A Budget Guide to Purchasing Your Own Piece of France.
"France inspires in me, and much of the rest of humanity, at least two ardent hopes—one, that it will never change; and two, that I may one day have a nice little house and garden in one of these magnificent habitations."
Richard Bernstein (Fragile Glory, 1991)
Buying your own bit of France
Low property prices, compared to much of Europe, makes owning even a part-time residence practical for regular visitors to France. The euro has made it even easier to calculate prices and possibilities. The decades-long flock of 3 million French abandoning the countryside for the cities leaves plenty of properties priced from $40,000 to $100,000 available in the hamlets, villages, and countryside of the Midi, Brittany, Normandy, and Southwest regions of France.
Buying has become even simpler in recent years. French banks are less daunted by the emergence of American buyers,and laws have lowered some of the French realtors’ add-on fees, increasing the feasibility of owning your own piece of French property, whether as a full-time owner or as a part-time partner.
Preparation will save time and money and avoid unrealistic expectations. Scrutinize local guidebooks of preferred regions. Scan the ads in magazines like International Living, obtain tourist office brochures, and preview available properties by fax, video, or Internet. The Brits discovered the rewards of French ownership years ago and have produced many helpful guides, including the Survival Book series Buying a Home in France and Living and Working in France. Also noteworthy is the London monthly, French Property News, which holds a yearly home-buying convention in the UK.
Likely locations
A lengthy stay is recommended prior to any purchase in a foreign country to determine if the realities and restrictions of everyday life are what you really want. The pace, availability of products, and daily routine are markedly different from life in the States. You may have a love affair with a certain region that predetermines your choice, but we considered property costs, culture, climate, crowding, and accessibility in narrowing our own location choices For us, Provence prices were too princely, the lovely Brittany coast too similar in chilly fog to my friends’ homes in Monterey, and although the Midi region was temptingly near to Paris, its train connections were inconvenient and time-consuming. Though the Dordogne offered majestic cliffs, castles, and merry holidaymakers enjoying canoe and kayak rides, we were glad to leave fuming buses and frustrated cafe clerks for the sleepy Lot to the south.
For us, the Lot provided easy access to areas of abundant tourist attractions, a major train link, easily reached airports, and the ease, affordability, and friendliness enjoyed in a region where a traffic jam consists of a tractor pulling off the road and its driver smiling as he tips his beret in salute.
Gascony and the Auvergne are even lazier and cheaper and contain some great bargains of sprawling estates that the intrepid buyer can renovate into multiple rental properties. Village houses and abandoned farmhouses dot the countryside of the Languedoc, from its pink city of Toulouse to the fortress of Carcassonne to its beaches by Beziers and the picturesque painters’ fishing village of Colloure. Normandy offers timbered houses with easy access to Paris or London, making renting or reselling a viable option.
Our hamlet home in Lapeze in the lovely Lot
Great expectations
The isolated farmhouses may seem idyllic, but if the purpose of your purchase is to live a lifestyle learned while intermingling with locals, a less-secluded spot will provide increased opportunities to interact and will likely simplify security and upkeep. We were tempted in our search by a village house where the nearby bakery wafted up delightful scents and the bustle of the boucherie and chatter at the cafes lured us with its sense of community. Our hamlet of 35 residents is evenly French and British and provided the best of both worlds—the opportunities to learn French language and ways, and the ease of English as we settled in and navigated our way through difficulties of setting up a household. Views of hectares of vineyards from our pied-ˆ-terre is rewarding as we watch the neighboring farms blend from gray to gold to green over the seasons. As our house sometimes sits empty for months, we have enough to do to manage our little plot from becoming a weedy eyesore. We are also free from the worry of marauding raiders—our neighbors would quickly intervene on any intruders!
Your property search can be prearranged before your departure from the States, often with English-speaking immobiliers. As properties may be scattered miles apart, it is advisable to limit your search to no more than five places daily. A long-term rental of a home in your preferred region will enhance the likelihood of finding your dream home. Ours was found in the final days of a three-week search, the minimum time I recommend. A willingness to expand your search beyond the boundaries of your dream spot may make the difference between your return to the States as a defeated buyer or as a satisfied homeowner. Allow the time to gossip with possible new neighbors and savor the ambiance, architecture, and sights in your schedule, along with a stop at midi (noon) for lunch to sample the local wine, cepes (mushrooms), cabecou (goat cheese), or crepes.
