Buying a home in France your guide

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					Buying a home in France
        your guide
The information in this brochure is based on our understanding of French property law and practice at
the date of publication. We cannot guarantee its accuracy. This booklet is a general guideline and is
intended for your information only. Specific advice applicable to your own circumstances should be
obtained from a French Notary and/or relevant professional bodies.



Before lending to you, CCF must ensure that you can afford the repayments. Mortgages require a charge
on the property and appropriate life policies. All loans are subject to security and status.

CCF is a member of the HSBC Group.

CCF is a limited company with share capital of 377,048,505 euros

Head Office: 103, avenue des Champs-Elysées 75419 Paris Cedex 08 SIREN 775 670 284. Approved
insurance broker (financial guarantees and insurance of professional civil responsibilities conform to
articles L530-1 and L530-2 of the Insurers’ code).
Your next move
Now that you have a definite project, apply for a mortgage:

1. You have already decided on a property
or you have chosen the region where you
would like to buy, then complete the form
enclosed at the back of this brochure and
send it by post to CCF in the envelope
provided, or fax it to the number shown on
the form.
2. If you have received the electronic version
of this brochure, please return the ‘Request
in principle’ by e-mail to CCF in Paris at
this address:

                Issued by HSBC Bank plc. Credit Commercial de France (CCF) is a member of the HSBC                          MCP 16257. 12/02. Printed by Paul Scott Print Ltd, Sheffield.

                Group, one of the world’s largest banking and financial services organisations with some 7,000
                offices in 81 countries and territories.

                                                                                                  HSBC Bank plc
                                                                                                  Mortgage Service Centre
                                                                                                  PO Box 1546
                                                                                                  S1 2UJ


Welcome Home, welcome to HSBC
We offer tailor-made, innovative solutions
to meet your banking needs...
…at home in your country, at home in France,
at home across the world.

To truly understand a country and its             Should you not be an existing HSBC
culture, you have to be a part of it.             customer we invite you to open a HSBC
                                                  account in your home country. No doubt
That’s why at HSBC, we have local banks in
                                                  you will be offered the warmest of welcomes
more countries than anyone else. And all of
                                                  in one of our 8,400 branches in 81 countries.
our offices around the world are staffed by
local people.                                     Your accounts will only ever be a click away
                                                  thanks to our e-banking services which allow
It’s their insight that allows us to recognise
                                                  you access any time, any where.
financial opportunities invisible to outsiders.
But those opportunities don’t just benefit
our local customers. Innovations and ideas
are shared
Think of it as local knowledge that just
happens to span the globe.

                                                                                                   si e
                                                                                                 in in
                                                                                              ils az

                                                                                          de ag
                                                                                          r  –

Where do you start?
If you are planning to buy a permanent or a holiday home
in France, and you are currently a non-resident, then HSBC
can help.

As you would expect from one of the world’s     The home buying process in France is unique
largest banking and financial services          in many respects. This brochure has been
companies, HSBC can offer you practical         especially compiled to guide you through the
help with the purchase of a French property.    purchase process and offer you some useful
All the experience of CCF, a member of the      advice in choosing the right home for you.
HSBC Group, is now available to you.
                                                CCF can advise on financial solutions for
CCF and its subsidiaries have over 850          your purchase.
branches throughout France. In many of the
major towns and cities we have bilingual
French/English mortgage advisors ready to
help you. So don’t worry if you are not a
fluent French speaker, we can ensure that all
the details of your home purchase are fully
explained to you, either by CCF or by
recommended professionals (solicitor,
notaire, etc.).

Buying a home in France
This section covers the key stages of buying a property in
France and helps you to get started.

Finding the right property                      Many home buyers are attracted by the fact
                                                that property prices in France appear to be
You may have already decided on a specific      lower than abroad. There are reasons for this
area or you may have a French region in         and before you start you should be aware of
mind, having been there on holiday for          the following points:
example. Finding a property in France is a
similar process to that in other countries.     •   French domestic property is not usually
There are many estate agents in France              bought as an investment. Apart from
(agents immobiliers) who will put you in            some very fashionable or highly sought-
touch with people selling property. A               after areas, prices usually rise in line with
selection of property search websites are           inflation. Therefore, you would need to
detailed at the back of this brochure.              own a home for at least three years to
                                                    recover the high fees associated with
Alternatively, there are estate agents in the       buying, even before considering
UK for example who have details on French           maintenance or improvement costs.
properties. There are also many specialised
magazines available for people interested in    •   France has a similar population to the
the French way of life. These publications          UK but is three times the size. There is
offer useful contacts and real estate               therefore less pressure on land and hence
advertisements.                                     lower prices.

