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PROPERTY

French property roundup: North-east bargains to rules for landlords

From flamenco-inspired architecture to property taxes and the vocabulary for making a sale, here is our weekly roundup of French property news.

Rent controls have been extended to cities including Lyon.
Rent controls have been extended to cities including Lyon. Photo: Jeff Pachoud/AFP

Flamenco tower

If you’re on the lookout for a French property that’s truly different, check out this development in Montpellier, a tower inspired by the skirts of a Flamenco dancer.

“I wanted to cultivate the Mediterranean spirit and put a feminine touch on this movement,” Xavier Gonzalez, the Spanish-born architect behind the Higher Roch tower, told Le Figaro.

The 17-storey building containing 76 apartments is scheduled to open in spring 2022.

Rent controls

Paris and Lille already had rent controls, although how effective the Parisian ones are is debatable, but from November 1st, local authorities in Lyon and Villeurbanne have also imposed price caps.

The controls, which affect new rental contracts, are decided by zones and by floor space of the property being rented out and sets a maximum price for landlords.

Taxes for second-home owners

If you buy property in France to keep as a second home you will still be liable for certain property taxes, some of which are due now. We have broken down which property taxes second-home owners pay and how much you can expect to pay, and we’re also looking at what you are entitled to in return for your taxes.

Winter truce

November 1st marks the beginning of the trêve hivernale (winter truce) during which it is illegal for landlords to evict tenants, even if they are in arrears with the rent.

It’s one of several ways in which property law is weighted towards the tenant in France, so if you’re planning to rent out your French property make sure you familiarise yourself with the rules in advance – getting rid of a bad tenant can be difficult.

Let’s move to . . . Nord

The north-east of France is often overlooked by foreign buyers, and is sometimes rather snobbishly dismissed by the rest of France, but there are good reasons to consider a move there.

Not only is property reasonably priced, but for Brits it has great connections to travel back to the UK. But practical considerations aside, the area has a lot going for it – from a satellite of the Louvre to delicious local cuisine and a fine brewing tradition. Lille resident Martin Greenacre explains more.

French property vocab

Offre d’achat – if you’re buying property in France you will definitely need to know this. The process of buying property in France goes in two stages – first the offre d’achat and then the promesse de vente and there’s usually a gap of about three months between the two. The gap is to give the buyer time to decide whether they want to go through with the purchase, but there are legally binding obligations at both stages, plus a specific timetable to hand over the money – full details here.

Property tip of the week

If you’re buying in a rural area, make sure you are aware of la chasse during the season. Hunting is a very popular hobby in France and la chasse generally means shooting.

Whether or not you’re in favour of hunting, it pays to know when the hunt is in your local area, as not all hunters with guns are very scrupulous about health and safety, and every year there are accidents when dog-walkers, hikers and cyclists get caught in the crossfire. Here’s how to keep safe during the hunting season.

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PROPERTY

French property: What is buying ‘en tontine’?

If you're buying property in France, you might be thinking about buying 'en tontine' - this has advantages especially when it comes to France's strict inheritance laws, but can also have tax implications.

French property: What is buying 'en tontine'?

What is it?

The ‘clause de tontine’ sometimes also known as a ‘clause d’accroissement’ is a clause that is inserted into the property deeds when you are buying a house or apartment.

It can only be inserted during the purchase, and cannot be added later.

It’s basically a ‘group purchase’. It’s most commonly used by unmarried couples who are buying together but it can be used by larger groups too – for example a group of friends buying a holiday home together.

You will have to ask a notaire to draw up the tontine clause during the property purchase and it can only be used if 

  • the parties are equally involved in the financing of the purchase
  • the parties involved have a roughly equal life expectancy (for this reason tontine clauses may be rejected if there is a significant difference in age between the purchasers)

What’s the point of it?

The main reason that people use it is to sidestep France’s strict inheritance laws, which assign that a certain portion of every estate must go to children, at the expense of a partner. 

READ ALSO How France’s strict inheritance laws work

For this reason it is particularly used by couples who have children from previous relationships.

On a property with a tontine clause in effect, when one owner dies their share of the property passes in its entirely to the other member/members of the tontine.

This cuts out children from inheritance, but means that a surviving partner is not evicted from their home in favour of the children of the deceased. 

It also has the advantage of making the intentions of the deceased clear, to avoid arguments among heirs after their death.

It should be noted, however, that the tontine clause only takes in the property that it covers – other assets may be subject to French inheritance law so it’s therefore probably wise to arrange a will, to ensure your wishes for your estate are met.

The surviving party can ask a notaire to update the property deeds to show that they are the sole owner, if they want. Be aware there will be a fee, which could reach four figures for the privilege – and it doesn’t actually involve any change to the property title.

Drawbacks

The advantages of the system are clear, especially for blended families, but there are some potential drawbacks too, which mean that anyone considering buying in this way would be well advised to take proper legal advice before they start.

Inheritance tax – while a tontine will help you to avoid restrictions on inheritance, it does not exempt you from inheritance tax. French inheritance tax is structured according to your relationship to the deceased, and people who are neither married nor related to the deceased pay an eye-watering inheritance tax rate of 60 percent.

The only exception to this top rate of inheritance tax is if the property is your main residence and it is valued at under €76,000 – in that case, tax is paid at a rate of 5.8 percent.

Married couples and family members pay a much lower rate or not tax, but if you’re not married to your tontine co-purchaser, be careful that you’re not lining yourself up for a massive tax bill in future years.

Wealth tax – depending on the value of the property, it could tip you over into the ‘wealth tax’ category when you inherit. France’s wealth tax is a real estate based tax and is levied on anyone who has real estate assets (property and land) worth €1.3 million or more.

The calculation includes property held en tontine.

Tax savings – you might hear tontines being advised as a way to limit your French tax liability.

While this used to be true, changes to tax laws means there are no no significant tax advantages to buying this way – the same is true for buying a property via an SCI, which used to represent a tax saving until the law was tightened up.

Disinheriting family membersOne side effect of the tontine clause on mixed families is to effectively disinherit any children of the first person to die.

Because the property passed to the survivor, under French law, only their direct descendants – rather than any family by marriage – are entitled to automatic inheritance.

That means that the children of the surviving partner will be entitled to the statutory share of the entire asset (between 25 and 30 percent depending on the number of children), but the children of the first person to die will be entitled to nothing. Obviously you can choose to leave them something in your will, but you can only leave them some or all of the estate which is not automatically given to the children on the survivor.

Divorce/dispute – if the members of the tontine split up or (in the case of friends) fall out, then they can either sell the whole property or agree to buy each other out.

However, if one party refuses to sell, then you have very limited legal options – unlike a standard property purchase a tontine is not regarded as joint ownership, so one partner cannot be forced to sell as part of a divorce procedings, for example.

Basically the tontine can only be ended or changed with the agreement of all parties – so if you can’t agree between yourselves then you may be stuck with it.

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