Castlenaud
Castle Walls
La Roque-Gageac
French Form
When you discover your dream home, the notaire (similar to a real estate attorney) will present a compromis de vente (sales contract), a reciprocal agreement and signature where the two parties are immediately committed. Be certain to add a clause declaring it null and void if a mortgage is not granted, so your 10% deposit will then be returned. Before signing, check with the city hall to determine if a freeway is planned through the center of your peaceful paradise or if your backyard is a pathway for your neighbor’s cattle.
If questions or complications remain, another less-used contract, la promise de vente, may be drawn up that allows a purchaser a three-month cooling-off period, with 10% of the purchase price forfeited if the purchaser does not take up the option to buy.
Presentation of a W-2 form, marriage and birth certificates, a debit account, and a statement notarized by your financial institution verifying your U.S. address will speed the closing. Though a handshake is promissory enough initially, 10% to 20% of the full sale price will need to be paid within a "reasonable" period. Recent laws negate the unseen realtors’ surcharge, but still allow for 15% to 25% above the purchase price in legal and tax stamp fees.
If you require a French loan, 5- to 15-year fixed and variable rates are available. We financed on a 10-year loan at 11 1/2% interest with no prepayment penalty. Life assurance for 120% of the loan with at least the same length term as the loan is required, while building insurance is assigned by the loaning institution. Loan applications are available in English and are similar to their U.S. counterparts. The borrower may use between 30% and 40% of his or her gross income for all credit commitments, including the new French mortgage and insurance premiums. As a group, we easily qualified but with the increased logistics needed with numbers, the lowest qualifying loan period is recommended, or pay cash through a stateside loan or mortgage at a lower rate.
English-language advise is available through Credit Agricole, Banque Transatlantique, and Payne Hicks Beach, Solicitors. Banque Transatlantique’s statewide offices are particularly helpful and can assist with setting up a personal account in Euros, sorting out tax affairs, and solving legal problems.
View to our lovely neighbors.
Societe Civile Immobilier (SCI)
Due to complicated inheritance laws that can seriously affect and delay a resale, it is advisable for any buyer other than an individual to set up a Societe Civile Immobilier, a type of company designed for group ownership. It is essentially a transparent company in which individuals who own shares will be taxed at an individual rate. This can be listed as the owners at the time of purchase, otherwise later startup costs will be around $1,500 to $3,000 U.S. but can save you far more in case of death or divorce or a dissolution in sale of a shareholder. Shares can be apportioned to recognize the actual contribution of each party, which can be by financial percentage or barter input. Our consortium is divided into half and full shares, with credit given for management and renovation duties. Shares are movable property, and partners are free to dispose of their shares in their America wills or agreements between parties.
Even spouses should consider forming an SCI prior to signing, or a second spouse may find themselves ousted by the offspring. If your comprehension of French is cursory, be sure to have all documents translated into English.
If you purchase as a group, carefully consider each partner’s personality, as not everyone is comfortable with communal ownership. Flexibility and compromise are essential ingredients for a successful cooperative. Formalize payment plans, brainstorm bylaws to cover potential problems, and list house rules to avoid future discord. Will all of the house be communal, used on a rotating schedule, or split as a time share?
SCI rules require yearly meetings with one member as chairperson and official signer. You must file that you have not changed shares, and have not had an income annually with your tax office or your can face serious charges at the rate of 3% of the full value of your home annually since purchase. After facing this year a tax clerk who suddenly demanded a 30% tax on the value of our house, including work we had completed ourselves, in spite of our having no income, I can not recommend more highly, the cost of retaining an ongoing tax attorney. I was told that I was supposed to keep current on all French law, hardly realistic for a partial owner of a house purchased for $40,000. You may chose to instead form an American corporation.
Those with the finances and time for extended stays frequently partner up with one or two friends or couples, but I found a partnership of five practical, allowing each member a month on- and off-season with two months free for repairs, renovation, and rental income.