                                                •   That isolated farm cottage set between
                                                    vineyards and a stream may require major
                                                    renovation. It might not have the same
                                                    appeal to a French family, hence the lower
                                                    price; and you should consider possible
                                                    difficulties of resale in the years to come.

                                                We do not want to put
                                                you off ‘la bonne vie en
                                                France’ but it is essential
                                                to start with the realities
                                                before embarking on the
                                                buying process.

You will need to work out in the early stages exactly what price
you can afford to pay, including an estimate of the likely
additional costs.

One of the most common mistakes made by          Purchasing a property in France
people buying an old property in France is to
underestimate the cost of restoration and        In many ways, the French purchase process
modernisation. If the property needs work        affords a certain amount of protection to the
then get accurate estimates from a master        buyer. A formal contract is entered into at an
builder (maitre d’oeuvre) before signing any     early stage. This could even be on the day
form of contract. Better still, have a           that you see the property and agree a price
structural survey completed. This can be         with the person selling it subject to a
expensive and is not normally done in France,    statutory seven day cooling off period.
but it will provide reassurance if you have      This initial contract makes it difficult for the
any doubts.                                      vendor (seller) to pull out without financial
The price that you can afford to pay will        penalty, thus reducing the risk of someone
depend for most people on what you are able      coming in with a higher offer (gazumping).
to borrow by way of a mortgage. This in          It is also difficult for the buyer to withdraw
turn will be based on your income and            without forfeiting their deposit.
existing loans and other commitments, as         Once you have found a suitable property, you
well as the length of time over which you        should check if the purchase price includes
intend to repay the mortgage. You can ask        the estate agent’s commission. The
CCF whether they can grant the mortgage          commission is charged on a sliding scale of
you have in mind by completing the enclosed      between 5% to 10% (the cheaper the
short-form application for an ‘in principle’     property, the higher the fee as a percentage
decision.                                        of the sale). It is usual for the commission to
Then you will need to allow for the deposit,     be included in the purchase price and to be
usually 10% of the purchase price and            paid by the seller.
payable at the preliminary agreement stage.
As a general guideline you will also need to
budget for between 10% and 15% of the
purchase price for extras such as independent
legal advice and a full structural survey.
In reality the exact amount will depend on
the professional services used, the age of the
property, its value and the amount of
paperwork undertaken.

The role of the ‘notaire’
In France the conveyancing process is undertaken by a notary
(le notaire).

A French notaire is a publicly appointed          Initial agreement to purchase
official who is responsible for ensuring the      a property
property has good title (ie, no irregularities
in the ownership) and that the purchase or        Having found a suitable property, you will
sale is correctly transacted. Because notaires    negotiate and enter into an initial agreement
are personally responsible for the contracts      with the vendor. This agreement is called a
drawn up they must be objective in the            ‘Compromis de Vente’ or ‘Contrat de
advice they give and be impartial in their        réservation’ and is a binding contract
dealings with the parties concerned.              between the buyer and seller which sets out
A notaire represents neither the seller nor the   the terms and price of the sale.
buyer but the French Government. They can         For new properties being built the most
also act for a client anywhere in France.         common contract is a ‘contract de
The same notaire therefore usually acts for       reservation’ (a reservation contract).
both the vendor and the purchaser. This is        There are various other contracts such as a
not obligatory and you can appoint                promise to purchase (promesse d’achat), an
your own notaire if you wish. The fees (paid      exchange of letters (l’échange de lettres) and
by the purchaser) are fixed by law and will be    an offer of sale (l’offre de vente), all of
split between both notaires if two are            which offer little protection to the buyer. We
appointed. CCF has contact with many              can offer you advice on these, but generally
English speaking notaires in France and can       they should be avoided.
put you in touch with one.
                                                  The preliminary contract will include a full
You should be aware that the notaire’s job is     description of the property, the latest date by
to finalise the agreement he has been told        which completion must take place, the price,
has been recorded. He is not there to advise      any escape clauses and the identity of both
or warn the purchaser of any inadequacies in      the vendor and purchaser. The preliminary
it. His role is therefore very different from     contract can be signed either at the notaire’s
that of a solicitor.                              office or at the estate agency.

