be).

THE BOTTOM LINE Essentially, there are three flavours of French property ownership: purely personal, personal combined with investment, and pure investment. Your reasons for owning a French home will dictate the “what and why” of the property buying process (as you’ll see in the next section). So it’s essential that you define your objectives from the get-go. Hence this quiz. If you haven’t answered the questions truthfully or fully, you need to go back and do it now. Don’t read on until you have!

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2

WHAT AND WHERE ARE YOU BUYING? WHAT YOU NEED TO KNOW

Like we said before, the “what” and “where” bit of the equation go together. You should only tackle this section if you’ve defined your property-owning type (A, B or C).

WHAT YOU NEED TO KNOW - A-types

It’s all about roses round the door, drinks by the pool, and dinner on the terrace. It sounds bloody marvellous, doesn’t it? We hate to burst your bubble, but it’s time for a reality check: a home is like a puppy – it’s not just for Christmas, it’s for life (or until you find someone to take it off your hands). Puppies grow into dogs: they need feeding, walks, and places to poo and pee. Holiday homes don’t stick their noses in your crotch, but they sure take some looking after. If you let them go, they fall into disrepair, and making good the damage can cost a fortune. Try making a list of all the expenditure related to your permanent home, over a year. Go through your file of house-related papers (we’re presuming you have one) and remind yourself of all those little things, like the leaky bathroom tap, the boiler that broke down, the washing machine that flooded, the dishwasher that died, and the locksmith who came round on a Bank Holiday Monday after the wind blew the front door shut, with you in your pyjamas on the wrong side of it (doh!). Add up what it cost you, in pounds (dollars, euros, whatever), and in time, and in patience. Now double that figure (you’re buying a second home, so you’ll have two amounts of expenditure). Now imagine doing all those things again, but in French, and during your precious holiday time. You’re going to need that drink by the pool, aren’t you? A word to the wise: have you considered the pros and cons of character homes versus brand new build? Unless you’re willing and able to put in the effort, running and maintaining a second home from a distance - can become a chore. Homes of more recent construction can be the answer. Less to go wrong, less upkeep, built to better standards, with decent insulation and lower running costs. Less time and money to be spent on the property means more time and money to be spent on – YOU!

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WHAT YOU NEED TO KNOW - B-types

Naturally, you want to buy a property that you love. But it’s just as important to buy something that others will adore, too. And by others, we mean total strangers. People who will rent out your holiday home. People who will take it off your hands, the day you decide to sell it (the chances are that one day, you will). Even if you’re happy to drive half an hour to fetch your croissants, other may not be so accommodating. The rental and resale potential of your French home is important – don’t buy something simply because it appeals to YOU. This is all about compromises – and how many you can live with and still enjoy your holiday home. If you have any illusions about renting out your French property as a holiday home, you’ll need something with a pool already in place, or with space for one. It’ll need to be within a hour’s drive of an airport and ideally some alternative transport options (like a TGV train station). You’ll want to bang on about these benefits when you advertise your property. It’s taxing, but it matters: you gotta declare any income you make in France, in France. On a French tax form, to the French tax man. In French. The first time you see the forms, you may want to cry. Or find a friendly, English-speaking accountant. No pain, no (capital) gain: if you sell your second home in France and make a profit, guess what happens? The tax man cometh. Capital gains tax (CGT, or taxe sur les plus-values, in French) is what you pay if you earn a pretty penny by flogging a second home. The good news? There’s none to pay if it’s your main residence. It pays to hang in there, if you can: capital gains are tax-exempt after 15 years of possession. Sell up any earlier and you get hit. Hang on for at least five years – it’s worth it. CGT is worked out by applying a 10 per cent reduction per year of possession, AFTER the fifth year. Buying and selling on quickly is NOT the name of the game. Remember, though, that you must think of the taxes you will have to pay in your own country, not just those in France – and the place where you live may not give you any 'discount' for owning the property for a long time. In fact, in most countries, the rule is that the tax you pay in France will be deducted from the taxes you owe on the same money back home. If your 'home' taxes are higher that the French taxes a reduction in your French tax simply means that you have less to set off against your 'home' bill! If you’re dead-set on this “renting out to holidaymakers” lark, be aware that as well as possibly making you money, it will definitely COST you money too. How come? Brace yourself and accept that every year, you will have to write off an amount for breakages, no-shows, and wear and tear. You’ll be amazed how many wine glasses you’ll buy. And how many towels go “missing”. And how often the loo will get blocked. If you’re not on hand, you’ll have to hire a local to handle emergencies, do some DIY, and take care of changeovers (your guests are not going to want to lug all their sheets and towels with them, so someone has to wash the bedding and keep things ship-shape).

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WHAT YOU NEED TO KNOW – C-types

Yes, we know, it’s all about the bucks, but wise up: France is not the place for get-rich-quick schemes. You’ve got to be in it to win it – and in French real estate, you’ve got to be in it LONG-TERM to win it. Look at how the French property market has performed recently: these figures are for capital growth of resale properties, yearon-year: % Growth in French Property Prices 20% 15%

15.4%

10.4%

10.1%

10.4%

7.5%

5%

7.1% 3.8%

20 06

20 05

20 04

20 03

20 02

20 01

20 00

0%

20 07

10%

14.3%

Be aware that these figure vary enormously from region to region, and from one area of a town to another.

Pay special attention to the tax issues, and the vital question of who should be the legal owner of the property. The right choice can save you a fortune in taxes. Remember, just because you are buying a property with your husband/wife does NOT mean that it is necessarily best to put the property in your own names. For investors, the leaseback thing is well worth knowing about. Essentially, it’s the purchase of a freehold property and the granting of a lease to a management company who will pay you a guaranteed rental. The lease is for a period of nine to eleven years on a fixed rental, which is normally inflation-linked. The rent is paid by the management company, regardless of whether the property is rented out at all times. The good news? Your rent is guaranteed, you can claim back the VAT on your purchase (and at 19.6 per cent, this is an attractive benefit), and you may even get a few weeks’ personal use as part of your package (the percentage rental return will be lower as a result). The bad news? It ain’t yours to do with as you wish. The décor and furnishing has to be uniform, your personal belongings have to be put away at the end of your stay – it’s not going to feel like “home” in the truest sense of the word. You are tied in for a long period – and the management company will probably have the right to renew the lease at the end of the initial period. But then frankly, if you’re buying as true investment, this is hardly going to matter. What does matter, though, is that you will usually make more money – in both rental income and capital growth – from your own well-managed apartment or house than you will from leaseback – and the exit route is a lot simpler. If the “does it feel like home” thing matters to you, face it: you’re a B- or even A-type. Leave the investing and serious money-making to more hard-nosed C-types (no offence, you investors out there).

