All about Selling Your Property in France

The property market in France is currently buoyant where demand exceeds supply. This is particularly so in Brittany which remains one of the most popular destinations for both British and French buyers seeking an unspoilt French region.

Due to the Covid-19 crisis, properties for sale in certain regions of France, including Brittany, are becoming scarce. Real estate agents are busy searching for properties. Brexit has induced some British expats to return to the UK due to family ties, whereas others are moving to France with their family with a view to start anew.

If you are thinking of selling your property it makes sense to do so now.

The selling procedure is somewhat similar to the buying process with a few differences. Here is a guide to help you understand how to go about taking the big step.

WHERE TO START?

As in the buying process, you have a choice between contacting:

GET A PROPERTY VALUATION

Before selling your property get an estate/ property agent and/or Notaire to give you a valuation of your property. They would need to visit your property in order to obtain the technical details. However, do note that there could be sizeable differences in the valuations given by property agents and Notaries (“Notaires” in French). Do not forget to ask if the valuations are free as some can be payable!

In general, they take into account the following factors:

DECIDING ON THE SELLING PRICE

Some valuations could be considerably lower with a view to make a quick sale. However, a lower price could be quoted for properties suffering from damp or having an outdated septic tank system as the buyer would be required to undertake work to eradicate the problem and update to the norms. Do not rush into making a hasty decision. Be aware that buyers will invariably offer a lower price, so do not start selling using your lowest acceptable price. Your aim is after all to make some profit.

It would be wise to take into account not only the purchase price of your property, but also all costs related to the renovations or improvements, or even the capital gains tax involved if it is your secondary home. On the other hand, if the calculated amount is way above the market price for similar properties, you would most likely have to bear a loss if you wish your house to be sold within a reasonable period of time.

There are cases where owners have overvalued their properties, waited years for a buyer and finally sold at considerably less. As a property agent quite rightly told me, owners are always subjective when it comes to valuing their property. “They tend to see their property as being the best”.

Do remember that prospective buyers who regularly check advertisements do not look favourably on properties that are on the market for a long period of time. The question often arises as to why it is still on the market even after regular price cuts. Some even keep track of the reduced prices and wait until the prices go down before manifesting their interest. This is why choosing an appropriate starting price for your property is very important!

NOTICE TO YOUR TENANT

As a landlord, you have the right to sell your property even if it is leased. However, there are certain rules to follow as tenants also have rights and cannot be evicted without prior notice.

As a start, the landlord would have to inform his tenant of his intent to sell, via a registered letter with recorded delivery, at least 6 months prior to the end of the lease period. The letter would have to mention the reason why notice is given, as well as the selling price of the property and the conditions of the sale. The tenant therefore has a preferential right to purchase the property and has 2 months to accept the proposal. This timescale is extended to 4 months if the tenant requires financing via a mortage/ bank loan. If he does not have the means or does not want to purchase it, he is obliged to vacate the premises at the end of the lease term.

It is important to note that if the landlord does not abide by this formality, he is unable to market his property for sale and the lease shall be renewed.

This preferential right to purchase, however, is not systematic. For example, if the seller decides to transfer his property to his close family members, the tenant shall not be given this right.

CHOOSING ONE OR MORE PROPERTY AGENTS

Going through an estate agent is highly recommended when you want to sell your property. They will lessen the burden of you having to undertake various formalities and besides, as a seller, you will not be paying them commission. The property agent’s commission and the Notaire’s fees, unlike in the United Kingdom, are entirely paid by the buyer.

Apart from property agents, you could also ask your Notaire to undertake this task.

This is on condition that you have not signed an exclusive mandate with an estate agent. The initial term of a mandate is generally for 3 months, after which it is automatically renewed. However, mandates can also be cancelled at any time after the initial term.

TYPES OF MANDATES

Non-exclusive mandate:

You can sign a non-exclusive mandate with one or more estate agents for an initial period of 3 months, renewed automatically thereafter but it cannot exceed 24 months. After the initial period, you are allowed to cancel the mandate at any time. This type of mandate allows you to sell your property through your own means.