By law, the purchaser can insert clauses into the agreement.
The seller, of course, has to agree to these.

If you are making a purchase with a                                Arranging the mortgage
mortgage, you should at least instruct the
notaire/estate agent to make your purchase                         After signing the preliminary contract, the
conditional upon obtaining a mortgage:                             next step is to formally arrange the
‘conditions suspensives’. This will offer                          mortgage.
you further protection under French                                CCF have a range of mortgages specifically
Consumer Law.                                                      designed for non-residents wishing to buy a
Upon signing this preliminary agreement the                        second or even their main home in France.
purchaser has to place a deposit with the                          A straightforward application form is
notaire, which is normally 10% of the                              available direct from CCF. The form contains
purchase price and will be deducted from the                       clear details of the application process
sale price. The property is then taken off the                     together with the supporting documentation
market. It is better to think of this deposit as                   that is required.
a payment on account or a penalty for                              Please return without delay your fully
breaking the contract. Having said this, a law                     completed application form to our bilingual
passed on 1 June 2000 does grant you a                             mortgage advisors at CCF head office in
seven-day cooling off period during which                          Paris. They will be pleased to answer queries
time you can withdraw from the agreement.*                         in English at any stage of your mortgage
Stamp Duty and registration fees will need                         application.
to be paid at completion when the agreement                        Subject to CCF approval of your mortgage
will be filed at the notaire’s office. As a                        and insurance applications, you will be
guideline, the notaire’s fees, Stamp Duty                          issued will with a mortgage offer. By law, this
and Registration fees will add up to around                        offer has to be written in French, but CCF
6% to 8% of the purchase price for existing                        will provide you with an English translation.
properties. For new properties they
will amount to around 2% to 4% of the
purchase price.
As the French tax and succession regimes are
different from many other countries, to
ensure tax efficiency and problem free
transfers on death you may wish to consider
instructing a solicitor based in your home
country to advise you. See also page 13.

* Although the preliminary contract is binding on both the
  seller and the purchaser after this cooling off period, you
  should note that the sale will still be subject to the notaire
  formally checking the title to the property.

Valuations and surveys                            The mortgage offer
Depending on the nature of the property, a        Upon receipt of your mortgage application,
valuation may be provided by CCF. This will       CCF will consider it and respond to you
merely confirm the current market value of        directly. Should any details need clarification
the property as collateral for the loan.          they will contact you by telephone. Once
                                                  your application is approved they will issue
It will not be a comprehensive inspection of
                                                  you with an offer. This offer will detail the
the property and is not undertaken to
                                                  terms and conditions relating to your
identify any structural conditions or defects.
Only a full structural survey will certify this
(we can arrange one on your behalf). While        It is a condition of consumer law in France
more expensive than a standard survey, it         that the applicant must wait at least 10 full
may be a small price to pay for your own          days before signing and accepting the offer.
peace of mind. Although a vendor must             This regulation ensures you have sufficient
certify that a property is free from ‘hidden      time to fully consider the terms of the loan
defects’, this provides little reassurance as     and the bank has to provide evidence that
they can just plead ignorance. It would be        this ‘cooling off’ period has taken place.
difficult to prove subsequently that they were    CCF will of course provide you with any
fully aware of any defects.                       explanations or further information that you
                                                  may require. The offer will be held open for
                                                  30 days from the date of issue before it
                                                  expires. When you return the accepted offer
                                                  you will be asked to include the payment for
                                                  the bank’s mortgage arrangement fee.
                                                  At the same time as the offer is sent to you,
                                                  details are sent to the notaire. He can then
                                                  prepare for the deed of sale to be signed. The
                                                  notaire will then begin his legal duties which
                                                  include checking that all the conditions in
                                                  the initial contract have been fulfilled.
                                                  The length of time between the initial sale
                                                  contract and completion can vary but is
                                                  normally around two to three months.