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So, for max lettings and income generation, you need to be looking at leaseback with NO personal use, with a company with a good track record, in an area with good rental potential, and (ideally) the potential for improvement and capital growth (because there’s huge investment being made in the infrastructure, or there’s a new ski lift being put in, or a new lowcost flight from the UK scheduled to start, or something along those lines). Get it? Got it? Good. Tax. We kind of said all this before, in B above. But to save you looking back (and because we know some of you won’t even have bothered to read B), here it is again: if you sell your second home in France and make a profit, the tax man wants to know about it. Capital gains tax (CGT, or taxe sur les plus-values, in French) is what you pay if you earn a pretty penny by flogging a second home. The good news? There’s no CGT to pay if it’s your main residence. If it isn’t, it pays to hang in there, if you can: capital gains are tax-exempt after 15 years of possession. Sell up any earlier and you get hit. Hang on for at least five years – it’s worth it. CGT is worked out by applying a 10 per cent reduction per year of possession, AFTER the fifth year. Buying and flipping is not really the name of the game, unless you’re buying off-plan and selling on at a great profit before completion – which means before you’ve had to start paying all the costs associated with French property ownership. You’ve got to be pretty slick to pull this one off. It’s amazing how much bullshit is talked about “yield.” And how many developers and promoters talk about guaranteed returns of “up to x per cent” (it’s that “up to” that we love). Yield should not be thought of as the money you make: rather, it’s the money that’s left over when everyone else has had their cut. The yield on a property is the profit on your investment (after expenses, but before tax) which can be compared with the gain on other types of investment (like shares). As a rule of thumb, the cheaper the property, the higher the yield. Here’s how to calculate your yield. Let’s say you buy a French home for €100,000, and the gross receipts for letting it out to holidaymakers for one year are €12,000. Your gross yield is 12 per cent (i.e.. 12,000 divided by 100,000 = 0.12, multiplied by 100). The thing is, if you buy a French property for €200,000, the chances of you being to let it out for €24,000 to achieve the same yield are slim. You might only manage to make €16,000, in which case your gross yield will be 8 per cent. Expenses have to be deducted from your gross income to calculate your net income – and net yield. So let’s say you bag a French home for €200,000, earn €16,000 in rent in a year, and have annual expenses of €6,000; your net income is €10,000. Your net YIELD is therefore 10,000 divided by 200,000 = 0.05, multiplied by 100 = 5 per cent. Don’t forget that you still have to pay tax on your net income, though.

THE BOTTOM LINE For investors. it’s all about the head ruling the heart. If you ain’t hard-nosed and good at maths, you’re not really reading the right section (try A or B).

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3

THE FOUR PEARLS OF FRENCH PROPERTY WISDOM

Buying and owning French property does not have to be that complicated. Sure, books and magazines bang on about it, but the essential info can be crunched down under four main headings. Extract the parts that apply to your particular property-owning type and you have four vital pieces of information. Four pearls of wisdom, if you will.

The buying and owning process You know what buying and owning means – but how do you make the process really work for you?

Location Where do you need to buy to get what you really want? We’re talking maximum long-term rental returns, maximum capital gains, maximum holiday lettings, the most sun, snow, wind or other weather combo, the most bang for your bucks… you get the drift.

Tax How can you avoid getting clobbered by the tax man? The French tax man, we mean. We’re talking property tax, income tax, capital gains tax, wealth tax, professional tax, inheritance tax, breathing tax – OK, we made that last one up, but you never know.

Bad things… And how to avoid them happening to you. What we mean is (say) flakey estate agents letting you down, dodgy notaires being economical with the truth, unscrupulous vendors asking for cash, other sneaky buyers trying to gazump you, holiday rentals clients not showing up, long-term tenants doing a runner. It’s a mean old world out there. Let us hold your hand.

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FOUR PEARLS OF WISDOM FOR ‘A’ TYPES PEARL ONE – PROCESS Your purchase is all about personal use and pleasure, so you want to deal with someone who understands what you’re looking for, and who can hold your hand all the way. Someone you like and trust. A house hunter (un chercheur de bien immobilier) might be what you need: you brief them, they go round the agents and find your dream home. Sometimes they charge you a small fee, sometimes there’s nothing to pay as their reward is a share of the agent’s commission on the sale. Alternatively, you might like to work with a UK-based agent who in turn works with lots of agents in France: you brief your UK contact, they liaise with their network of partners in France. The beauty of this system is that you only have one bum to kick. (See Special Thanks and Contacts – section 15 for details of agents and house hunters who work in this way. )

PEARL TWO – LOCATION It’s only you and your friends who’ll be visiting, so go ahead, buy what you like, where you like. Just remember that one day you may want to sell up (or maybe you’ll HAVE to sell up), so bear resale potential in mind. France is a huge country; it’s essential to narrow down your search area. To help you decide, consider climate, accessibility, lifestyle, amenities and activities, and – most importantly - whether your budget will allow you to buy in your selected area. Location is crucial because everything else about a property can be changed, albeit at a cost. Location is all about your life stage, too. If you’re coming up for retirement, sunshine may be a “must”; for young families, access to leisure facilities and amenities can be important. Buying a bolt-hole halfway up a mountain is fine when you’re young, free and single, but you’ll soon get fed up with driving an hour to buy nappies or formula milk once you start a family. Take into account your current needs and how they may evolve as years go by.

PEARL THREE – TAX When you’re buying purely for pleasure, it’s easy to lose sight of the boring bits, like tax, but you really need to know how much you’ll have to shell out each year. In a nutshell, it’s this: As the owner of a French property you are liable for property tax (taxe foncière), although owners of new homes are exempt from this tax for two years from January 1 following the completion date. Anyone who resides in a property (as the owner, as a tenant or even a friend, rent-free) with a rental value of over €4,600 is liable for residential tax (taxe d’habitation). If you let your house, even if you are paid 'back home', you will have to pay income tax to the French government.

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Capital gains tax (impôt sur les plus-values) is payable on the profit made on the sale of a second home in France, up to 15 years after purchase; non-resident EU citizens are taxed at 16 per cent, for example. And, in each case, you will (in most cases) have to declare your income and gains back home and pay tax there too. When you die, your heirs will have to pay inheritance tax on the value of your property in France – to the French government.

PEARL FOUR – BAD STUFF As a “pleasure purchaser”, you may well be an estate agent’s dream. Your heart tends to rule your head, you’re in love with the idea of buying a place in France, and after a good lunch and a couple of glasses of wine, any old character property looks lovely. Cast your mind back to your youth: remember how beer goggles made frankly ordinary guys or gals look positively hot? You need to straighten yourself out (a double espresso after lunch always helps). Try to focus on the practicalities (like how long it really takes to drive from the airport to the property in question, and how much it will cost to hire a car each time you visit) rather than the physical attraction.

