Between 1995 and 2010 there was a distinct boom in the number of families buying houses in France. Subsequent changes in French legislation (relating to capital gains tax on second properties), movements in the rate of exchange and concerns over consumer credit in the UK have seen shifts in the flow of money across the channel, but, the process and the specifics of the procedure remain unchanged.
We look at how to do it, what are the stages to 'the buying process' and how do currency payments and exchange rates affect buyers and sellers alike?
On the face of it the process is quite similar to that of the UK.
You view a property and move to make an offer. The offer is agreed and then the format for buying comes into effect.
Unlike in the UK though, selling properties in France is a licensed activity which usually means a more hands-on, formulaic and clear experience for all concerned.
An agent receives a 'mandate' to sell a property and it is through them and the local Notaire that the process...proceeds.
For what it is worth, if you are actively looking at the time you read this post, we would be quite happy to connect you to some extremely competent agents operating in Paris, the Dordogne, Provence and on the Cote D'Azur. Just ask.
So, you've seen the house you want and you make an offer.
If we suppose this offer is accepted, the agent then presents you with the paperwork.
Within 7 days of the signing of the paperwork - the 'compromis de vente - you will be required to pay a 10% deposit.
This deposit is redeemable if your buyer pulls out.
If you pull out, provided there is no 'clause suspensive' (or reason undermining the sale), the deposit is forfeit.
So, as the buyer, your first concern is the readying of money to pay this 10% deposit.
This amount is paid directly to the notiare for the locale in which your a buying.
The notaire is the local state representative.
They are charged with conducting the UK equivalent of searches. They are both the collector of payment and the signer and settler of the transaction.
The first rate of exchange you will have to consider, assuming you have not already availed yourself of a preferred company through which you might conduct an exchange, is the one you face for converting your sterling into euros in compliance with the 'compromis de vente'.
Your notaire and the agent in France will inform you directly of the date on which the deposit needs to be paid.
Delaying this payment for whatever reason may leave you liable to penalty, although this rarely happens.
After your seven day 'cooling off' period after the acceptance of the offer, money needs to be in the notaire's account for the process to continue.
You can use a company like Prime Cap to send your sterling to France.
We can either deposit money in to your french bank account, one which we can advise and guide you on setting up by way of our relationships with third party domestic facilitators, or, you can ask us to credit the appropriate euro amount into the notaire's account directly.
Specific referencing of the payment - so, what the notaire would see as the identifying marks of your incoming payment - can be included on the transmission.
Furthermore, we can provide you with a direct and immediate confirmation showing where your money is going and when it will arrive.
You will not know the GBP cost of the euros you want to buy until you actually explicitly instruct for the exchange to go ahead.
Whilst you will always be encouraged to make use of the 7 day period between the document signing and the arrival of the deposit amount, we work with you to make sure you've not left it too late for the funds to clear on the right date.
Bear in mind that your UK bank might have a daily limit on the amount of money you can move from your online banking facility.
Usually you can visit your UK bank in person and instruct them to transmit the whole amount in one go, but, you need to remember that this does not necessarily mean your money will arrive with us the same day. We advise you to take this in to account during that 7 day period and please do not leave it to the last minute.
Twelve weeks after the signing of the 'compromis de vente' and provided no issues are flagged by the notaire, comes the completion, which is referred to as the 'Acte de vente'.
This is when you will have to pay the remaining balance to the notaire.
Your agent in France will serve as your go-to point of contact for all communications with the notaire and your vendor.
Unlike in the UK there is no role in this process for a solicitor or legal representative. That is all taken care of at a local level but the supposedly impartial notaire.
Also unlike the UK, you won't have to worry about being gazzumped during this period. The french process locks in the buyer and seller which means that, provided the terms are met, far fewer purchases fall through than in the UK.
There will undoubtedly be a difference between the rate of exchange you achieve for the deposit payment and the rate of exchange you can achieve for the balance of the purchase.
Prime Cap can talk you through making use of contracts which fix the rate of exchange for both payments.
Your UK bank does not offer you the ability to fix one rate for both payments, but it is a standardised and useful inclusion to our offering and something that, whilst not actively advocated, forms part of any discussion that should take place between you and your currency broker.
Again, on the day of completion, funds need to already be with the notaire.
If you choose not to fix your rate of exchange you may find that it has gotten better or worse since the day you paid your deposit.
In effect, this means that the sterling cost of the property has either risen or fallen depending on the movement in the rate.
We strongly advise that you acquaint yourself with what it would mean were the rate to drop sharply. Can you afford it?
We have had a number of instances where a buyer is actually unable to complete because they had not accounted for the fact that the rate of exchange had dropped. This left them without enough sterling to buy the euro amount they had committed to.
During the course of your relocation/integration into France, whether you are buying for a second/holiday home or relocating totally, you will need to open a french bank account.
Once you have your account set up you could drip-feed funds across when the rate is good using Prime Cap's services - of course, this relies on the rate improving over the twelve week period.
You will usually have to sign the 'act de vente' in person and all parties will usually need to be at the notaire's office on the day of completion, or at least appoint a proxy to be there for you.
Our system will provide you with a confirmation of payment at the precise time we release your sterling to the notaire. If you want we can even copy the notaire in to the email notification of the money being sent.
This means that you should be able to confirm the arrival of your deposit and subsequently your balance amount before you visit the notaire for the completion signing.
The formulaic nature of the French buying process means that, in essence, the whole thing is more straight forward and predictable than that of the UK.
You are not waiting around for one solicitor to respond to another.
Also, the agent involved in the process is wholly committed to seeing the purchase through and they can serve as a valuable point of contact especially, if you're not too confident with your french.
Planning and calling on a broker to advise you of the current rates of exchange, even when you are viewing, is highly advisable. Brokers like Prime Cap do not charge on an hourly basis like a solicitor. So, you can call, gets quotes and chat things through with us as many times as you like, even if you don\t buy your currency from us.
Bear in mind: There is no sense in going to look at a series of properties only to find that the rate of exchange means they're actually beyond your reach.
We had one buyer who thanked us for suggesting they use a £1 for €1 calculation when conducting their search, because, the rate of exchange is, was and likely will be ever higher than 1 for 1, so, the buyer felt as though they were receiving quite a sizeable discount.
Put to one side the fact that you will get a better rate of exchange from Prime Cap than you from you bank and you begin to see that the transparency of our service and the fact that someone is there to troubleshoot, support and guide you, is a very valuable aspect to the way we work.
An improvement in the rate of exchange is a 'given'. And when you accept this fact, you can begin to truly appreciate the other bits of the service.
Even if we gave you the same rate as your bank, which we won't, you would be better off engaging our expertise than trying to do it all yourself during a time that is highly emotional and typically conducted in a foreign language.
0203 172 8193
brokers@primecappayments.com
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