View from the Foothills of France

Some personal views on living, working,
bringing up family and making the dream happen in the most beautiful region of France. View from the Foothills of France also includes some personal and professional thoughts and tips on finding and buying the perfect property in the Ariège and Haute Garonne regions.

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Everything including the kitchen sink

What constitutes fixtures and fittings in a French property sale?

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There is no clear legal definition in France between fixtures and fittings in a property sale which can cause last-minute complications between buyer and seller.

In fact, very often in France, seller and buyer leave unstated exactly what is to be included in the sale. This doesn’t always cause problems and sometimes, the buyer can be pleasantly surprised at just what the seller has left behind. On the other hand, it can come as a shock to arrive in your new home and discover that the whole kitchen has been removed (including the kitchen sink) which does happen or that not a single light fitting remains – more irritating than anything but not welcome if you happen to arrive in your new home in the evening.

The result is that when buyers move into their new home, they sometimes feel short-changed about the extent to which the property has been stripped of what they considered to have been ‘fixtures’. Fitted bedroom furniture and kitchens in particular are often a source of uncertainty in law and between buyer and seller.

Another potential grey area concerns wood burners, particularly if the wood burner itself is removed, and the flue left in situ. The same level of uncertainly applies to garden sheds that may not be built on a concrete foundation.

So the golden rule in these matters is to ensure that the sale contract makes clear just what is to be left in the property, something I always insist on for clients.

Recently I was doing a final check of a property before signing the Acte de Vente on behalf of a client in Australia when I noticed that the lawn tractor agreed in the deal appeared to have aged considerably since I last saw it. Luckily I had taken photos and was able to check back and discover that indeed not only was the tractor in the shed much smaller and in far worse condition than the one in the photo but it was also a completely different make. Of course, this wasn’t too difficult to sort out and as soon as I had told the Notaire that I wouldn’t be signing until the agreed tractor had reappeared, sure enough it was back in the shed within the hour and we could complete the deal but I was certainly glad that I had compiled a list of goods included in the sale and also had photographic evidence.

In addition, if fittings are to be left in the property, then another advantage of making a separate inventory of such items in the sale contract is that their value can be reduced from the purchase price of the property, which in turn reduces the level of fees and taxes payable to the Notaire. As ever, it is best to have a professional on your side.

Following your dreams and avoiding nightmares when buying in France

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I was recently lucky enough to be invited to share a delicious coupe de champagne with a very happy couple, newly ensconced in their beautiful home here in the Midi-Pyrénées. The champagne was to celebrate the realisation of a long-held dream and the start of a new adventure for my clients who had finally found their perfect house. They contacted me last year to ask for my help to find and buy a property out here in the Haute Garonne region of France. Their brief was similar to many of my clients; they were looking for that classic French house, a traditional stone building with lots of character, plenty of original features, wooden shutters, a bit of land, lovely views and in a peaceful and beautiful location where they could enjoy an excellent quality of life.

They had both always dreamed of living in France and they had talked about it many times. But each time they seriously considered making the move, something seemed to happen that persuaded them to put if off for another year whether it was a fall in the exchange rate, worry about moving the children, not speaking good enough French or that they wouldn’t fit in. Now both in their 50s, they were determined to finally fulfil that dream before it became a regret. They both have flexible jobs that can be done from a distance, albeit with occasional trips back for meetings and their children are grown up with lives of their own. There was really nothing to stop them making the move – except perhaps fear. But they have now admitted that it was exactly this fear of the unknown which had prevented them taking the plunge year after year and they decided not to let this fear control their lives any longer; it was time to turn that dream into reality.

Of course taking the plunge and following a dream is not the same as being foolish and taking unnecessary risks which is why they decided to hire me to ensure they had considered all the options and possible pitfalls as well as the opportunities. When you choose this lovely part of France, you are buying a way and quality of life not just a property investment and a ‘good buy’ means more than just getting a bargain. It is also easy to have your head turned and your heart stolen by something you wouldn’t even consider in your own country.