Completion is when the final deed of sale is      Each page has to be initialled by both the
signed and legal ownership is transferred to      seller and buyer and both must sign the last
the buyer. It is at this point that the balance   page after writing in French ‘bon pour accord’
of the purchase price plus any extras such as     which means they have understood and accept
the notaire’s fees, taxes and duties are due.     the terms. There are no title deeds as such in
The monies will be paid directly by the bank      France and proof of ownership is provided
to the notaire.                                   and guaranteed by registration of the
                                                  property at the Land Registry. The Land
The final act is the signing of the deed of
                                                  Registry’s stamp is put on the deed of sale
sale (acte de vente) which will take place in
                                                  and the notaire gives a certified copy to the
the notaire’s office. It is normal for both
                                                  buyer around two months after completion of
parties to be present when the deed of sale is
                                                  the sale.
read, signed and witnessed by the notaire. It
is good advice to attend in person at the
notaire’s office for the signing and witnessing
of the deed of sale. However, if this is not
possible you may invoke a power of attorney.
As this must comply with strict legal
procedures you should inform CCF at the
earliest possible opportunity if you think you
will be unable to be present in person.

Mortgage product details
CCF are able to provide a range of mortgages designed to cover
the needs of non-residents wishing to buy their main or second
home in France.

CCF will consider mortgages on most types
of property, including those being
                                                •   Mortgage Type: capital repayment.
constructed on an individual basis or as part   •   Mortgage Amount: minimum € 50,000,
of a development.                                   maximum 80% of the purchase price or
                                                    the estimated value of the property,
The property should be primarily for your           (excluding legal fees),whichever is lower.
own use, although you may wish to let it for
parts of the year to provide extra income.      •   Total loan repayments on your mortgage
Any rental income will not be taken into            and other loans must not exceed 33% of
account when assessing your ability to repay        your joint or single net monthly income.
as CCF do not finance transactions purely           This guideline is commonly used by
made for investment reasons. Mortgages              French banks. Please note that under
are available from CCF subject to the               French Law, banks are obliged to
following terms:                                    evaluate the applicant’s capacity to keep
                                                    up repayments.
•   Applicants must be aged over 18 and
    under 60 at the time of the application,    •   Arrangement fees: generally 1% of
    subject to status.                              the amount borrowed (please ask for
                                                    further details).
•   Please refer to CCF's lending criteria
    enclosed at the back of this brochure.      •   Security required: first legal charge on the
                                                    French property.
•   Mortgage Term: 5 to 15 years.
                                                Flexibility of Repayments
                                                You can alter your repayments, subject to
                                                certain limits, within the term of your loan
                                                to suit changes in your income.
                                                At any time after the first year the monthly
                                                repayments can be adjusted downwards so
                                                long as this does not add more than two
                                                years to the duration of the loan.
                                                Repayments can also be adjusted upwards to
                                                a maximum of double the initial repayment
                                                level. These changes can be made five times
                                                during the life of the loan, subject to at least
                                                one year between each change.

Interest rates                                     French bank account
You have a choice of:                              Monthly repayments covering both capital
                                                   and interest are paid in euro via a CCF bank
•    Fixed rate
                                                   account. An account with CCF must be
Calculated on the basis of current bond            opened before completion of the mortgage.
prices when the mortgage is made, and fixed        Payments can be made by a transfer of funds
for the term of the mortgage.                      from most overseas current accounts to CCF.
                                                   Your CCF bank account can be used to pay
In the event of early repayment, a fee
                                                   the Direct Debits for taxes due in relation to
equivalent to 3% of the capital outstanding
                                                   your property as well as bills for electricity,
at the time will be charged.
                                                   telephone and gas.
•    Variable rate linked to a benchmark rate
                                                   Mortgage insurance
Linked to a benchmark rate of Euribor 1
                                                   Life cover is mandatory and is provided by
year. Early repayment of the mortgage can
                                                   Erisa*. This insurance pays off all or part of
be made at any time without penalty.
                                                   your remaining mortgage in the event of
Additionally, you are protected against a
                                                   death. The policy also includes mortgage
significant interest rate rise as you can switch
                                                   repayment protection. This insurance will
to a fixed rate at any time. To take advantage
                                                   pay all or part of your monthly repayments
of both of the above options you can
                                                   if you become ill and cannot work or
arrange your mortgage with a combination
                                                   become permanently incapacitated.
of a fixed and variable rate.
                                                   Home Insurance
•    Capped variable rate
                                                   It is a requirement of French law that your
Periodic revisions of the terms of the
                                                   new home is insured against damage with the
mortgage based on a benchmark rate, with a
                                                   policy effective from the same date as the
guaranteed ceiling rate. This is a good
                                                   signing of the deed of sale. CCF can arrange
compromise between a variable and a fixed
                                                   an ‘Elysees Habitation’ insurance policy
rate since you can benefit from a decrease in
                                                   underwritten by CCF with Erisa Iard*, The
interest rates. However, you cannot switch to
                                                   insurance will be based on the estimated cost
a fixed rate and in the event of early
                                                   of rebuilding the property. It also has an
repayment a fee equivalent to 3% of the
                                                   option to include contents insurance.
capital outstanding will be charged.
                                                   * Erisa and Erisa Iard are CCF subsidiaries, regulated by the
Current interest rates will be given by CCF        French Insurance code.
upon receipt of the ‘in principle’ mortgage
quotation request form enclosed with this