In general, agencies do not particularly go out of their way to sell your property under this mandate due to the competition. I have noticed that some accept these mandates but shelve the properties. They prefer focussing on exclusive mandates as they are sure to obtain their commission in the event of a sale. Of course, there are some reliable agencies which offer great services. However, you should note that properties under this mandate take time to sell.

If you find a buyer through your own means, you are obliged to inform the identity of the purchaser to the agencies. The terms are mentioned in their mandates and this applies to any sale that occurs up to 24 months after cancelling the mandates. This is to ensure that the purchaser has not avoided the agency (with which he had previously signed an agreement) by not paying the commission which is due.

Exclusive mandate:

By signing an exclusive mandate with an estate agent, you are not permitted to sell or to sign mandates with other agents. The duration of the mandate and its cancellation terms are approximately the same as for a simple, non-exclusive mandate. Please note, however, that the duration and their commission could be negotiated.

In spite of the constraints, properties marketed via this mandate are sold quicker. The agency does their utmost to sell the property by showcasing your property in their agencies, on their websites and in many other websites with whom they have partnerships. Some even advertise in reputable British property websites. It is estimated that it takes about 3 months to sell a property under this mandate, but we must remember that this duration relates to cities or big towns; it could take longer in the countryside.

Another good reason to sign an exclusive mandate is because some agencies reimburse you the sums paid towards the diagnostic reports (compulsory property surveys) during the signing of the Title Deed at the Notaire’s office. Do not forget to ask the agency about this as it could save you quite a bit of money!

Semi-exclusive mandate:

This mandate is a mixture of the above two in the sense that you sign a mandate with one agency but you also have the possibility to search for a buyer. If you do find a buyer, you are obliged to inform the agency which will then prepare a pre-sales agreement or commonly known in France as a “compromis de vente” . The buyer pays a reduced commission to the agency during the signing of the Title Deed at the Notaire’s office.

Co-exclusive mandate:

The semi-exclusive and the co-exclusive mandates are relatively rare. For example, at the end of an exclusive mandate you wish to add one or more agencies to market your property. You can do so via a co-exclusive mandate whereby all the participating agencies are listed. You, as an owner, are not allowed to sell the property directly. However, this type of mandate is very rare.

PREPARING THE MANDATE

Prior to drafting the mandate, the agency or its accredited representative will visit your property. He or she will ask you numerous questions including the following:

You can sign the mandate electronically or on paper. Once signed, you are obliged to accept visits by potential clients and the agency to your property. Remember that appearances and first impressions of the property help to sell a property much easier. In this light, I recommend you to read my article on the subject.

PROPERTY DIAGNOSTIC/ SURVEY REPORTS

Energy performance report:

The main report is the DPE or the energy performance diagnostic which gives a rating from A (best) to G (worst). It takes into account the insulation materials used in the property and the type of heating system among other factors. In the past it was common to find no rating for holiday homes due to the lack of electric, gas and heating bills on an annual basis.

New energy performance regulations from 1st July 2021

With an aim to lower carbon emissions and to preserve our planet, the French Government has put forth new regulations with a view to incite owners (or even tenants) to undertake work (for which grants are given) to make their properties more energy efficient.

They are :

Legal action can be taken if the diagnostic is found to be incorrect or fraudulent.

Diagnostic companies can be sued by the owner or the tenant of a property. The company in question is obliged to undertake another diagnostic to prove their findings.

Sellers could also be sued. For example, a property was purchased on the basis of a C rating but was later found to have an F rating. The new owner could therefore sue the seller for having fraudulently obtained a better rating, and therefore a better selling price.

The consequences of a fraudulent or incorrect diagnostic could lead the party at fault to undertake the energy renovation work at his own expense.