As always, before beginning the search, I took a very detailed brief which included questions about how they imagined their dream house but also covered practical aspects and how they live in their home in reality (most people only use a tiny percentage of their house on a daily basis.) When dream and practicals didn’t really tally, we discussed in more detail. For example, although they were picturing a very rural property, on further questioning it turned out that they have both always lived in villages and towns and liked the sense of community. Hence living in the middle of nowhere would make integrating much more difficult (as well as commuting for work) so, on reflection they asked me to look for properties that were in striking distance of a market town but also easily accessible to Toulouse airport. We also discussed in detail the size of the house, the ideal layout, whether they would be welcoming lots of friends and family (yes definitely) and how much garden they really thought they could manage. They had a clear wish-list but were realistic enough to know that there would always be some compromises needed and that their perfect house might not necessarily exist but that it could be created as long as the location and unchangeable details of a property were right for them.

The exciting bit was when they were able to come out and view their short list. This I put together after a few weeks of searching, having viewed all the houses on the market that seemed to match their criteria (eliminating 80% of them that didn’t in reality or had potential problems). They appreciated having me working for them, with their needs and interests in mind and offering impartial advice rather than feeling they were being shown houses by agents working for the seller. I was also able to show them houses being sold privately and those not even on the open market.

They completed last week and I was privileged to be their first visitor in what I’m sure will prove to be a very happy home. It is never to late to follow your dreams; just make sure you have a professional helping you through the process so that those dreams become a wonderful reality and not a nightmare.

The cost of buying French property falls 25%

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The property market in south west France is suddenly booming thanks to the perfect combination of favourable currency exchange rates, low house prices and very cheap mortgage rates. In particular, the strengthening of sterling against the euro means that French property is attracting huge interest from British buyers at all levels of the market and investors are also moving in.

It is currently almost 25 per cent cheaper to buy a property in France than it was a year ago. The reasons are threefold:

Firstly, according to the FNAIM (the national association of French estate agents), average house prices have fallen by 1-2% annually over the past few years.

Secondly, the pound has soared against the euro over the past twelve months. Figures from Currencies Direct show that the pound rose to €1.40 last week, up from €1.22 this time last year. This effectively means that a €250,000 property is around €24,000 cheaper than it was a year ago.

Thirdly, mortgage rates are cheaper than they have ever been; it is now possible to get a 20-year fix for 2.55% with even lower rates available for the very best borrowers. This is a sharp fall from 3.5% a year ago and means that someone buying today would save more than £45,000 in interest payments over the 20-year term of a €400,000 (£290,000) mortgage if they fixed at 2.55% compared with 3.5%.

All of which seem to have combined to produce the current burst of activity in the French property market; British buyers who have been waiting a long time to invest in France are clearly now taking the plunge.

This sudden buying boom and action by Europe’s central bank, which has embarked on a programme of “QE”, will push house prices up over the medium term, making now a good time to invest in property. House prices in France are predicted to rise by 15-20% over the next decade.

Please get in touch if you would like to be put in touch with a recommended mortgage advisor or currency advisor and be careful to check out the credentials of anyone you plan to trust with your money.

Changes to French capital gains tax on second homes

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Since January 2015 capital gains tax (CGT) on second homes in France has been reduced to 19% instead of 33.3% for all non European residents bringing it in line with the CGT for residents of European countries including French residents.

The way CGT is calculated in France is that the 19% ‘tax’ component decreases with time from the 6th year onward to a complete exemption after 22 years, while the 15.5% ‘social charges’ component decreases slowly from the 6th to the 21st year and more rapidly after, up to a total exemption after 30 years of ownership of your French house or flat.

In addition, the ‘social charges’ component of 15.5% is being  challenged and  the European court of Justice should reach a decision during 2015. If the court considers that non tax resident who own a property in France should not pay the 15.5%, the French state might have to refund the non-resident tax payers. It is, therefore, very important that you keep your tax role, wherever you live whether in a European country (except France) or a not.

There is no CGT if your home in France is your main home where you live permanently as long as you are a French tax resident. If you do not live in France and/or do not pay your main income tax in France you are a non resident and therefore you are liable to pay CGT when you sell your French home. If you are a tax resident of a European country, you may benefit from a CGT exemption on up to 150 000 € of capital gains under specific criteria. Please note that financial and tax laws in France are constantly changing so it is vital to take professional advice.

As ever, I would always recommend having a professional on your side when buying and selling property in France. If you would like to talk through your purchase in France, please get in touch; nadia@foothillsoffrance.com