FOUR PEARLS OF WISDOM FOR ‘B’ TYPES PEARL ONE – PROCESS You are buying for pleasure, but may well want to rent out, too. So you’ll want to know what the going rate is for holiday lettings, and how fierce the competition is in your chosen area. Dealing direct with a handful of agents in one particular part of France will allow you to ask some searching questions (and compare the answers!), and you’ll get info straight from the horse’s mouth. Sure, the horse may be slightly less than objective, but being based locally, they’ll know more about the lie of the land than a UK-based agent who deals with a network of partners across France. By the same token, you could try chatting to locals and foreign owners of holiday homes in the area. Look at holiday rentals adverts online but also in shop windows and on notice boards in your chosen town or village; you’ll soon get a feel for what’s on the market, and the going rate. (For details of estate agents that we rate in the Languedoc region, which is where we’re based, see Special Thanks and Contacts – section 15. )

PEARL TWO – LOCATION You’re buying a holiday home, and might rent it out to others: are you and your guests more likely to make long weekend trips, or lengthier stays? Answering this question will help identify the type of property best suited to your needs, and its ideal location. The fact that France has 22 regions, a wide variety of landscapes, several climatic zones and numerous micro-climates gives house buyers too much choice: Joe Laredo’s “The Best Places to Buy a Home in France “(Survival

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Books) is choc-full of facts and helpful for sorting the wheat from the chaff. If rental potential is important to you, choose a property in reasonable condition in a popular, accessible area over a dream home in a remote spot.

PEARL THREE – TAX Taxe foncière is payable by the person who is the owner of the property on January 1 (although owners of new homes are exempt from this tax for two years from January 1 following the completion date). It is divided into two parts, for developed (le bâti) and non-developed land (non-bâti) and any development must be reported to the tax office, so that… your bill can be revised accordingly! So if you put in a pool or build a roof terrace to entice holiday rental clients, you need to declare it. Anyone who resides in a property (as the owner, as a tenant or even a friend, rent-free) with a rental value of over €4,600 is liable for residential tax (taxe d’habitation). It’s paid irrespective of whether the occupier is actually staying in the property at that date; if the property is furnished and has water and electricity supplies, the tax is payable. Don’t imagine that by renting out your French home to summer holiday makers you’ll get out of paying taxe d’habitation; you’d have to be renting it out year-round on a long-term contract for this to happen. If you let your house, even if you are paid 'back home', you will have to pay income tax to the French government. Capital gains tax (impôt sur les plus-values) is payable on the profit made on the sale of a second home in France, up to 15 years after purchase; non-resident EU citizens are taxed at 16 per cent, for example. And, in each case, you will (in most cases) have to declare your income and gains back home and pay tax there too. When you die, your heirs will have to pay inheritance tax on the value of your property in France – to the French government.

PEARL FOUR – BAD STUFF You like the idea of renting out your French home, but it isn’t your main objective and you want to retain some personal use: we’re talking holiday lets. To rent out without coming unstuck, you need to know the ins and outs. We’d heartily recommend you read Earning Money from your French Home (Jo Taylor, Survival Books) as a starter. The Bad Stuff that could happen is: your guests don’t turn up (and haven’t paid a deposit), or they do turn up (but haven’t paid in full and you’ve rented to someone else, which is very tricky), or they pay, stay… but wreck your place. This is worst-case scenario stuff. To avoid it happening, you need to do three things. 1.

You take a booking deposit when the reservation is made.

2.

You take the balance of the rental fee eight weeks before the start of their stay, so they’ve paid in full before they even set foot in your place (and if they don’t pay up, you stipulate in the contract that they lose their booking, and you are then free to rent others - eight weeks should give you long enough to find someone).

3.

At the same time as you take the balance of the rental fee, you take a cheque as a security deposit, in case anything gets damaged (you’re allowed to bank the deposit, although many don’t) which you return it at the end of the stay, once you’ve checked the place over.

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FOUR PEARLS OF WISDOM FOR ‘C’ TYPES PEARL ONE – PROCESS As an investor, the chances are you’ll be buying new build so we’ll focus on that. Here’s what you need to know about the new build buying process, which is significantly different to that for resale homes. New build prices are non-negotiable – no haggling, please! For off-plan purchases, the buyer may be asked to sign a contrat de reservation – the process varies from place to place and developer to developer. If the purchase depends on a mortgage application being granted, be sure that the contract includes a clause suspensive (conditional clause) to this effect. The contrat de réservation is subject to a cooling-off period of seven days from the date of a registered letter of notification, which usually accompanies a copy of the signed contract. During this period you can retract from the sale by sending a recorded delivery letter to whoever sent the notification (usually the notaire) within the seven days; pull out afterwards and you lose your deposit. You may need advice on how to buy the property (i.e. in personal names or as a company). If you are not sure what names you want to use at the point of signing, make sure there is a clause of substitution in the contract to allow you to change the purchaser name(s) in the final acte de vente (completion contract). Once the reservation contract is signed, you will have to wait for the building work to be completed (usually twelve to twenty-four months). If buying with a mortgage, you will need to make your application as soon as you sign the reservation contract, as there is a limited time for this to be approved or refused. Off-plan properties are paid for in a series of stage payments, roughly as follows: Dépôt de garantie (deposit): 5% Ouverture de chantier (works start): 25% Achèvement des fondations (foundations laid): 5% Plancher bas rez-de-chaussée (ground floor stage): 30% Mise hors d’eau (roof on): 5% Menuiseries extérieures posées (second fixing): 20% Achèvement des travaux (works completed): 5% Remise des clés (key hand over, snagging completed): 5%

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The signing of the acte de vente – at which point you become the owner – takes place when the building has reached ground level (you’ll be sent a projet d’acte - a copy of the contract to be signed - when the foundations have been completed). Although the purchaser becomes the owner on signing the acte de vente, the property is not finished; stage payments will continue as the works progress, with the final five per cent payment made when snagging is complete and keys are handed over.

PEARL TWO – LOCATION Chances are you’ll be buying in what the French call a residence de tourisme (a purpose-built holiday rental complex sold and run under the French government’s leaseback scheme), so the location bit is all taken care of: leaseback schemes are only built in popular resort areas (alpine or coastal, mainly) to attract maximum visitors. All you have to decide is where you’d prefer to invest: in the mountains, at the seaside, or perhaps on a golf course?

PEARL THREE – TAX You need to play by the rules here. A- or B-types doing the odd holiday let to friends of friends with a cash-in-hand payment might just go unnoticed, but C-types investing in French property to make money will soon come unstuck if they try to fiddle le fisc (l’administration fiscale – the French tax authorities). British property owners in France came under the spotlight of the Gallic taxman in 2006 when the French government began cracking down on folk skimping their tax dues. What you need to know is that besides income tax payable on rental returns, plus the property taxes detailed above, there is an asset tax that can be demanded annually. The impôt de solidarité sur la fortune (ISF) is charged at 0.55% rising to 1.8% on wealth in France, once your assets pass the €750,000 threshold. The problem is that it is possible to be considered resident for tax purposes in both the UK and France. If the French authorities decide a person is resident, all of their assets – including any outside France – fall into the wealth tax net. And, in each case, you will (in most cases) have to declare your income and gains back home and pay tax there too. When you die, your heirs will have to pay inheritance tax on the value of your property in France – to the French government. So take professional advice before you dive in and build yourself a French property portfolio. Getting the tax set up wrong can easily ruin the performance of your investment.