Other diagnostics:

The other checks made are for the presence of lead, asbestos, wood boring insects like termites, electrical and gas installations etc. It must be said that inland Brittany does not have a termite infestation problem compared to the coast or in the Parisian region. However, most old Breton stone houses have traces of wood worm (“vrillettes”), be they big or small. A technician recently told me that they could nest in the woodwork for over 50 years. However, wood rot is a serious matter to check for. Most of these wood boring insects proliferate when houses are not heated in winter, are damp and not aired on a regular basis.

CONTENTS FOR SALE

You may wish to leave some furniture behind in the property. A potential buyer may or may not want them. In the affirmative, an inventory of the contents and their prices must be drawn up and given to the property agent and to the Notaire. Alternatively, the furniture could be sold directly to the purchaser as second hand furniture.

The prices must take into account the age and condition of the contents and the total amount should not be over 2 to 5% of the value of the property. Bear in mind that the prices should be reasonable or else you may be liable for a tax audit.

There is a fiscal advantage of having a list of furniture added to the selling price in the Title Deed made by the Notaire. This is because the prices of the contents are not included for calculating the Notaire’s fees due by the buyer.

What can be added to the list?

– movable furniture, that is, any furniture which is not a structural part of the property and which can be removed, even if it means light work like blocking holes on the walls.

– electric radiators, if they are just screwed and do not damage the wall if removed

– garden furniture

On the other hand, the following are considered as part and parcel of the property as their removal could physically or aesthetically damage the property if removed:

– fireplaces

– sanitary fittings

– mirrors which cannot be removed

– shutters, if they cannot be removed without spoiling the wall

– fitted shelves and wardrobes

PRIVATE SEPTIC TANK SYSTEM

The private septic tank system, or in French the “assainissement autonome”, needs to be inspected prior to a sale. You would therefore have to contact your governing authority (eg. SPANC) and fix an appointment. Do contact them in advance as they are very busy. They will check your system and send you a report of their findings which is payable. If your system is not to the norms and an update or a new system is required, be warned that the purchaser could offer a lower price to offset the cost.

AN OFFER!

After a number of visits, you have finally found an interested buyer. Agencies often require a written letter from the interested buyer stating his offer. If the price is not suitable, you could suggest a higher price. The property agent’s job here is to negotiate the price between you and the buyer.

PRE-SALES AGREEMENT OR THE “COMPROMIS DE VENTE”

When an agreement has been reached, the property agent or the Notary prepares a pre-sales agreement, known as the “compromis de vente”, mentioning your personal details, details about the property, the selling price, the agency’s fees and all the conditional terms and conditions of the sale, including a 10% (or less upon mutual agreement) deposit of the purchase price.

The usual conditional conditions that would delay the conclusion of the sale are the obtention of the following documents:

– mortage/bank loan if the buyer requires financing for all or for a portion of the purchase.

– pre-operational planning certificate or planning permission for your renovation or building project.

– relinquishment of pre-emptive rights from the related authorities if your property is within the perimeter of a historical monument, in the centre of town, in an agricultural zone etc.

This is an important document as it sets the terms and conditions for finalising the sale.

For more information on the pre-sales agreement and the cooling off period, please refer to my previous newsletter Guide to buying a property in France.

TITLE DEED (ACTE DE VENTE)

When all the contractual conditions and documents have been obtained, the sale shall be finalised at the Notary’s office where the Title Deed will be signed by both parties in principle. This used to be the normal procedure until Covid restrictions were enforced. It is now quite common for a Notary to prepare a proxy / power of attorney (“procuration” in French) to buy or to sell (depending on the concerned party). By signing it, you would give him and/or his clerks the authority to sign on your behalf, as well as to undertake all the required formalities leading to the sale.

The power of attorney is generally a summarised version of the Title Deed. However, it is highly recommended to obtain a draft copy of the Title Deed so as to be fully aware of all the terms and conditions.

Do note that if you are not fluent in French, the Notaire would normally ask for an English translation of the Power of Attorney and both documents (in French and in English) would have to be signed and certified. I am a qualified translator and have been working for Notaires for over 17 years. If you are in France, the Mayor of your town or your Notaire can certify your identities and signatures.

