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PROPERTY IN FRANCE

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Why 2015 is the year to buy that house in France

With the double whammy of low interest rates and favourable exchange rates, a property expert tells The Local that there's never been a better time for foreigners to buy their dream home in France. The Local speaks to a family who is set to do exactly that.

Why 2015 is the year to buy that house in France
The time is right to buy that house in France you always wanted. Photo: Property photo
On Friday, one British Pound was worth a healthy €1.35. One US dollar was worth €0.88.  And one of the best exchange rates in years has caught the attention of foreigners eager to make hay while the sun shines on France. 
 
Phil Richards, an accountant from Berkshire in the UK, is in the process of securing his first home away from home in the French Alps, close to the Swiss border.
 
"I'd be a liar if I said the movement in the euro didn't have a factor in the timing," he told The Local. 
 
His family had been planning to buy a second home in France for three years, but only recently decided to take the leap when the currency exchange rates made things "a whole lot more attractive". 
 
They're set to sign any day now on an off-plan chalet in the famous Portes du Soleil area, a home where they'll spend large portions of time with their two kids and three dogs. 
 

(Richards, centre, plans to enjoy the summer cycling and the winter slopes. Photo: Private)
 
"When you can compare what you get for your money in somewhere like Cornwall, France becomes a very attractive option. Put it all together and it makes a lot of sense," he says. 
 
He admits that it's not all plain sailing though. The fear, he says, is that the exchange rate could take a turn for the worse while they're paying off the property over the course of a year.
 
"The big risk is that if I commit to paying today and the pound weakens then I would end up paying a lot more. But my plan is to lock in the exchange rate today to cover myself," he says.
 
"This is a risk for anyone buying and they need to be aware of it. Even a small move in the exchange rate could mean a few thousand pounds when it comes to property. This is a very real risk, but one that you can manage if you want to."
 
'A double whammy of goodness'
 
The Richards family is far from alone in eyeing up French property from abroad, and experts expect to see many more Brits joining them this year.
 
"All the stars and planets are aligned to give customers a good base to buy from," said Heather Byrne, Regional Manager at estate agents Leggett Immobilier for the Rhône-Alps.
 
She says that home prices are at their lowest since the 2008 crisis and that it's the best exchange rate in recent memory. 
 
According to Leggett, the average UK buyer of French Alpine property spends around £290,000 – this time last year that would have bought you €342,000, but today it would fetch €390,000.
 
Essentially, For those looking to buy at the upper end of the market the savings could run into hundreds of thousands of euros.

 
But it's not just about the favourable exchange rate.
 
"On top of that, French mortgage rates are also at an all-time low. It's the same as in the UK, the government wants the markets to be opened up and for people to keep selling to generate movement across the economy," Byrne tells The Local.
 
 
"And the national banks are keeping interest rates low and there are also really low exchange rates. This is a double whammy of goodness."
 
While sales to UK buyers are on the up, the overall French property market remains fairly calm. There were just over 700,000 transactions in the last 12 months, meaning that properties are generally priced to sell and that there's a decent supply to choose from.
 
But that doesn't mean it won't boom for foreigners. Byrne has predicted for months that 2015 will be a "bumper year" for the property industry, providing there isn't another crisis. She notes that there has been a growing trend for people investing their money outside of banks due to the bad interest rates. 
 
"They're realizing that they might as well put their money into property," she says.
 
As 2015 continues, she thinks prices will level out that that more asking prices will come through.
 
But if you're thinking about making a purchase of your own, you shouldn't wait, she warns.
 
"The vendor is becoming stronger as people are looking to buy. People need to get their property purchases in now – it's an absolutely fantastic time to buy."

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PROPERTY

Property taxes: How much will it cost to extend your French home?

Installing a swimming pool, building a garden shed, or adding a conservatory to your French home has become more expensive in 2023.

Property taxes: How much will it cost to extend your French home?

If you are planning a renovation project in 2023 you’re likely looking at rising cost for materials and labour due to inflation – but there is one other cost to consider; taxes. 

In France there is a one-off tax that has to be paid on certain building works, and the government has raised the rate for this.

The taxe d’aménagement, sometimes referred to as the garden shed tax, applies to all property development – construction, reconstruction and extension – of buildings that require planning permission or a building permit.

Garden sheds, swimming pools or extensions with a surface area of more than 5 square metres are subject to the development tax – although a 50 percent reduction is applied to the flat-rate values of certain buildings, particularly the first 100 square metres of main residences.

READ ALSO Everything you need to know about installing a swimming pool at your French property

The tax is collected by local councils, who set their own percentage rates for the tax, working off the base rate set by the government.

A decree published in the Journal Officiel set the base figures for 2023 at the following rates: 

  • €1,004 per square metre in Île-de-France (up from €929 per square metre in 2022);
  • €886 per square metre outside Île-de-France (€820 per square metre in 2022).

The flat-rate values per square metre of building space, which constitute the basis for the development tax, are revised on January 1st of each year according to the latest construction cost index published by national statistics body Insee. 

Additionally, specific rates are set for:

  • €250 per square metre  for a swimming pool (up from €200 in 2022);
  • €12 per square metre of ground-fixed solar panels (up from €10 in 2022);
  • €3,000 per wind turbine more than 12 metres high;
  • €3,000 per pitch for tents, caravans and mobile leisure homes;
  • €10,000 per pitch for a holiday chalet or bungalow.

The amount of the tax is calculated according to the following formula: 

(Taxable area multiplied by the government-set base figure) multiplied by the percentage tax rate set by the local authorities. This gives the total to be paid in cents. Bills are rounded down.

So, the tax for a 30 square metre extension in an area where the combined local and departmental tax rates total 6.25 percent would be calculated like this:

30 (the size of the development) x 886 (the base tax rate outside Ile-de-France) = 26,580

6.25 (local and departmental tax) x 26,580 = 166,125 cents, more usually expressed as €1,661. 

If the total payable is less than €1,500, you will receive a bill in the six months after planning permission was granted, with details of how to pay.

Otherwise, it is paid in two instalments, 12 months and 24 months after authorisation, with a 10 percent surcharge applied in cases of late payments.

READ ALSO The hidden costs of owning property in France

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