PEARL FOUR – BAD STUFF Hmmm… most of the Bad Stuff as far as investors are concerned is pretty much covered under Tax above! Naturally you’ll want a decent return on your investment, but if you’re buying leaseback through a reliable developer with a sound management company in place (remember, you’re looking for track record and

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satisfied customers rather than promises of figures that may never materialise), that shouldn’t be too much of an issue. If you do decide to go down the alpine route, be aware that because property values are reaching dizzy heights, wannabe investors MUST look for good rental yields and capital growth (making back your initial outlay through holiday rentals alone is downright unrealistic). The smart money goes into (for example) a ski development in a resort that’s slated for infrastructure improvement. For example, the Briançon/Serre Chevalier ski area has recently been acquired by the Compagnie des Alpes ( the company behind resorts such as Les Arcs and Val d’Isère) and some 50 million euros of investment is planned for the area’s infrastructure, putting in new lifts and improved facilities which may well result in an uplift of the area’s popularity and property values.

THE BOTTOM LINE There comes a point where you have to stop reading magazines, books, websites and (yes) e-books and Just Do It. If you bear the Pearls of Wisdom in mind while house hunting, you’re unlikely to come badly unstuck. Let’s move on.

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4

CRACKING OPEN THOSE OLD CHESTNUTS

Oh, if only we had a euro for every time we’ve been asked: “Is buying new build better/easier/cheaper/quicker/ than resale?” Or for every time we’ve heard: “I’d like to run a B&B – do you have any advice?” Or for every email we’ve received that says: “We want to buy somewhere sunny, with a pool, and a garden, in a quiet, pretty, rural, safe setting, with shops, leisure facilities, amenities and an airport nearby. Do you have any suggestions?” (actually we do, but they’re not printable). So this is where we explore and explode the myths. Chuck out those mouldy old chestnuts. Read on and wise up! Each chestnut is examined with reference to A, B and C types – so you can focus on the part(s) that relate to you. CHESTNUT ONE: Old versus new A-types tend to go nuts for character homes. They can’t get enough of those lovely old stone-built properties, be they cottages, village houses or converted barns. And if you’re buying purely for pleasure, you’re allowed to buy what you damn well please, but just remember this bit: OLDER HOMES COST MORE TO RUN AND REPAIR. For B-types, it’s OK to swing either way: old character homes can rent out well to the overseas holidaymaker, ditto purpose-built new apartments in well-situated resorts in the mountains or on the coast. Once again, the key benefit of new build is that it’s cheaper to run and repair, and if you’ve bought into a leaseback or guaranteed rental return package, the renting out side of things is managed for you, which is a boon. C-types should not even think about character property: it’s new build all the way for investors. Buying something that has yet to be built is cheaper than purchasing a pre-existing property, and it’s practically inevitable that by the time the project is delivered (usually within 12 – 18 months), its value will have increased. Plus maintenance is a doddle compared with character homes.

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CHESTNUT TWO: Buying a wreck to renovate A-types are free to do as they please, but remember, your purchase is meant to be all about pleasure. And renovating old property is not fun, by any stretch of the imagination. Unless you are a professional builder, or a relatively young, fit and able-bodied bloke with a masochistic streak and plenty of mates who want to share your pain, we’d suggest you don’t go down this route. It’s a killer. As a B-type, you are perhaps allowed to dream about this idea: a carefully planned, financed and executed renovation project can be sold on for a small profit. If you’re mad about DIY on a large scale and want the challenge of a long-term, back-breaking endeavour, go for it: if you want to make money more easily, buy a renovated, modernised home (or a new build property) with good rental potential, and put your energy in to publicising it. C-types, this is a no-brainer for you: no investor in their right mind would go anywhere near a renovation project. Period.

CHESTNUT THREE: Downsizing (or upsizing) to France In other words, trading in your cramped, two-bed flat for a large, four-bedroom family house (upsizing), or swapping your frantic lifestyle and crippling mortgage repayments on a city centre pad for a carefree, mortgage-free existence breeding pigs in the middle of the French countryside (downsizing). This is a dream often entertained by A-types, but whatever type you are, remember that buying a place in France does not constitute a lifestyle change per se. It just means you own a property. How you earn money to support yourself and pay the bills relating to that property is a whole other ball game. One thing’s for sure: running a gîte or B&B is not going to cut it.

CHESTNUT FOUR: Escaping ghastly Blighty/Brown’s Britain This one is rather similar to Chestnut Three above. Sure, you can jack in your job and move to France, but you’ll be swapping Brown’s Britain for Sarkozy’s France. You need to know what that trade-off entails. If you earn any income (and unless you’re drawing your pension or living like a hermit, you’ll have to be making some moolah somewhere along the line, just to survive), you’ll be subject to French tax laws. If you set yourself up as selfemployed, you’ll have to pay some pretty crippling social contributions (they’re obligatory). France is spelled F-R-A-N-C-E; Utopia is spelled differently.

CHESTNUT FIVE: Running a gîte / tea shop / nudist colony This A- and B-type dream is often linked with a property purchase, because folk like to think they can offset the running costs of their French home by running a side line. Which to some degree they can, but it has to be pointed out that we’re talking pin money, not a main source of income.

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Also important is the fact that running a business from your French property entails rules and regulations: check out the Gites de France website for background on gîte and B&B-related legislation. If you plan to offer cups of tea and scones in your garden, or let butt-naked folk camp in your field, you’ll need to look into the rules (try Earning Money from your French Home - Jo Taylor, Survival Books). And beware: France is infamous for its paperwork. Setting up a business in France can be a real pain – as can running one. See John Howell's book “Starting a business in France” (details in Section 14).

CHESTNUT SIX: Sunshine and swimming pools Be careful what you wish for. The sun-starved Brits and Irish often want warmer weather and consequently go house hunting in the south of France (Provence and Languedoc-Roussillon are the regions of choice). What they need to know is that you can sometimes have too much of a good thing. If you’re buying a holiday home for purely personal use (hello, A-types) you’ll be visiting it often. So be sure you’re buying into a climate you honestly crave. Summer temperatures along the Mediterranean coast can easily reach the high thirties, and fair-skinned types can find this uncomfortable. You might want to rethink your search area, or prioritise properties with pools, or proximity to the sea (or a river) for a cooling dip. B-types, this goes for you, too: if you want to stand a chance of renting out your holiday home, a pool is a must. And for happy holiday rentals clients, you DO want to be in a very sunny spot. No-one wants to spend their hard-earned cash and valuable summer break in a cloudy, chilly place. Maximum days of rays is what it’s all about. C-types, you may well decide to buy into a leaseback development that comes complete with leisure facilities (pool, sauna, Jacuzzi, fitness room) so you don’t need to worry on this score. The thing to look out for is the charges de copropriété, particularly if the development has a sizeable “common parts” area for which the upkeep may be expensive (like property within a marina or leisure complex, or on a golf course). Ask how much you’ll be liable to pay each year in maintenance and service charges. You don’t want to be crippled by your copropriété!

CHESTNUT SEVEN: The Great Outdoors (gardens) A-, B- and C-types, we’re going to group you all together for this one. Everybody thinks they have to have a garden. For Brits, it’s kind of in the blood. Many of us grew up with green squares and rectangles at the back of our homes, not to mention tedious trips to the garden centre with Mum and Dad at weekends, and we can’t conceive of a dwelling without a garden. So when we come house hunting in France, we tell the agent we want un jardin (preferably un grand jardin) because hey, we want to live out our fantasy to the max, and faffing around like Jane Seymour* with a trugg is all part of it.

