Buying a French property either to live in, as a buy-to-let investment or as a holiday home is an exciting prospect – but, as a reputed South of France surveyor, we have learned from experience that many people are unsure (or even unaware) of the additional costs that they will face upon making a purchase.
Broadly speaking, there are two main categories of additional expenses that can add considerable sums to the total price tag attached to buying a French property. These are the immediate costs of finding and purchasing the property, and the ongoing costs of running a house in France.
A professional and experienced South of France surveyor will help you determine how much these additional costs will amount to in advance, ensuring you won’t be in for a nasty surprise after the fact. Let’s consider five of the most important.
#1. Finding the Right Property
Even before you have begun the official property purchase process, you must consider the fact that you will need to factor in travelling expenses as you explore your options in the South of France. These will include accommodation costs, transport costs, as well as basics like food. Any time you take off work may also need to be considered.
Your South of France surveyor will of course make this part of the process as straightforward and enjoyable as possible, but travel costs can nonetheless soon mount up, and you need to be prepared.
#2. Estate Agent Fees
Estate agent fees in France are typically between 5% and 10% of the property’s valuation, and are also liable to TVA (taxe sur la valeur ajoutée) – the French equivalent of VAT. While it’s true that the estate agent will be employed by the seller, the two parties will enter into a contract called the mondat de vente, which specifies who pays the fees – usually the buyer.
Although this contract has no legal power over you, if you refuse to pay the estate agent’s fees, it is likely that you will then have to negotiate with the seller, who will be looking to mitigate the additional costs for themselves – a process that may indeed end up costing you more.
#3. Notaire’s Fees
You can’t buy a property in France without using a notaire.
Notaires are employed by the government to collect any taxes payable and to ensure that all legal requirements are met. The notaire’s fee is calculated on a sliding scale – meaning that the higher the price of the property, the lower the percentage the notaire will take – though between 6% and 8% is typical.
#4. French Bank Account Fees
It will of course make the most sense to set up a French bank account before you purchase a property in the country – even if you are just planning to use it as a holiday home.
However, banking is not free in France, and you will need to pay the monthly fee for a French bank account – usually around €8 a month. In addition, any transfers up to £500 you make to your French bank account from the UK can cost as much as £25, and your French bank will also make a small charge of around €3 for receiving the money. Though perhaps a small drop in the ocean when compared to the total cost of buying a house in France, these are all nonetheless additional expenses that you will be met with.
#5. Exchange Rate Fees
High street banks will usually charge you significant fees for sending large sums of money abroad. As such, using a foreign exchange company to transfer the main payment for your property purchase in France should save you money – they usually don’t charge a fee.
However, many people purchasing a foreign property like to use a forward contract, which ensures that the exchange rate is fixed for up to two years from the the time the contract is arranged. This means that when the time comes to transfer your money, you do so at the exchange rate you agreed, and not at the current market rate. This of course, can make a huge difference (either positively or negatively) depending on how markets fluctuate in the meantime. However, it will help you to budget, as you will know the precise amount of sterling you’ll need to get the required sum of euros.
Final Thoughts
There are numerous additional costs that come with purchasing a property in France. However, if you know what they are, you can budget for them, and can ensure that you are as prepared as possible for the exciting journey ahead.
If you’re looking to purchase a property in le Midi, you’ll need a professional and experienced South of France surveyor to guide your way – get in touch with Charles Mackintosh today to start your journey.