Country Overview | Key Property Facts

Types of Tenure:

Most French property is owned on a freehold basis. Leaseholds of up to 99 years are also used but are less common.

Forms of Ownership:

There are many different ways to own property in France each with different legal and tax implications. Above all, purchasers should bear in mind that inheritance implications will vary depending on the form of ownership in question. It is important when buying therefore that you carefully consider all the options and seek legal advice where appropriate to ensure you choose an arrangement which best protects your interests.

French property can either be purchased by individuals, or through a French property-holding company (“societe civile immobiliere” (SCI)) or alternative legal entity (such as a trust or partnership). It's also possible to buy French property via a French commercial company or a UK offshore company but these forms of ownership are less commonly used. If a property is bought by individuals, it may be owned in single, joint or multiple names.

There are two different ways to jointly own property in France . The first is to purchase “en division”, which means that on your death your half of the property will be passed on in accordance with the French inheritance rules. The beneficiary is entitled to force a sale of the property, thereby compelling the surviving joint owner to leave. The second option is to purchase “en tontine” where your 50 per cent automatically passes to the surviving joint owner on your death.

Multiple ownership in a common building will most frequently be in the form of condominium ownership (“copropriete”). Timesharing (“la multipropriete”) is the most common form of fractional ownership in France .

Properties are often purchased via a company when the purchaser is buying to let out. It may also be worthwhile considering this if you are buying a large property or one with a business use. With an SCI, buyers own shares in the company which owns the property rather than owning the property directly as a private individual. Although an SCI can be expensive to set up, this purchase structure is well worth considering for the tax advantages it affords. SCIs also make it easier for owners to dispose of their share of the property when it comes to resale and can also overcome some of the restrictions of France's succession laws.

Restrictions:

There are various situations in which third parties have preferential rights to purchase real estate in France. For example, a residential tenant of unfurnished premises has a statutory right to purchase if the owner refuses to renew his/her rental contract with the intention of selling; some municipal authorities also have a right of pre-emption.

There are no other restrictions on non-French nationals buying property in France.

Property Rights:

According to the Economist Intelligence Unit, contractual agreements are secure in France, and both the judiciary and the civil service are highly professional. Although the French public sector is generally very competent, dealing with the bureaucracy can often be time consuming.

Mortgage Finance:

The French domestic mortgage market is well established and competitive. As a foreign investor, you can either remortgage your UK property and take out a loan in sterling or borrow from a French lender in euros secured on a mortgage against your French property. French mortgages can be found for 80% loan-to-value (LTV) with 70% the usual figure for non-residents. However, the French mortgage market is rapidly evolving and 90-100% LTV is now offered in some cases to EU nationals. The interest rate will be agreed between the bank and the borrower; euros tend to be subject to a lower base rate of interest than sterling. Local French institutions favour shorter loan terms, whereas British lending institutions are more prepared to grant longer repayment periods. French banks generally require mortgages and life assurance as security

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Key Property Markets:

France 's main property markets revolve around its capital, Paris, and its main tourist regions – the south west (in particular, the Atlantic coast and the Dordogne), the Mediterranean coast (Provence is a high-end, established market while Languedoc-Roussillon is currently emerging very rapidly) and the principal ski stations (especially the large Alpine resorts). Major cities such as Toulouse , Marseilles , Bordeaux and Lyon also have strong buy-to-let markets.

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