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What you need to know is this. A garden (even a small one) eats up your time and money. It looks horrid if you don’t look after it regularly. Sitting in it is what you imagine you’d do if you weren’t weeding, mowing, raking, sowing, or driving off to the bloody garden centre for yet more pea sticks. If you’re only visiting your French home sporadically, your jardin is going to become a jungle very quickly. A- and B-types, you’re going to have to wrestle with it yourselves during your precious holiday time, or pay someone else to do it for you. C-types, you’re going to have to pay someone else to do it anyhow (although chances are, if you’ve bought into a development rather than an individual property, someone else WILL be doing it anyhow, paid out of the charges de copropriété we mentioned above). A- and B-types, we’d suggest you opt for a patio, terrace, loggia, roof terrace, paved area, or something equally low maintenance. Alternatively, hire yourself a green-fingered local.

THE BOTTOM LINE Don’t be daft. Or greedy. You can’t have it both ways. There is no Utopia. You need to talk to people who have done what you want to do, and learn from their mistakes. That’s why “warts and all” case studies make interesting reading (you can find details of where to find these in For Further Reading – section 14). *Baffled by the Jane Seymour reference? Try this link.

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5

LATEST FRENCH PROPERTY FACTS & FIGURES

Whether you’re an A-, B- or C-type property buyer, you need to do some research before you dive in. Having some hard facts at your fingertips means you can compare property prices across regions, within departments, and even within different parts of France’s larger cities. You can see how real estate values have risen (and fallen!), where the most capital growth has been achieved, and figure out where best to invest your hard-earned cash. A very good source of information is released by the FNAIM (it stands for Fédération Nationale de l’Immobilier and is effectively the French federation of estate agents). They publish detailed property market figures every quarter, based on resale property (there’s no new build), which you can access free of charge via their website www.fnaim.fr – it’s only available in French but once you get the hang of what to look for, you can read the tables of figures quite easily. Go to the Toute l’Info section on the home page and click on Lettre de Conjoncture for the latest quarterly figures. Within this Lettre de Conjoncture, there’s a handy map of France with stats for apartment prices in many of France’s major cities (les prix des appartements en France), including prices per square metre for both sales and rentals, and percentage changes quarter-on-quarter. There’s also a chart (called Le Match Transaction/Location) which shows you how well you can do (or otherwise…) in the buy-to-let stakes, giving average prices per square metre for property sales and rentals in over 90 French locations – so you can see whether you’d be better off owning in Toulon or Toulouse, for example. Similarly, there is a monthly bulletin which details the evolution of resale prices for houses and apartments, so you can see how the market is performing, and there are selected items translated into English. The Notaires de France site www.notaires.fr has some good stats too, and lots of it is in English (hurrah!). The thing you need to know is that these figures include new build sales (notaires are responsible for the conveyancing of ALL French property transactions); however, they can also be misleading, because the figures

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are based on sales made direct by notaires, and not through estate agents (there’s no agents’ commission included). Also very handy is www.immoprix.com – a site where you can key in a French address and find the latest average price per square metre for a variety of property types (house, apartment or plot of land). A word of caution, however: These notaires guides are great, but don’t take them at face value. The price per square metre shown is usually well below what you will be asked to pay. Why? Well, firstly, the figures are often a year old. A deal is struck, contracts are signed, enquiries are made and, eventually, the acte de vente is signed in front of the notary. The transaction is then reported and listed. Second, there is still a culture (illegal and often dangerous) of under-declaration of the price in some parts of France – including Paris. This depresses reported values. Third, these are average figures. You are likely to buy an above-average property.

THE BOTTOM LINE Buying a French home? You’ll want to know if you’re being charged a good price – or at least the going rate – before you put your hand in your pocket. Looking in estate agents’ windows is fine, but it takes time and is not really the most reliable research method. Hard facts and figures are only a mouse click away – and now you know where to find them, so you can make an informed choice.

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6

WHAT YOU MUST KNOW ABOUT FRENCH ESTATE AGENTS

They don’t give out much in the way of info (their property particulars are so scanty, you could hang ‘em in your window and call ‘em net curtains). Learn to live with it. They rarely have exclusivity on a property, hence their reluctance to give out too much info (see above), in case a) some unscrupulous rival comes along and persuades the vendor to put it on their books, or b) some unscrupulous buyer goes along and persuades the vendor to sell to them, direct, cutting out the agent. Imagine… Most have very small businesses and many have only a handful of properties on their books. Many only deal with a very tiny area – sometimes just a few streets. They may not have shop premises but operate from an invisible third floor apartment on a back street, so finding them is not easy. What's more, a lot of property doesn't pass through estate agents – it is sold direct by the owner or via notaires. And even for the stuff that does go via an estate agent, the best will never get into the estate agent's window, let alone an ad in the paper. It will be sold quickly via personal contacts. Some of them are bona fide, others are cowboys. You can tell them apart by one simple test. Ask to see their carte

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professionnelle. They should have it up on the wall of their office. If they don’t, ask why. Go on. Don’t be all English about it. If they get uppity, you’re probably better off without them anyway. French agents do not tend to speak great English. Which means you need to speak great French, or find someone to help you who does! If the French agent you are dealing with is unaccustomed to dealing with overseas purchasers, they may not be willing to assist with any issues after the sale (like helping you apply for planning permission, or getting your utilities sorted out).

THE BOTTOM LINE If you feel confident, you can choose to deal with French agents; alternatively, there are UK-based French property agents who work with partners across the Channel. There are pros and cons to both.

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7

WHAT YOU NEED TO KNOW ABOUT NOTAIRES

What is a notaire when he (or she) is at home? And what do they do, exactly? More importantly, what don’t they do? The notaire – qu’est-ce que c’est? A notaire is a legally qualified official whose role is to ensure that property transactions are completed in accordance with French legislation. What does he do? He carries out local searches, checks the title of the property and ensures there are no outstanding loans on it. He collects all the fees (except the estate agent’s commission) associated with the purchase; these are known as the frais de notaire. How much does a notaire make on a property sale? Not that much. Of the total frais de notaire – remember, this is all the fees associated with the transaction (so registration taxes, stamp duty, land registry fees, notaire’s fee, and, if relevant, mortgage registration fees - roughly 1.5 per cent of the mortgage amount), only a small percentage goes to the notaire himself for his services; this amount is levied on a sliding scale and depends on the price of the property. Portion of purchase price (€)

Rate (%)

Fee (€)

Up to €3,333

5%

€166.50

€3,334 – €6,666

3.30%

€276.46

€6,667 – €18,333

1.65%

€468.46

Over €18,333

0.83%

You do the maths!

