FRANCE - THE SAFEST COUNTRY TO OWN REAL ESTATE ………………(fact!) Says who?……………

Among others, the US government; World Bank; United Nations; the European Union and the IMF!!
Litigation on real estate transactions at present exceeds 9% in the USA; and average 3.9% thru-out the European Union - AND IS UNDER 0.4% IN FRANCE!
France has a unique system of law for property -

THE NOTAIRES :

As seven years of law are necessary to graduate, the Notaire is the most qualified lawyer of the French legal system. The Notaire is both a Public Officer and a counsel. His qualifications allow him to efficiently advise his clients in specific areas of Law - Real Estate Law, Family Law and Corporate Law. He is able to advise clients on matters all over France. A Notaire from Paris can hence equally deal with an acquisition of a house on the French Riviera he can supervise the purchase of a supermarket in Strasbourg or control an industrial implantation in northern France.

The French State confers to the Notaire an authentic power to legalize certain agreements, such as Real Estate sales, which cannot be enforced by any other means. This monopoly prevents almost any subsequent litigation concerning these contracts. However, the Notaire does not only draft and authenticate deeds. As today's legal transactions are more and more complex, counselling clients is also a major function of a modern Notaire.

The Notaire is deemed a Public Officer with powers delegated by the French State to authenticate the deeds he drafts and to provide complete security to the contracts he supervises. The authenticity of the deeds grants them an undisputable date and content in Court. The law imposes a personal liability on the Notaire for his professional acts which is more extensive than that of any other branch of the legal profession. Not only would the professional mistake be penalized immediately by a judge, but it would also mean that all of the Notaires would be held liable among themselves as they have a common insurance, providing an immediate financial guarantee to the client. The overseas investor is therefore facing a specialized lawyer fully liable for his deeds, both professionally and financially.

The Real Estate Registration system in France is highly efficient. It takes two months for a sale to be registered, and only the authentic deeds settled by the Notaire can be registered. The content of the deeds is controlled both by the Notaire and by the Registration Authority. On the one hand, this procedure may seem long compared to an immediate transaction occuring in some other countries, but on the other hand, it results in a lack of litigation concerning these contracts (0.5% per year on Real Estate transactions). This, the Notaire has the task to both completely satisfy his clients and to impose some limits to their queries according to his Public Officer status.

The fees concerning the deeds and taxes a Notaire can perform are fixed by Law. Neither the Notaire nor the clients may modify these specific fees. The "closing costs on NEW BUILD are fixed at 2.5% - on all property over 5 Years the fees are between 11 and 15%;

Overseas clients undertaking a Real Estate transaction in France should be aware that if there are two Notaires, the fees are shared. Therefore, retaining their own Notaire will not increase the professional "closing costs"

The Notaires have a wonderful website, (also in English) at www.notaires.fr. You will see lots of information plus be able to download free publications. The true knowledge of real estate in France - not written by so-called "experts"; but by the State of France.
(Also view the Ministry of Economy website, (also with English version), on www.insee.fr where you will see the trends in real estate again; from the State, not from the “experts”!

LATEST! By law, every new build has to have a government certificate stating that the building is protected against earthquake, (strange as France does not have them!) and is not built in an area subject to floods or any other hazard – whether man-made or natural. The ONLY country that gives such protection – nationwide!

Guaranteed Rental Income!

“Guaranteed rental income” (buy-to-let), began in France in 1964 and is the “prime” investment of the French. Currently, guaranteed rental return on long-term, unfurnished rentals averages 6% per annum (based on total purchase price) 30% on RISK.

“Guaranteed rental income” is for long-term, (3 year contracts), unfurnished properties, (NOT holiday rental), and owners receive the following FOR THE ENTIRE PERIOD YOU RENT OUT YOUR PROPERTY:

These guarantees are fully backed by the French Government program "Loi Robien". Robien’s Law was introduced by the Government to encourage buy-to-let (own-2-invest) rental investment in France!

Maximum Growth :

As all experienced investors agree; you can talk about interest rates; “feel good” factors; etc etc – even the weather; but the ONLY thing that “truly” moves real estate is SUPPLY and DEMAND.

Well, France certainly has H U G E problems in that area with a government reported 1.5 million people short of adequate homes – of which over 1 million are renters!

Since 2001 and the introduction of “Loi Robien”, capital growth in the main metropolitan city areas has grown at average of 22% per annum. 2007 has seen a slow down in the market, by the French, in anticipation of the May and June Presidential and National Assembly/Senate elections. This was especially so as the outcome depended on the tax concessions to be given by Nicolas Sarkozy.
(Prices have only risen slightly while the French waited. Overseas investment has broken records so far!) Well he won!! New laws are in!! SO!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Non-Recourse Mortgages

ALL FRENCH BANKS USE A SIMPLE SYSTEM. YOU MAY NOT BE ABLE TO OBTAIN A FRENCH MORTGAGE IF YOU CANNOT PROVIDE THE INFORMATION BELOW.

NOTE : FRENCH BANKS DO NOT LEND ON ANY TYPE OF BUSINESS ENTITY, (EXCEPT A FRENCH SCI); “TRUSTS”, OR ANY PROFESSIONAL OR SEMI-PROFESSIONAL PROPERTY INVESTOR OR COMPANY;

MORTGAGE BANKS CHECK LIST

About the property: (provided by developer)

About yourself : MUST BE PROVIDED BY YOU!!!!!

If you are salaried (for each applicant):

If you are self-employed or a company owner (for each applicant):

FISCAL

France has double-taxation treaties with every country – and therefore you will not pay tax twice!

Tax on rental income is very low, in most cases zero after all decusctions. Capital gains tax in France is on a sliding scale from 16% to zero over a maximum 15 years, (approx. 11 years after deductions).

We are more than willing to pass on our knowledge and experience; however we are not tax advisers or accountants and therefore strongly advise you to take personal advise from an international tax professional before investing. The notaire can also advise as it is part of his profession.

CLOSING COSTS

On new build and property up to 5 years old : 2.5% fixed.
Over 5 years old between 11 and 15%.

When selling, ALL costs are for the purchaser – non for the seller. The seller appoints realtor; notaire etc., but BUYER PAYS ALL.

French Property Investment Guide and Timeline

Requirements to acquire all new build/”off-plan” under French Property Acquisition Law :

Following is a helpful guide to give you a general idea of the timeframe for the process of purchasing investment property in France :

* NOTE : Send all documents requested by courier, ie DHL, UPS, or FEDEX

RESERVATION (earnest money deposit) = 5%

CASH PURCHASE : After 3 months (or to where building completed - whichever is higher); another 25% plus "closing costs" for notaire/tax fixed on new build at 2.5%, (allow 10/15% plus agent's fees of 7% on old build). Then stage payments of approx. 10% to 15% every 2 to 3 months until completion.

FINANCED PURCHASE : If you take mortgage, you invest the reservation 5%; then the 15% plus "closing costs". During construction, the banks give you a choice that either you pay a small part of the interest they have paid out, (approx. 50 euros per month for each 100.000 euros borrowed) or pay nothing until completion. However, in this method, repayments will be slightly higher for "using" banks funds. (Mortgage insurance is compulsory if taking higher than 50% mortgage)

IMPORTANT NOTE : ONLY make payments direct to a French state notaire, or direct into the State Treasury Bank controlled by a notaire - never to any individual, company or entity! (French licensed real estate experts only use this method only).

ABOUT CLOSING COSTS :

Own2invest Properties