Sunday, 26 July 2009

French Estate Agents (Agent Immobilier) and Mandats

This is a highly regulated profession in France and the Agent Immobilier (or French Estate Agent) must be formally registered and bonded as such with French authorities. The paperwork that they are required to keep is quite detailed and very specific. As a consequence, when viewing property in France, you will be asked to sign a “Bon de Visite”, which is actually a legal requirement in France, (loi Hoguet), although not all agents ask you to sign these documents. It does beg the question that if other agents do not ask you to sign, how competent will they be with any paperwork resulting form a potential purchase. It does not commit you to anything, but provides a record of the properties that you view and shows that your agent introduced you to that property and the owners. It also requires that you will deal with the agent with whom you have visited a property, and not via a 3rd party or directly with the owners. This of course also ensures that the agent that introduces you to the property will get paid should you proceed to purchase. Before you can view a property, a agent will need to have a suitable “Mandat de Vente”, (also loi Hoguet), (empowering them to sell a property on behalf of the vendor) completed by the vendor and suitably registered. Any agents showing houses without a registered mandat de vente are breaking the law and the consequences are very serious. The mandates may be on an exclusive, non-exclusive, or semi-exclusive basis. Since most French properties offered for sale are on the books of several agents, the most common option is the non-exclusive basis. Vendors need to examine the terms of exclusive and semi-exclusive contract before signing as they may be committed for long periods of time and forced to pay a 2nd commission. Another type of mandat is a “mandate de recherche” (empowering them to seek out property to buy on behalf of a purchaser) and the mandat will specify the price band, type of property and the amount of remuneration. Finally a word of warning to anyone, of whatever nationality, who is not registered as an Estate Agent or Agent Commercial in France, and who attempts to take a commission on brokering properties, could be held to be committing a criminal offence. For a selection of properties in the Poitou Charentes region of France use the following link Peter Elias (Agent Commercial), La Moinerie, 79500 Paizay le Tort, Deux-Sèvres, FRANCE
Tel: 00 33 (0)5 49 27 01 22 or Tel: 00 33 (0)8 77 07 58 99 Mob: 00 33 (0)6 62 28 02 25
Tel: 0871 717 4176 (UK) Fax: 0870 458 1804 (UK)

Wednesday, 22 July 2009

Sterling falling against the Euro

Sterling is the big loser overnight in the markets and it is on the ropes this morning again. Recently we have witnessed a consistent pattern of steady gains followed by a sharp sell off. The pound has retraced to 1.15 against the euro; the 1.15 level is a crucial support on GBP/EUR and a break below 1.15 will be worrying for the pound. So what is causing this renewed weakness for the pound?
Initially the rot was started with the confirmation that June’ public sector net borrowing came in at £13 billion, the figures were actually better than expected but still underlined the dire state of public finances and understandably focused attention as to how we can climb out of this debt? Cue feedback from the National Institute of Economic and Social Research (NIESR) which said that government finances will remain deeply in the red for at least 4 years and this is based on the Treasury tightening the crews on public spending to a higher degree than planned…so a tighter reign on spending and inevitable tax rises is on the menu beyond the next election- very appetizing. Sterling has suffered on this negativity, as it does on any scent of bad news; a couple of articles also added to pressure on the pound- the first reported in the Financial Times highlighting a survey that more than half of businesses did not see any improvement in their prospects for at least another 12 months. The second through the Telegraph noted that Barclays and RBS will need billions more in capital if they are to continue growing their investment banks.
The Bank of England minutes just released offered no surprises with a vote of 9-0 to keep rates on hold and to maintain QE levels at £125 billion. Slightly sterling supportive as the minutes noted a reduction in the downside risks on GDP.

Sunday, 19 July 2009

French Capital Gains Tax on property sales

As in the UK, your “principal residence” is exempt from capital gains tax, so only people not meeting this requirement are impacted by CGT. However, one of the most frequent problems is that you can only qualify your “home” as your principal residence if you are formally tax resident in France. It will not qualify if you have been living in the property for some time, but have never entered the French tax system, nor completed a tax return.
The basic rules are fairly simple in that the purchase price can be revalued, by purchase / sale costs (agency fees, Notaires fees & specialist reports), and any major renovation bills, but there is no longer an inflation allowance. The resulting figure is subtracted from the sale price to calculate the taxable gain.
The gain is then taxable at a set rate of 16%, for European residents, with an a extra “social tax” (11% this year) for French residents. Anyone who is not a resident of a European state will pay a set tax rate of 33%.
You need to be aware that the conditions for the acceptance of “renovation work” are very stringent. The works must have be carried out by a registered French artisan (with an appropriate invoice) and invoices for materials that you have purchased yourselves are no longer allowed. One further expense for sales in excess of 150,000 Euros is the need to appoint an official “fiscal representative”, who is responsible for calculating and paying the tax on your behalf. They typicfally charge 1% of the sale value.
There is a significant allowance given for the length of time you have owned a property, after the first 5 years of ownership, as from then on, you are allowed 10% off your capital gain, for each complete year of ownership, with the result that a property owned for more than 15 years is free of Capital Gains Tax.
See also an article on our library pages
Peter Elias (Agent Commercial), La Moinerie, 79500 Paizay le Tort, Deux-Sèvres, FRANCE
Tel: 00 33 (0)5 49 27 01 22 Mob: 00 33 (0)6 62 28 02 25
Tel: 0871 717 4176 (UK) Fax: 0870 458 1804 (UK)

Sunday, 5 July 2009

French property fees

Most French properties are advertised on the internet with agency fees included. Typically these fees are 6-7 %, and are paid for by the buyer, not the vendor. (This actually works in the buyer's favour, since otherwise the fees would be added to the purchase price and Notary fees payable on the increased sum. Be careful though, some agents charge much higher fees!
Some agencies quote a fully inclusive price, (i.e. inclusive of all fees). Whilst at first glance this may sound like a good idea, the actual figure is often inaccurate, since the price may include furnishings or white goods etc. making the Notary fees quoted inaccurate.
On our website all prices are inclusive of agency fees, but exclude Notary fees. So just how much are Notary fees and how are they calculated?
At the bargain basement end of the market, say 60,000 Euros the fees are around 8% (4,692 €).
At 150,000 Euros, the scale drops to 6.74% (10,110 €), and at 255,000 has reduced to 6.43% (16,397 €). For properties above a million Euros you are paying around 6.3%.
So if you agree a purchase that is worth 210,000 net to the vendor you would expect to pay an additional 12,600 € in agency fees, and 14,350 € in Notary fees, making a fully inclusive price of 236,900 (12.8% in fees).
NB. Additional fees are payable when there will be a mortgage registered against the French property.
Peter Elias (Agent Commercial), La Moinerie, 79500 Paizay le Tort, Deux-Sèvres, FRANCE Tel: 00 33 (0)5 49 27 01 22 or Tel: 00 33 (0)871 7 17 4176 Mob: 00 33 (0)6 62 28 02 25
Visit our website to see around 300 properties in the Poitou Charentes for sale.