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If you really want the details, here’s how it works: the notaire’s fee is calculated as a proportion of the purchase price, and the rate changes according to price bands. Like this: The real question though is not “how much does the notaire make?” but rather, “how much should I allow to cover the frais de notaire?” – and we’ve covered that one below. There’s also “how much do I have to pay to buy a French property, over and above the basic purchase price?” For the answer to this one, see “Costs associated with purchasing and owning a French home” under Financial Traps - section 8. How much should I allow to cover the frais de notaire? As a rule, the frais de notaire for a new, off-plan property are 2.5 – 3.5%. For properties more than five years old, the amount charged is 6.5 – 10%; the cheaper the property, the higher the percentage. Who pays the notaire? That’ll be you, the purchaser. What doesn’t the notaire do? Good question. The notaire acts on behalf of both parties and is not committed to protecting the sole interests of either purchaser or vendor. The notaire can and will advise you on legal aspects of the transaction, if you ask him specific questions, but he’s not going to take you to one side and spontaneously tell you what you ought to know. He will know nothing about the law of your country and the interaction between it and the French system – which is what creates most of the problems and opportunities. The notaire will seldom give you advice about tax saving strategies. Many speak little or no English. This means that you’d be well-advised to appoint some kind of legal eagle who will have your best interests at heart. Do I get a say in which notaire handles the transaction? You do, up to a point. The vendor/agent will have chosen a notaire to handle the sale, but you - the buyer can appoint your own at no extra cost (the single fee is shared by both notaires). You can arrange to meet with them to discuss in what name to purchase the property and any other questions relating to inheritance tax issues (the thing you need to know is that French inheritance tax laws vary from those in the UK, and they’ll apply to you, as the owner of a French property, even if you remain a UK tax payer and resident). However, to make this step worthwhile, you’ll need to find a notaire who speaks fluent English and French, and who has not just the knowledge of the French system and laws, but an understanding of your UK (or other) situation and background. Arguably your time and money might be better spent with one of the French/English legal experts who specialise in property transactions – like John Howell of the International Law Partnership (you’ll find his details under Special Thanks and Contacts – section 15).

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THE BOTTOM LINE The notaire acts on behalf of both parties; the very nature of his role means he has to remain impartial. If you want someone to bat for you, you need to hire ‘em. Instead of appointing a second notaire, you’d be better off hiring a qualified legal advisor with experience of the French property purchasing process and the tax and legal situation of your home country; they also need the language skills to explain all this to you - in English and to argue your case with the vendor/the agent/his notaire, in French.

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8

FINANCIAL TRAPS YOU MUST NOT FALL INTO

TRAP ONE: Not realising how much buying a French property really costs So first up, there’s the purchase price. Usually it includes the estate agent’s commission (commission d’agence), which is payable by the buyer, but you should always check this. Estate agents’ fees are worked out on a sliding scale of 5-10 per cent (the cheaper the purchase, the higher the percentage). Then there’s the frais de notaire. Be careful: this isn’t just the notaire’s fee: frais de notaire means all the costs associated with the sale, except for the agent’s commission, and any fees you have to pay to your lender for arranging your mortgage. TRAP TWO: Not realising how much owning a French property really costs We’re talking about taxe d’habitation and taxe foncière. As the owner of a French property - or plot of land, come to that - you are liable for property tax (taxe foncière); owners of new homes are exempt from this tax for two years from January 1 following the completion date. Anyone who resides (as owner, tenant or rent-free – lucky you!) in a property with a rental value of over €4,600 is liable for residential tax (taxe d’habitation). If you’re concerned about how much you’ll be paying in terms of these two taxes, ask the agent straight out - and make sure they give you a straight answer. As an example, a year’s taxe d’habitation and taxe foncière on a three-bedroom apartment in the centre of a major French town is currently a couple of thousand euros; it’s gotta come from somewhere, and that somewhere is out of your pocket.

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TRAP THREE: Not realising how much running a French property really costs Now we’re on to charges de copropriété. Any home with common parts shared with others (e.g. apartments, or homes on a private estate) is owned through a system known as copropriété. Purchasers own their homes but also a share (quote part) of areas such as hallways, stairs, lifts, gardens and swimming pools, and share the cost of their upkeep, so it’s key to check the financial implications of buying in a copropriété. As an example, on a three-bed apartment in the centre of a French provincial city, you might pay around €1,500 per annum. It goes towards things like mending the roof, clearing the gutters, cleaning the stairwell, replacing the ancient lift (there’s French legislation being introduced over the next few years which makes updating or replacing lifts obligatory), replacing the 19th century lead piping, and a hundred other things you’d never imagine. And then there’s the basics, like gas, electricity and water bills.

THE BOTTOM LINE It doesn’t end with the purchase price. Look into ALL the financial aspects of buying, owning and running a French property to be sure you can really afford it! If you’re buying an older property, ask to see copies of the utility bills, a couple of years’ maintenance and service charge (charges de copropriété) bills, and the minutes from previous copropriété meetings (known as Assemblée Générale). If you’re buying a brand-new home, ask what the maintenance and service charges will be. You can relax a little as far as the utilities are concerned, though: new build homes are better insulated and thus far more economical to heat and run than old stone properties.

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9

SIX FRENCH PROPERTY PITFALLS YOU MUST AVOID

PITFALL 1: HELP! Someone else is buying the property instead of you! In other words, someone (the commune, a tenant, the SAFER – the French equivalent of the Agricultural Commission - or a coindivisaire – a joint owner) has exercised their droit de pré-emption (pre-emption rights). Yes, this can happen, but don’t panic. You, the potential purchaser, will recover all the deposits made to the estate agent or notaire, so you won’t lose your money. It’s a bummer if you had your heart set on this particular home, but there are plenty more fish in the sea. PITFALL 2: HELP! My mortgage application has been declined! If you apply for a mortgage outside the time frame given in the initial sales contract (compromis de vente) and your application is refused after the contract has become unconditional, the vendor can refuse to return your deposit. This is tough. To avoid this happening to you, take a couple of tips: TIP ONE Apply for a mortgage in principal, before you even go viewing. If you get the green light, great. If you get turned down, at least you know where you stand. TIP TWO Before signing the compromis de vente, make sure it contains a conditional clause (clause suspensive) about the sale being dependent on your mortgage application being approved. With this get-out clause in place, you’re covered and your deposit will be returned, even if the bank won’t play ball and fund your French property fantasy.

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PITFALL 3: HELP! I haven’t got enough money! As in, the euro/sterling (or other currency) exchange rate has changed dramatically and now my pounds won’t buy enough euros to fund my purchase. To avoid this happening to you, don’t leave your euro purchase to the last minute: agree the rate with your chosen currency specialist and purchase at the same time (known as spot buying) - unless of course you actually WANT to gamble on the cost of your French home. PITFALL 4: HELP! I’m not ready to sign the final contract! As in, you are unable (or unwilling) to sign the final acte de vente within the time frame specified in the initial sales contract. We don’t need to go into the reasons for this (your funds aren’t ready, your auntie died, the dog ate your homework…): what we do need to do is let the agent and notaire know; in some cases they will be able to agree a later date with the vendor. The vendor has the right to ask the notaire to serve a notice to complete on you, giving you another 14 days. If this isn’t enough, by law, you lose your deposit and the right to buy the property. Ouch. If, on the other hand, the owner fails to complete, they have to refund your deposit and pay you an additional 10 per cent compensation. Nice. PITFALL 5: HELP! I can’t be there to sign the final sales contract! As in, I’ve broken my leg, I’ve lost my passport (the dog ate my homework, the alarm didn’t go off…). This one is a cinch. You can appoint a proxy to sign on your behalf. Contact the notaire and ask for a power of attorney (une procuration) to be sent to you, which you then have to sign in front of a public notary and return. This gives someone else – usually the notaire’s clerk – the right to sign on your behalf. PITFALL 6: Ooops! I didn't think about who should be the legal owner of the property, and I've put it in the wrong person's name The combination of high French taxes and complex French inheritance rules makes this a real danger – especially if you have a complicated family situation (e.g. ex-wives or husbands, children by different partners, or a same-sex relationship). See you specialist lawyer NOW! The longer you delay the more expensive it will be to put it right. If you don't KNOW whether the property is in the right name, get it checked by a specialist lawyer.