Your home is your castle
HOME BUYING TIPS
1. Research the area of your home search carefully. Weather, convenience to airports and trainlines, costs, climate,crowds, possible rentals or resale income, and tourist attractions are all factors to consider. Will you start your own business? Will you be using this as a travel base to the rest of Europe or happily settling into one spot? Never buy without spending an extended stay in the area you invision as your home.
2. The best bargains and smartest buys for the part-time resident, are village homes and Inheritance properties. We initially set out with a romantic vision of our country home and soon realized that the isolation and the land upkeep and security was not for a part-time resident.We realized that a hamlet, town or village home better served our needs. Village houses cost a pittance of a single dwelling home. Inheritance properties are also great bargains as the owner has needed to wait years (due to Frances difficult inheritance laws) before he could put the property up for sale and therefore ,will usually sell cheap.
I found 2 delightful village homes, near the wonderful smell of bread stores. They would have made great places to include a business such as a craft store. All the retirees love arts and crafts and supplies are not easy to find. One of our neighbors is setting up craft classes and a buyer I assisted set up a textile design business. Is this home a vacation residence or does it need to earn an income? As an American working will be almost impossible unless you own your own business.
3. France scored #4th in International Living Magazine's 2003 Quality of Life Index. It came in first in health care, a major concern for retirees! French Property News lists France as number 1 for health care within Europe.
4. Taxes and insurance are cheap. Closing cost are not. Add another 25% of the total sale price, to be safe. Although a handshake is enough to reserve your property, be sure to add into the contract that it is null and void if your mortgage is not accepted. Check with the 'Mairie' (city hall ) for land registration and restrictions, such as the neighbors right of way for their goats, for example. You will have a reasonable time to send the 10% required. Bring your tax statements, birth and divorce documents, pay check stubs and a letter stamped with a seal from your home bank attesting to your 'character.'
5. Unless you are a single person who will always stay single with no children, set up an SCI at the time of purchase.This is a French propert holding company that legally avoids the difficulties of French inheritance laws. This will save you endless headaches and money in the long run. (Please see the section Buying Guide, for details.) A second spouse could conceivably be evicted from their long time home by a jealous first spouse and children without the benefit of an SCI. As a co-ownership we can trade or sell shares between us with a notary in the states and our American wills are valid. Or consider setting up an American company.
6. RESEARCH! Every day you spend researching from your home in the USA may save you a week of your limited stay in France. Houses are stretched many miles apart and it is unrealistic to view more then 3-4 properties a day. My consultation service will narrow down your search by previewing your properties from a personalized survey of your needs before you arrive. The $29 hourly consultation fee will be subtracted from your 1% housing cost fee, if in fact you find and buy your dream home.
I spent 9 months of research and 3 weeks of the actual search in finding our home. We found our dream home on the final day of our stay. On the following day a woman who had searched without success for a home that met her criteria, for 7 years, offered us almost double our purchase price. We turned her down. I am certain that we would have also returned home-less without the benefit of our many hours of research 'leg work.' When problems occur, and they will, I contact the amazing Jonathan Cavender attorney at office33@wanadoo.fr.
French Living
Once you’re settled, the simplicity of life, along with the availability of fresh produce and poultry and flavorful wine at a few francs a glass, allows for affordable and satisfying stays. During the summer, weekly village foires and fetes offer fabulous opportunities to mingle with your new neighbors and stroll the markets for goods and furniture for your new home.
To defray some costs, Brits commonly use their French places as holiday homes and rent them out to friends eager to escape the cities—or the States. Longer-term residents circumvent French bureaucracy with home-run businesses ranging from crafts to catering to construction.
Retirees will relish the relaxed lifestyle, low crime rates, and affordable health care.
The rewards of French living are far more than financial. As I sweep the cobwebs from the timbered ceiling, I find the clutter from my brain receding, and I pause to hear the cicada sing outside my window. Stateside sound bytes and sitcoms swiftly swirl away with the swish of the cappuccino maker as the waiting scent of a warmed croissant meets me on my rose-covered verandah.
Why buy in France, so far away? "Never have I lived in a country where the overall quality of life was better," states correspondent Richard Bernstein. "There is nothing going on in the country compared to what used to be the case, but live somewhere else? Whatever for? France is the only place where I would really be happy." Vive la France!
