Buying a house in France (2)
Before you commit yourself to buying a house in France there are many more things to consider than just the legal procedure and inheritance rules. Here are a few thoughts.
If you are buying a holiday home, think carefully about maintenance. An old farmhouse might look idyllic, but it is likely to need extensive and ongoing maintenance and repairs. French plumbing can be idiosyncratic, to say the least, and many plumbers make a good living from sorting out the plumbing problems of absentee English owners. Are you confident about arranging for builders to work on the house in your absence?
Swimming pools need care and maintenance on a regular basis every few days when they are in use. If you are not living in your French home you will need to pay someone to visit regularly to look after the pool. New laws introduced in 2004 require you to install safety fencing and child proof gates round swimming pools. You can get a higher rental income with a pool but you have higher overheads.
Do you need a mortgage? You have two choices a French mortgage secured on your French house or a further advance on your English mortgage. If you arrange a French mortgage you will have to make the repayments in Euros, which will involve transferring money from England. While the exchange rate has been favourable in recent years there is no guarantee that it will remain so. As a rule of thumb, if all your income is in sterling, an English mortgage repayable in sterling will probably be safer.
Both British and French banks will need to know that you can afford the additional borrowing. French banks apply stricter tests than English banks and in general will not lend if your total monthly payments on mortgages, both in England and France exceed one-third of your gross income. Potential letting income will not be taken into account by banks in either country.
You will need a French bank account in order to pay the utility bills and any builders, gardeners, or cleaners you need to employ. Fortunately there is now an easy way to do this. Crédit Agricole have a dedicated English speaking telephone branch in Caen set up especially to cater for British people requiring a French account. Visit www.britline.com phone 00 33 2 31 55 67 89. Internet banking is available as a matter of course.
If you plan to rent the house out for holidays, do your research into the market. Brochures from agencies which offer self-catering holiday accommodation in France will give you a good idea of what the current market rents are in your area. It is always worth ringing them up for advice; they will see you as a potential client and will often give you a lot of useful information. Check how long the season is in that part of France. It is dangerous to rely on letting income to cover all your outgoings and mortgage payments on the house. With careful marketing you may do so, but there are no guarantees.
You will have to pay income tax in France and Britain on the profit you make from letting, even if all the rental income is paid to you in Britain. Any tax you have paid in France can be set off against your UK tax liability. You will not be able to claim all your expenses against the rent because some will relate to the periods when you are using the house yourself. If you are not confident about dealing with property income on your tax return you will probably need to use an accountant.
For information about French inheritance laws, click here