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THE BOTTOM LINE A lot of these pitfalls (apart from the pre-emption one, we grant you) can be avoided with careful planning. Fail to prepare and you prepare to fail. Unlike the UK property buying process, where negotiations between vendor and buyer can drag on for months on end, only to result in one party pulling out and the whole deal going pear-shaped, things in France move pretty swiftly. Once you’ve signed the initial sales contract and the seven day cooling-off period has elapsed, you’ll have to pay your deposit. Legislation prevents you from getting gazumped (hurrah!) Another three months or so after paying your deposit and you should be looking at completion. Which means that you need to have all your ducks in a row and be ready to move quickly, if the right property comes up. Apply for a mortgage in principle before you go viewing, to save time. Sell your main residence, your granny or whatever you need to do to get the cash to seal the deal. Take legal and financial advice way up front, before setting foot in France. Get your solicitor, surveyor, builder friend, French bank account, loan and whatever else you might need all lined up, so that when the time comes, you can get on the phone and call for ACTION!

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10

FIVE QUESTIONS TO ASK YOURSELF BEFORE BUYING A FRENCH PROPERTY

QUESTION 1: Why am I doing this? If the answer is “because my wife/husband wants me to/because I saw a great TV programme about buying French property/because we’re flying home tomorrow/because I hate my life and want to start afresh in France”, then STOP. QUESTION 2: Can I cover all the other costs associated with owning this property? If the answer is “uh, what other costs?”, STOP. Have you carefully calculated your annual bill for taxe foncière, taxe d’habitation, frais de copropriété, heating, gas, electricity, water, telephone, insurance, garden and pool maintenance – oh, and the cost of travelling to and from the property? If not, you need to. Pronto. QUESTION 3: Have I looked into all the issues regarding inheritance tax laws and other tax implications, as they relate to me and the purchase of this property? If the answer is no, then hold it right there, buster. What’s the matter with you? Are you looking for trouble? There are countless books on this very subject (see For Further Reading - section 14 if you want recommendations), and better yet, specialist advisors who can be consulted (you can talk to the notaire about inheritance issues, too). What you MUST know is that French inheritance tax laws force you to leave your property to your children. If you or your partner have children from a previous relationship, the inheritance issue can get more complicated, but there are ways around it – like changing your marriage contract, or buying in the name of a company.

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QUESTION 4: Have I made a will, or modified my existing will to include my French property? If the answer is no, STOP. Trot off to see a solicitor right now (you’ll want one who is qualified in both France and the UK (or your country of domicile). Don’t forget that in your will you can leave the property to whoever you want, but if you leave it to other family members or friends, the taxes will be higher. QUESTION 5: Do I understand the French property buying process, and in particular, conditional clauses and the seven-day cooling off period? You don’t? You’re not sure? Whoa. This is serious. Ask your agent to talk you through the process, slowly, step by step. Ask them to be crystal-clear about the seven day retraction period (like, when do the seven days start, and stop? How exactly do you withdraw from the sale within those seven days?) and the conditional clauses that can be included in the initial sales contract.

THE BOTTOM LINE If you answered “no” or “don’t know” to any of questions 2 – 5 above, you MUST NOT pass go. In fact, go to jail and do NOT collect £200, either. This isn’t Monopoly money we’re dealing with here, people – it’s real life. Take time out, a deep breath, and start reading. This e-book is a good start, but perhaps you need to dig a little deeper. As we tried to point out in question one, buying a French home (or moving to France) is NOT the answer to all your problems. There are some great self-help guides out there, you know (we’re not being facetious, either – we’ve listed some in For Further Reading – section 14, because we rate them).

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11

FIVE MISTAKES YOU MUST AVOID WHEN HOUSE HUNTING IN FRANCE

MISTAKE 1: Don’t be a size queen. Sure, your British pounds, American bucks, or whichever currency you’re trading in, may be able to bag a far bigger property in France than you’d get back home – but will they stretch to heating and maintaining it, too? And the tax bills that go with it?

MISTAKE 2: Don’t go ridiculously rural if you’re urban at heart Don’t buy a home in the middle of nowhere if you’re used to living in a seething metropolis – city slickers are rarely cut out to be hicks from the sticks. Try a gradual transition – like, from a capital city to a midsized market town – and see how the shift feels. If you’re looking at permanent relocation, for goodness’ sake RENT before you buy.

MISTAKE 3: Don’t buy the first thing you see There are so many properties to view. You shouldn’t buy the first one you visit, anymore than you’d sleep with the first person you dated (you didn’t, did you?)

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MISTAKE 4: Don’t be frightened into action by the agent Don’t feel pressured to purchase simply because the agent says he’s got another buyer who’s very interested – as Mandy Rice-Davies might have said, “Well, he would say that, wouldn’t he?” Buy because it’s right for you – not because someone else might get there first.

MISTAKE 5: Don’t work with cowboys or amateurs Don’t buy from a non-bonded agent or a jumped-up “expat expert” who thinks they know all about buying French property because hey, they did it themselves, once.

THE BOTTOM LINE Fools rush in where angels fear to tread. So think of house hunting like dating. Take it gently, one step at a time. Don’t kiss on the first date. Play a little hard to get, even. You’ll know when the right one comes along. And in the meantime, you can have lots of fun looking for Mister – sorry, Maison – Right.

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FIVE THINGS YOU MUST DO BEFORE LETTING OUT YOUR FRENCH HOME

THING 1: Identify your USP. The largest group of clients who book self-catering rental properties in France is families, so if you want maximum bookings, make your French home ultra child-friendly and market it as such. Giving your property a distinctive spin will help it stand out from the crowd: could you pitch it as ideal for (say) golfers? Foodies? Gay couples? Stag parties? The aim is not to isolate potential customers, but to give them a reason to opt for your gîte over anyone else’s! THING 2: Wise up on tax. Letting out your French home has tax implications; any income has to be declared in France, regardless of where you live. The good news is that if you’ve bought your holiday home with a mortgage, once you start letting it, you’re allowed to deduct the mortgage interest from your French tax declaration. THING 3:. Legalise it. Furnished tenancy is governed by different legal and tax regulations from those that apply to unfurnished accommodation. Make sure you understand the differences and how they pertain to your property. Read Earning Money from your French Home - Jo Taylor, Survival Books - and wise up.

