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What is a compromis de vente?
A compromis de vente is the document that is signed once you have found a property, and your offer has been accepted. This is usually prepared by a notaire, a government official who oversees the sale and purchase of property; however it can also be prepared by the estate agent.
The compromis is there to protect both parties and can be written to include certain clauses that have to be respected for the sale to go through; for example obtaining planning permission, or a mortgage. Once this initial contract is signed by both parties the buyer pays a deposit of 5 or 10 per cent of the property's price. The property is then taken off the market.
There is a cooling off period - mandatory under French law - of about seven days. Up to 25 per cent of buyers walk away at this point. If you are still committed, searches can be carried out on the house, finance can be organised and any checks made in the following two months.
What is an acte de vente?
The acte de vente is the final document which is signed in front of the notaire to conclude the sale. At this point the various taxes and fees associated with purchasing a house are paid by the buyer.
What are the taxes and fees?
There are two taxes that are paid every year when you become a home owner. The first is taxe d’habitation and is paid by the person who had been living in the property in January of that tax year; so for example if you buy your property in July you will not have to pay this tax until the following year, it will be paid by the seller in November when the bill is sent out by the government. The second is the taxe foncière which on the day of the purchase will be shared out on a pro rata basis, so if you bought in July then you will be asked to pay the seller the amount for July to December of that year as they will have paid it in full at the end of previous year.
There are 2 main fees when buying a property:
Estate agents fees which can range from 2 - 5%
Notaire fees including registration fees should be approximately 7% of the purchase price
Are all houses “sold as seen?”
Not all houses are sold as seen; this should be noted in the compromis de vente. If this is the case then it is worth booking a viewing of the property shortly before you sign to check all is as it was when the offer was accepted.
Should I have a survey done?
In France it is not obligatory to have a structural survey done. However should you wish to get one done, it is best to organize it before the 7 days cooling off period has expired.
Do I need a French bank account?
It will be much easier to open a French bank account before the sale goes through to handle the various fees and payments that you will need to make over the course of the buying process.
What is the best way to transfer money?
When transferring large amounts it is important to use a specialist foreign exchange provider like Currencies Direct, HiFX or Moneycorp. On a transfer of £100,000 you could save up to £3,000 than if you went through a high street bank.
What if I need a mortgage?
Should you need some financing to purchase your property in France, there are two main options:
1) Remortgage your property
2) New mortgage for foreign properties
For the second option most high street banks will provide mortgages for foreign properties, or you could use a broker who specializes in international loans for instance Conti Financial Services.
As to whether you should obtain a mortgage in sterling or euros will depend on your situation. If you are planning on renting out your property to cover the repayments, a euro mortgage would mean that you would not have to transfer so much money between the two currencies.
Will I still have to pay tax in the UK ?
If you are still earning money from activities in the UK while living abroad, such as rental income from property, you could still be liable to income tax on those earnings. It is worth contacting HM Revenue & Customs to check your tax liabilities.
What about my pension?
Your state pension entitlement is not affected should you decide to move abroad before or during your retirement, provided that you inform the pension service of your new details. If you move to France, your state pension will be paid into your local bank account in euros. It is worth calling the International Pension Centre on +44 (0)191 218 7777.
If you are sent abroad by your employer, you can remain in your UK company pension scheme for up to five years. Some experts recommend that you continue to make national insurance contributions so that there are no large gaps in your payment history, which could affect your pension entitlement.
How do I join the French Healthcare System?
The criteria for joining the French healthcare system are in the process of changing, but if you are planning to work in France then you will automatically have access to the French healthcare service for free, which means you will only need a simple private health insurance like other French people to complement your health cover which for a single person is approximately 35-50€ a month. If you are already retired then you will also have direct access to the healthcare system, the International Pension Centre will provide you with the forms needed to present to the local CPAM in the area you will be living in France.
If you will not be working, and are not at retirement age yet, then you will need a S1 form from the International Pension Centre which can provide you with up to two years of free cover should you have been paying national insurance up until you have left the UK.
If none of the above case correspond to your situation then a private medical insurance will be necessary.
What if I want to bring my car with me?
It is possible to bring your car with you, however you will have to register it with the local prefecture (town hall) to obtain the carte grise (car registration document). As long as your car meets EU standards this process should be pretty straight forward, however if it is a car from outside the EU, then this can be quite a long process and will need to create a dossier with the DRIRE who will inspect your car to decide if it can be driven in France. In most cases you will be given the go ahead, but it is worth noting that this can be rather a long and costly drawn out process.
What should I do before leaving the UK?
Before you leave the UK you should contact both The Pension Service for a state pension forecast and also HM Revenue & Customs to ensure that you are not liable to pay tax before you leave or while you are abroad. You should also contact your GP and the Post Office, to redirect any mail.