Rates and Taxation
Homeowners in France are liable for two local taxes.
Inheritance taxes may also apply.

Taxe Fonciere                                      CCF can put you in touch with these
                                                   professionals who can give you advice to suit
This is a land tax. The size of the property       your own specific circumstances. This can
determines how much is paid and owners of          include property taxation advice applicable
new properties are exempt for the first two        to residents and non-residents.
years. The tax is paid by the person owning
the property on 1 January of each year with        French inheritance laws are particularly
payment due in the final quarter of the year.      different to those abroad.
However, if the property ownership changes
                                                   You are well advised to take legal advice on
then the purchasers must usually reimburse
                                                   these matters before completing the purchase.
the sellers for their share.
                                                   You may also be liable to French tax if you
Taxe d’habitation
                                                   derive any income from the property, ie,
This is a local services tax. It covers the        letting fees. You must register with the
services and maintenance provided by the           French Taxation Centre for Non-Residents
local council and again is payable annually in     when you buy the property.
the last quarter of the year. The estate agent     France has signed taxation treaties with most
will advise you of the taxes in relation to your   countries which means that you avoid double
own property and tell you how much you will        taxation.
need to pay. The tax demands will be sent to
the address of the French property and both
taxes can be paid by Direct Debit on a
monthly basis from your CCF bank account.
French inheritance laws and Taxation
These are specialist areas and we strongly
recommend that you seek professional
guidance. For UK residents, CCF has
established a list of UK based solicitors who
specialise in French Property law. They also
have contacts with English speaking notaires
throughout France.

Useful French terms
Acte de vente                                   FNAIM
Deed of sale                                    The initials of the Federation Nationale des
                                                Agents Immobiliers et Mandataires which is
Agent Immobilier
                                                the main French national association of
French estate agent
                                                estate agents.
                                                Maitre d’oeuvre
                                                Master builder
Assurance multirisques habitation
                                                Mandat exclusif
Household insurance policy for buildings
                                                Exclusive mandate for an estate agent to sell
and contents
                                                a property as opposed to a mandat simple
Cadastre                                        which is a non-exclusive mandate.
Land registrar
Code de la consommation                         A lawyer who is a legal professional and a
French Consumer Code                            public officer appointed by the Ministry of
                                                Justice to handle the conveyancing of all
Compromis de vente
                                                property sales in France. Notaire’s fees: ‘frais
Pre-contract: bilateral contract binding both
                                                de Notaire’.
parties to the transaction. It is guaranteed
with deposits that are forfeited if one party   Pièce
pulls out.                                      A room
Condition suspensive                            Prêts réglementés
Reservation clause, eg, agreement only if the   Statutory loan entitlements
buyer is granted a loan.
                                                Promesse de vente
Débours                                         Sales promise. This is a contract by which
Disbursement charges laid out by the notaire    one person undertakes to sell to another
on behalf on the client in order to pay the     person without the latter immediately
different agents relevant to the transaction    consenting to buy.
(land registrar, surveyor etc).
                                                Registration fees
Droits de timbre                                They consist of the notarial fees for the
Stamp duties (fiscal stamp to be affixed on     writing of a deed (ie, the notary public’s
every page of the deed of sale).                commission) and all legal fees and taxes due
                                                for any real estate transaction.
Valuation or Survey                             Taxe Fonciere
                                                Land tax
Mortgage                                        Taxe d’habitation
                                                Local tax for services
Indemnité d’immobilisation
Deposit paid by buyer to notary or estate       Terrain
agent following a sales promise. Forfeited if   Land or grounds
the buyer pulls out of sale.
                                                                                                             November 2002
General information on mortgages offered by CCF for residential
properties in France – Capital repayment

