PROPERTY
Renting, Buying & taxes
Although house and property prices have seen dramatic declines recently in some countries, prices have been relatively stable in France, this is mainly due to the dominance of fixed rate mortgages which makes the market less prone to the sharp downturns other countries have seen.
For those of you fortunate to already own property in France, France is not experiencing large property price reductions although the recent economic uncertainty in the UK and the strong euro have certainly impacted on the property market in the Alps and Chamonix is no exception.
Renting
Whether you are looking to rent for a holiday, for the season or the year, there are plenty of rental agencies in Chamonix to help. To understand the rental rates, you should also understand the town.
Although Chamonix is both a winter and summer resort, the peak rental months are during the winter season. Many people come to Chamonix for the winter, whether it is for work or simply for a prolonged holiday. They arrive in November/December and leave from early April. Although there are more tourists in the summer season, the season is a lot shorter: July and August.
As a result, there is far more choice at the end of the winter. If you are looking at renting for the year, try and start your rent from April/May rather than November.
Types of Rental contracts
Many of you will sign a rental contract without giving it a second thought. Others of you may be thinking of renting an apartment, an annex to your house etc and may be wondering what is involved.
Unless you are dealing direct with the owner, any company overseeing the property rental, to whom you pay your deposit or rent, must hold a ‘Carte Professionnelle Agent Immobilier’ this entitles them to take your deposit or monthly rent on behalf of the owner.
There are 3 types of rental contract:
Seasonal
A seasonal contract in France is valid for a maximum of 3 months.
Furnished
Furnished property benefits from slightly different treatment. The contract duration is for one year and at the contract end it is automatically renewed, unless notice has been given by either side. That aside, furnished contracts are less regulated as concerns deposits, charges, the obligations of landlord and tenant, and the documents to be attached to the contract.
Furnished property is taxed as professional income, and is exempt from value added tax. The owner is liable to pay local taxes.
Unfurnished
An unfurnished property contract has a minimum duration of three years (if the proprietor is a person), or six years (if the proprietor is a company or society). An individual owner can make a shorter contract (one year minimum, except in the special case of holiday lets) only if he needs to recover the property for professional or family reasons, e.g., retirement, return from abroad, need to house a family member. If no limit is fixed in the contract, three years are automatically applied.
The contract must be in writing. There are a number of obligatory clauses, and also many forbidden clauses. The tenant is forbidden from sub-renting without a written agreement from the landlord.
The Contract
The tenancy contract stipulates terms and conditions of rental and rental rates and is signed between the landlord or estate agent (on behalf of the proprietor) and the future tenant.
The tenancy agreement must include the following:
·Owner's name and address and that of their agent (if relevant)
·Date on which the contract starts
·Duration of the contract
·Rental amount and terms of revision/increase
·Method of payment
·Amount of the deposit
·Type of accommodation (house, apartment, mixed dwelling)
·Declaration of common areas
·A description of the property (number of rooms, garage, garden, cellar)
Write and sign an inventory and condition report, with the future tenant, to accompany the rental agreement. List fittings, fixtures and their condition and the condition of the property.
The deposit must be of the value of one month's rent, paid up front on the signing of the tenancy agreement. In addition, the first month’s rent must be paid at the same time.
Note: This only affects rental contracts signed from 9 February 2008 onwards (not those signed before that date).
At the end of tenancy and on the return of the keys, the landlord/agent has up to two months to reimburse the deposit, deducting any money needed for repairs to the property. It is illegal to hold back the last months’ rent in lieu of the deposit.
The tenant is required by law to have a comprehensive household insurance certificate.
The landlord may add a clause to both new and renewed contracts, demanding termination of the contract if the tenant fails to insure the property.
If your property has a fireplace or log burning stove, a cleaning certificate must be renewed annually by the tenant and may be requested by the insurer and owner.
Buying property
Buying property in France is not the same as buying the in the UK.
