This is a very good way the French Government can Ignite the Real Estate Market Now
Even with the low interest rates, French real estate sales are still moving very slowly in most of France, however, there is a solution that the French government can use to ignite the French real estate market.
This is called a First Time Buyer’s Program
One of the biggest costs a French property buyer has are the notary’s fees that are made up of mostly French government taxes (state, department and commune).
A purchase of a pre-owned French house or apartment for 165 000 Euros at this time can have a notary fee of just over 13 000 euros! So the 165000 euro home actually costs the buyer close to 180000 Euros!
For a first time French property buyer who is scrapping together money to have the deposit for a new property the notary fee can directly impact his or her ability to afford a home. Many French property buyers have to include the notary fees in the mortgage application amount since the notary fees are so high as a direct result of French government taxes.
Note: The sample above was for French real estate of 165 000 euros purchase price which may not be a realistic purchase price in many parts of France, prices can be higher and therefore, the tax amount will be higher. If you buy a French home for 250 000 euros the notary fees are going to be closer to 20 000 euros! Indeed, the notaries fees can be less if you are buying a new French property but many times based on location or pricing buying a new property is not an option for first time French property buyer.
The solution – how it works:
In countries such as Canada there is a first time buyers program. This program allows first time property buyers to have an exemption or reduction on the property transfer tax when they fit certain criteria.
For example, in British Columbia, Canada, a first time buyer can obtain an exemption or reduction on the property transfer tax property when
- The property is priced below a certain price range
- The buyer is a permanent resident or citizen of the country (in this case Canada)
- The buyer has lived at least 2 years in the province of British Columbia
- The buyer has never had a property tax exemption before
- The buyer has never owned an interest in a principal residence anywhere in the world at any time
- The buyer must live in the property as their principal residence
**** A false declaration to obtain the benefit can also lead to a large penalty.
Current and up to date details on the British Columbia system can be found here.
Of course, you may think “this is great for first time French property buyers but what about other property owners who want to sell or buy? how can this benefit me as a second time French property owner who wants to sell now?”
The First Time Buyer Program has a domino effect and this is why one needs to be created in France
The French first time property buyer is the stimulater of the market. Once the first time property buyer enters the market with a successful purchase, his or her action allows the current French property owner to ‘buy bigger’ or ‘down size’ in the market place which continues to stimulate more activity. It creates a buying or selling domino effect.
The high cost of buying in France for French first time property buyers due to the government taxes paid by the buyer makes the market less active, creating a new French first time buyers program can make a difference. Encourage your local political representation to take action.
ESREA France: We are here to help make the process of buying a French property easier for English speaking people. We would like to see the creation of a First Time property buyer program in France for the English speaking people from other countries who come to France to set up business and stimulate the economy. If they are given a more affordable opportunity they are more likely to invest and stay long term rather than rent and stay short term. In addition, we would like to see young French people stay in France and buy a home and not leave the country to find work and a less expensive buying process. This program can a a win-win for all involved.
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Members of the French parliament, can we make this idea possible?