           Currency              Euro
             Loan to             up to 80% of the purchase price or valuation, whichever is lower
      valuation ratio            (excluding legal fees)

   Minimum amount                Euro 50,000
     Maximum term                15 years, borrower must be over 18 and under 60 at time
                                 of borrowing
            Interest rate        fixed rate/variable rate/capped rate
                Security         first legal charge (mortgage) - The customer’s property in France is at
                                 risk if they do not keep up with the repayments
            Repayments           – existing property:
                                 Repayment of capital and interest will be required in monthly
                                 instalments. The first instalment will be dependent on the date of
                                 first drawdown of the loan
                                 – property under construction:
                                 The first instalment will be payable within one month of the first
                                 drawdown of the loan. The instalments are based on the amount of
                                 funds released. A maximum of a 12 month deferred payment of
                                 capital may be granted on that occasion
                                 Important: the first legal charge on the property has to be registered
                                 upon signature of the final deed with the notaire
               Lender            CCF or its subsidiaries (850 branches in France)
     Early repayment             early repayment fees, if applicable, will be dependent on the type of
                                 rate selected
                                 – fixed rate/capped rate: In the event of early repayment, a
                                   fee equivalent to 3% of the capital outstanding at the time will
                                   be charged
                                 – variable rate: Early repayment of the loan can be made at any time
                                   without penalty
    Survey/Valuation             Can be provided by the bank’s panel of surveyors/valuers, with the
                                 cost payable by the customer
     Other conditions            Insurance:
                                 • Mortgage reducing term insurance mandatory provided by Erisa
                                   insurance company*
                                 • The borrower is required to take out a building and contents
                                   insurance policy
   Arrangement fees              1% of the amount borrowed (Please ask for further details)

  *CCF group Insurance company
Information-                                                        November 2002

      Documents required                                      Property details (“compromis de vente”or “contrat de réservation”)
for mortgage arrangement
                                                              Evidence of income
                 in France
                                                              • Last three pay slips and a letter from employer confirming salary,
                                                                 position and length of service (if self-employed, please provide your
                                                                 last three years’ audited accounts).

                                                              • Latest income tax return.
                                                              • Evidence of other income (eg, rent agreement or bank statements
                                                                 for investment income).

                                                              • Last three months’ bank statements.
                                                              Evidence of Identity (must be certified by an HSBC officer)

                                                              • Identification proof – Passport, birth certificate and where
                                                                 appropriate, marriage certificate.

                                                              • Confirmation of address – copy of gas, electricity or phone bill
                                                                 showing present address (dated within last three months).

Main criteria for mortgage                                    • Net yearly income of more than €40,000 euro and financial
    loan approval by CCF                                         investments or savings of more than €20,000 euro.

                                                              • Affordability – up to 33% (fixed monthly commitments including
                                                                 the requested mortgage loan repayments compared to the net
                                                                 income per month) or a sufficient disposable income.

                                                              • Regular and stable income.

             This document is a general guideline. Please ask us for further details.

                                                                                              For enquiries
                                                                                    International Business Centre
                                                                                         75419 Paris Cedex 08

                                                                                         Fax: 00 33 1 58 13 17 29
                                                        Notes : the information given above is subject to change at the Bank’s discretion and without
                                                                prior notice.

                                                            Member of the HSBC Group
                                                       CCF has a share capital of 377,048,505 €
                  Registered office :103 avenue des Champs Elysées-75419 Paris cedex 08 -SIREN number :775 670 284 RCS Paris
       Bank and insurance broking company incorporated under F law; financial guarantee and professional indemnity insurance in accordance
                                           with articles L.530-1 and L.530-2 of the French Insurance Code.

                         Approved insurance broker (financial guarantees and insurance of professional civil responsibilities
                                         conform to articles L 530-1 and L 530-2 of the Insurers’ Code).