In the UK we are used to offering a price and based on the reply, deciding whether or not we want to buy the property. In France, when you make an offer, it is expected that you will buy if the offer is accepted.
In the first instance you will be required to sign a ‘compromis de vente’ - a promise of sale. This legally binding document details what you will buy. It will contain, amongst other things: the identification of the property being sold, it’s description, the dimensions, related costs eg. Annual co-propriété charges, whether there is asbestos etc, natural risks ie. Is it in a flood or avalanche zone, the terms of the sale ie. The date on which you must pay and how much, the latest date for signing the deed etc. This is the moment you pay your deposit.
In France, only someone with a ‘carte professionelle agent immobilier’ has the right to hold money on your behalf, ie. Take a deposit from you. Check that the person you are dealing with holds this ‘carte’. Do not pay money directly to the seller as you may lose it.
After signing the ‘compromis’ you have 7 days in which to retract your offer.
Take note of any ‘servitudes’ eg. Any rights of passage or planning restrictions. The seller must inform the potential buyer of the boundaries of the property and indicate any common ownership of certain fences or walls.
If you are buying land, make sure that you can build on the land. Check that the land is used for public utilities or whether anything is planned eg. Water pipes, sewage pipes.
Taxes
Whether you own or rent your property, you will have to pay taxes.
Taxe d’Habitation
The person living in the property on January 1 is liable to pay the taxe d'habitation. It applies, even if you are living there as an owner, a tenant or for free. Even if you move from the property on January 2nd, you must pay the tax for the whole year and you have no recourse to reclaim the money from the new owner/tenant.
You are also eligible to pay Taxe d’Habitation if you have the “possibility” of using the property, ie. It is furnished and supplied with water or electricity, even if it is only occupied for occasional visits. This means that your second home is also subject to this tax.
The rate you pay is determined by a state estimate of the rental value of your property, minus any reductions. The bill arrives in the last quarter of the year, normally around October. Take a note of the date it must be paid by, as if you miss this date you will have to pay a surcharge of 10% of the bill.
Your TV licence is also payable in the Taxe d’habitation. The rate was 120€ for 2010. Everyone is assumed to own a TV and it is up to the resident to opt out. If you have a television set in your property on January 1st, whether it’s your first or second home and whether you watch English or French TV or even just dvd’s, you must pay. It doesn’t apply to computers on which you watch films.
You can pay your Taxe d’Habitation in a lump sum, in cash or cheque, online or by installments.
Taxe Foncière
Taxe Foncière is paid by owners of property both residential and commercial. Your tax is based on whether or not you have buildings on your land. You will pay a portion of your tax for the buildings and a portion for the land.
Any permanent construction above or below the ground is eligible for Taxe Foncière. Adjoining facilities such as car parks, swimming pools and gardens are also counted. If you moor your boat next to your house (not much chance in Chamonix) this will also be included.
New houses or re-built properties are exempt from the Taxe Foncière for 2 years after construction.
As with the Taxe d’Habitation, various exemptions can made taken into account.
Wealth Tax
France is the only EU country which still imposes a wealth tax. The debate still rages around reforming or abolishing this tax, along with the various exemptions which accompany it.
The Wealth tax is based on your overall net worth above 790,000€. This includes property (you can deduct 30% of the value of your main home), land, furniture and fixtures, personal possessions ie. Jewellery, cars, watches, horses, planes (if you are so lucky!) etc. It also includes bank accounts, stocks and shares.
The wealth tax is very complicated and there are many exemptions. For obvious reasons, I do not give advice on taxes and would always advise seeking the advice of a professional.
The initial rent can be freely agreed between the owner and the renter. However, the rent can be revised only once a year, and only if a clause in the contract specifies it.
Rules and regulations change constantly. Please get in touch if you want further information on any of the above subjects.
Communiquer 74: Sarah Barnes Tel: 00 33 (0)6.45.85.64.95 Email: communiquer74@orange.fr
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