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PROPERTY

French property roundup: New rules on mortgages and those dreaded ‘dossiers’

From new rules on Airbnb rentals to your checklist of pre-move admin and extra laws for homes in the mountains, here is our French property roundup for the week.

French property
Photo: Sebastian Bozon/AFP

Minimum income

New rules on getting a mortgage mean that buyers now need to be earning an average of at least €30,000 a year to qualify for a first-time-buyer mortgage in France, according to research from the property team at Le Figaro.

New rules mean that mortgage lenders have become tougher on minimum income levels in France.

The research shows that anyone wanting to buy in Paris would need a minimum income of €60,000 for a first-time buyer, while the cheapest region is the northern Hauts-de-France area, where buyers would need to be on €22,000 a year.

Find the full list here.

Paris to intensify crackdown on Airbnb

The city of Paris already has some of the toughest rules on renting out your property on Airbnb, as city bosses have waged a lengthy struggle against the online platform.

But now authorities want to introduce a new ‘compensation zone’ which will make it even more difficult to rent out properties in the most popular areas, including Marais, Montmartre, the Champs-Élysées and the Latin Quarter.

These will be voted on by City Hall in December. 

READ ALSO What are the rules on renting out French property on Airbnb?

Let’s move to . . . the Paris suburbs

If you want to move to Paris but been put off by the price of property, try having a look outside the périphérique.

Technically, only the area that is inside the ring road is Paris, the rest is suburbs – but because Paris is a very small city as capitals go, the suburbs are often still within easy commuting or even walking distance of the city centre.

The inner suburbs – known as the petite-couronne – are formed of three départements; Val-de-Marne, Hauts-de-Seine and Seine-Saint-Denis, while the outer suburbs are Seine-et-Marne, Yvelines, Essonne and Val-de-Oise. 

The inner suburbs in particular are mostly accessible on the Metro lines and so are an easy commute. Prices drop dramatically as soon as you cross the périphérique so it’s well worth taking a look at the areas.

The banlieues, as the suburbs are known, don’t always have the best reputation, but while it’s true that there are some rough areas, particularly in Seine-Saint-Denis, there are also lots of lovely areas that offer larger properties, more green space and something of the feel of small-town France.

Here’s our pick of some of the best areas.

READ ALSO Banlieue boom: No, Paris’ suburbs are not all deprived and crime-ridden

Before you move 

Here at The Local we’re obviously big fans of starting a new life in a new country, but before you make the move there are some boring but important practicalities that you need to consider.

From legal residency to income, from making friends to selecting a place to live, we’ve put together a guide to the 10 things that you really need to think about before moving to France.

French property vocab 

Dossier – this won’t just come in handy for property, a dossier is essential for all sorts of things in France. The word itself simply means file but the true meaning of dossier in French is much more wide-ranging.

When completing almost all admin tasks – including buying, selling or renting property – you will need to prepare a dossier of documents in order to complete the task. The documents required will vary but will almost always include a passport for ID, proof of address such as a utility bill and bank details. Make sure when submitting an application that you include all the documents asked for it you don’t want to hear the most blood-curdling phrase in the French language – votre dossier est incomplet

Property tip of the week 

If you’re buying in the Alps, Pyrenees, Jura or Massif Central, be aware of the Loi Montagne. The ‘mountain laws’ cover all sorts of things from what building work you can do on your house, to your car.

A series of extra laws cover mountainous areas with things such as reinforced building codes in avalanche risk zones to compulsory winter tyres between November and March. So if you are buying in an elevated area, make sure to check whether your area is covered by mountain laws, and then familiarise yourself with them.

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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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