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THING 4: Insure it. You must notify your insurance company that you’re letting out the property and get appropriate cover for your holiday home. It’s a legal requirement to have adequate public liability - responsabilité civile - and fire insurance once you’ve purchased a French property, anyhow; ask if this covers your clients, too. Find out what would happen if a client caused water or fire damage (you’re asking about recours de locataires contre le propriétaire), and make sure you’ve got comprehensive household insurance (assurance multirisques habitation).

THING 5: Cut the cord. Stop thinking of it as “our little place in France.” You’ll be very upset the first time something gets broken, lost or stolen (yes, it happens!) but you have to stop taking it personally. Start thinking of it as “a French holiday home with the potential to generate money if correctly managed and proactively marketed on a decent website. If it’s in the Languedoc region, you might like to advertise it on www.creme-delanguedoc.com

THE BOTTOM LINE Making a decent amount of money from your French home is not as easy as it appears, and there’s a lot of competition out there (it’s impossible to estimate the number of self-catering rental properties in France as so many are independently run, but on the Gîtes de France website alone there are upwards of 55,000 properties; a further 2,200 are created each year). Arguably you are better off keeping things strictly personal (only you use your French home), or going the whole hog and running things on a purely professional basis. It’s tricky to do both - who gets to bag the best weeks, your family (who don’t pay), or clients who pay the going rate? Who gets priority? Who will you blame when you next visit and find that someone has burnt a big hole on your favourite rug? Was it your sister-in-law? Should you say something? Will she take it badly if it wasn’t her? You get the picture.

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13

YOU GOT FEEDBACK? WE WANT IT!

If you’ve found this e-book helpful, we’re happy. If you’ve got feedback for us (and we welcome it, particularly if it’s constructive), please email us at [email protected]

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FOR FURTHER READING

Books we recommend about buying and owning French property (and why we like them): Buying a Home in France, by David Hampshire (Survival Books, RRP £11.95/$19.95) Very thorough, well-researched, good index, and errs on the side of caution. Looks dull but well worth the RRP of £11.95 / $19.95. Buying Property In France, by Penny Zoldan (Collins, RRP £8.99) Very attractive, lots of colour photos, nicely laid out, easy to read. Written by the founder of Latitudes French property agency, so slightly biased, and errs on the side of – whatever the opposite of caution is. Earning Money From Your French Home, by Jo Taylor (Survival Books, £11.95/$19.95) No pretty pictures, but full of facts and common sense, very comprehensive. Essential reading for anyone thinking of letting out their French property, be it taking a lodger, holiday rentals, long-term residential lets, or business premises. Renovating and Maintaining your French Home, by Joe Laredo (Survival Books, RRP £14.95/$24.95) One for all you DIY bores out there. Arguably the best and most comprehensive book available about renovating French property. Incredibly detailed, and not an easy read, but good if you like that kind of thing. Surprised by France, by Donald Carroll (Survival Books, RRP £9.95/$17.95) Not specifically about buying French property, but well worth a look. If you’re going to be dealing with French agents, vendors, notaires, bank managers and the like, and spending time in France once you’ve bought a property, then you really ought to wise up on life across the Channel. This book covers French society, culture, language, history, manners, politics, food and drink, eating habits, restaurants, shops and… attitudes to money. Based on fact but written in a humorous style, it’s a very easy read. The Best Places to Buy a Home in France, by Joe Laredo (Survival Books, RRP £11.95/$19.95)

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One to read before you start your search. This is for folk who haven’t yet managed to narrow down their search area. A comprehensive, detailed, well-researched tome that looks at the different French regions and how they compare in terms of house prices, population, infrastructure, employment prospects, crime rates, climate… you name it, it’s here. The French Property Buyer’s Handbook, by Natalie Avella (Harriman House, RRP £12.99) Highlights all the issues you should consider before buying a French home, or indeed relocating to France. Written in a straight-forward style, with a wealth of tables and contact details for further information. What we particularly like are the interviews with property buyers (and a couple with estate agents) dotted throughout the book. They’re honest, revealing (one woman details the dramatic end of her marriage after the disastrous purchase of a farm in the Limousin), and at times quite funny. Presumably names have been changed to protect the innocent… Starting a Business in France, by John Howell (Cadogan Press – RRP £12.99) A practical guide to setting up a business in France. Written by an expert in international property and senior partner in The International Law Partnership. The Sunday Times Guide to Buying a Property in France, by John Howell (Cadogan Press – RRP £12.99) A comprehensive guide to buying French property, by John Howell

UK magazines we recommend on the subject of buying and owning French property: Living France (Archant Life) www.livingfrance.com Monthly magazine full of practical tips about buying and owning French property, moving to France, earning a living, starting a business, and life’s other challenges. French Property News (Archant Life) www.frenchpropertynews.co.uk Monthly magazine dedicated to the French property market, latest developments, legislation, tax issues, and all matters related to buying, owning, renovating and renting out French homes.

And finally… Self-help books we recommend (yes, really) – because buying a French home is not necessarily the answer to your problems: Who Moved My Cheese? By Spencer Johnson What Color is Your Parachute? By Richard Nelson Bolles Don’t Sweat the Small Stuff! By Richard Carlson

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15

SPECIAL THANKS TO...

Bryan Lancaster of Brylliant Images for the photos used in this eBook. You can purchase Bryan’s photos, or hire him to take photographs of your property for sale, by visiting www.brylliantimages.com John Howell, International Law Partnership, www.lawoverseas.com, Tel. +44 (0)207 061 6700

USEFUL CONTACTS UK-based French property agents working with partners in France: Francophiles, www.francophiles.co.uk, Tel. +44 (0)1622 688165. Latitudes, www.latitudes.co.uk, Tel. +44 (0)208 951 5155. VEF, www.vefuk.com, Tel. +44 (0) 207 515 8660.

Property search consultants we know and like: Julia Troccaz, Beyond Biarritz, www.beyondbiarritz.com, Tel. +33 (0)6 75 20 65 13. Neil Parkinson, James Properties France, www.jamespropertiesfrance.com, Tel. +33 (0)6 26 58 14 15. PropertyQC, www.propertyqc.com, Tel: +44 20 7061 6750.

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16

DISCLAIMER

You’ll notice that we didn’t call this “Everything you ever wanted to know about buying French property but were afraid to ask.” It’s just the most important bits. The bits you really NEED to know. We’re doing our best to help you here, but there are things that you have to do for yourself. Like going in with your eyes open. Buying with your head as well as your heart. And splashing out on some legal advice. It’s going to cost you in the region of £1,500 tops. We’d recommend John Howell of the International Law Partnership, not least because he kindly read through this e-book for us and is a Good Egg. Find his details under Special Thanks – section 15. If you’re spending six-figure sums on a property, an extra grand or so here or there is not going to break the bank. It may however make a huge difference: the difference between buying your dream home and being sold a pup. Don’t spoil the ship for a hap’worth of tar. Take legal advice. You know it makes sense. We’ve assumed that many of our readers will be British, and have written this e-book accordingly, but please don’t be put off if you’re not a Brit. The same information applies to you too – just ignore any UK references, and please don’t hold our Brit-ness against us!

This book is protected by all international copyright agreements, and reproduction is prohibited without specific permission of the authors.