If you are not in France, you would need to sign the French and the English documents in the presence of a UK Notary Public or Solicitor before it is sent to the appropriate authority for the “apostille”. It is a form of authentication accepted by all countries that are members of the Hague Convention of 1961 for cross border transactions.

CAPITAL GAINS TAX (“Impôt sur les plus values”)

This tax is due if you are selling your secondary residence/ holiday home and the percentage is calculated on the number of years you have owned the property. The Notaire will calculate the tax based on the profit made (purchase price minus selling price minus any construction or renovation bills less than 10 years). You will have to sign the form during the signing of the Title Deed after which the Notaire shall submit it to your tax centre. For non-residents the tax centre is located in the Parisian region (Noisy Le Grand).

When all the registration formalities have been completed and the Title Deed signed by the Land Registry, the Notary shall send you a copy. On the other hand, if you have lost a copy, you could always ask the Notary for one as he is obliged to keep a copy for 75 years.

ON THE DAY OF SIGNING THE TITLE DEED

The buyer and the seller take meter readings of all the utilities. As a Seller, it is up to you to cancel your subscriptions and eventually convey the name of the buyer.

You must also contact your Insurance company to cancel your home and contents policy on the day. The Buyer is obliged to subscribe to an insurance policy on the day of ownership and he has the choice of using another insurance company. And last but not least, give the Buyer all the keys to the property!

Should you require any assistance during the buying or selling process, please do not hesitate to contact me.

(c) Conseil régional des notaires

Covid has changed the property market. People are now seeking spacious apartments and houses for their main residences and holiday homes. A good broadband connection is also a big criterion.

General Trends

Average Prices of Older Properties in Brittany

(c) Conseil régional des notaires

Cities like Rennes, Nantes or Brest, as well as coastal areas are the most sought after. Prices there have soared over the year. It is not rare to note price hikes over 10 or even 15%:

10 % in La Baule, + 12 % in Roscoff, +13% in Pléneuf-Val-André, +15% in Concarneau and on the Presqu’Ile de Quiberon, +17 % in Crozon, +18 % in Trégastel, Pornic and Saint-Malo.

« The ideal product for numerous buyers is a property that is not too far from Paris and which enables people to work from home for two days during the week. Apartments in the centre of Rennes are in high demand”, according to Mr Damien Rauaud, Notary in Blain, in the Loire-Atlantique departement.

Who are these buyers?

Due to the Covid epidemic and the economic crisis, properties are now considered as security investments. “Parisians scrambling to purchase properties in Brittany is a stereotype”, according to Mr Damien Rauaud. “It is true that their budgets are much higher, but they only represent a third of home owners in Brittany’s coastal regions. Most property purchases are being undertaken by the locals.

According to Les Echos, a French financial newspaper, the number of Parisians buying properties in Brittany has increased by 7% in 2020.

Prices of Older Houses in Breton Cities

Average budgets per type of clients:

(c) Conseil régional des notaires

Buyers in the 30s to 50s age group, essentially executives, are seeking to purchase their main residence or holiday home for the first time. It is a good time for them due to the exceptionally low interest rates.

This is where rural areas and Central Brittany are benefiting from a buoyant property market as can be seen in the chart below.

According to Les Echos, 17% of the buyers are top ranking executives who own properties in Brittany for 11 years and 9 months on the average.

Price Increases for Older Houses in Medium-Sized Towns and Rural Areas:

(c) Conseil régional des notaires

To conclude, the President of the Regional Notarial Council stated that « Brittany remains very attractive price-wise compared to other regions. The property market is very diverse and inspires confidence for the years to come”.

Interested in purchasing a property in Brittany? Properties for sale are getting scarce. Contact me for advice, administrative assistance and translation services during the purchasing process.

Sources: France-3 Bretagne article dated 16/04/21, Airbnb article dated 14/4/21, Tweet by AMRF dated 14/4/21, FranceInfo dated 17/4/21, Les Echos article dated 20/04/21.