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What are the costs and fees to expect when buying a Paris apartment?

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Notaire fees

in France, “notaire fees” on real estate include stamp duties (taxes), land registry fees (including registering the mortgage on the property, if there is one) and the notaire’s own fee for overseeing the transaction. In most cases, the total amounts to between 7-7.5% of the purchase price, broken down roughly into:

  • 5.5% stamp duties (purchase taxes)
  • 0.5% document research costs (to ensure good title to the property), and
  • 1% fee to the notaire for overseeing the process

Real estate agency fees

Standard practice in France is that the selling agency’s fees normally amount to around 5% of the purchase price of the property. The fees are agreed between the seller and the listing agent, and specified in the sales mandate. They are then included in the public listing price. The letters ‘FAI’ on a French property advertisement means ‘frais d’agence inclus’, or agent’s fees included.

The buyer pays the total price, including the agency’s fees, when the acte de vente is signed. Licensed real estate agents are forbidden from receiving their commission until the property purchase is finalized. At the end of the transaction, the notaire pays the seller the net amount of the purchase price, and separately pays the agency their commission; so, effectively, the agency fee is a shared expense.

It is possible for the sales contract to specify that the purchase price and the agency fee will be paid separately. The advantage for the buyer is that then notaire fees are not assessed on the agency commission. However, if the buyer is looking to finance as much as possible of the purchase, some banks will require that the agency fee not be separated out in order for the mortgage to also cover the agency fee.

Since there is no loss or gain either way to the seller, the buyer should be aware of this issue ask for the structure that best suits his needs.

 

Property finders’ fees

The law in France requires that any person or company that finds or sells property is required to hold a Carte de Transaction, or broker license. Licensed real estate agencies that search for property for clients are forbidden from taking upfront fees for the search, or from receiving their commission before the property purchase is finalized with an acte de vente. Real estate agents are closely regulated in Paris: besides the required license, they hold malpractice insurance and are bound by strict ethical rules regarding their representations about the property and their conduct with their clients.

Some licensed real estate agencies offer buyer search services separate from the properties they sale. Their fees, like listing fees, are paid at the signing of the acte de vente.

A Paris “property finder” that is operating without a broker license is unlawful. The fees that a buyer pays to unlicensed property finders are not allowable deductions from the capital gains tax owed upon sale of the property.

 

Appliances and movable furniture

Normally, appliances and/or furniture are not included in the sale of an apartment. However, you can agree with the seller to buy them along with the property.

In that case, their value is normally separated out from the purchase price, and you pay for them as a separate transaction. This is done in order to avoid paying notarial fees (purchase taxes, about 7% of the purchase price) on their value. If the appliances were included in the purchase price, you would pay those fees on the total amount.

The appliances should be fairly recent, since the value stated must include depreciation. For example, appliances depreciate at 20% of their value per year, so any appliance that is more than five years old should not be “purchased” separately from the apartment price .

Antique furniture is a different matter and should be valued separately and in accordance with their resale value.

 

Homeowners insurance and utilities

Before the purchase is finalized, be sure to establish homeowners insurance on the property and its contents, to take effect as of the date of close. If you are renting the apartment, be sure that this activity is covered in the insurance.

You will also need to transfer utilities to your name, and set up telephone, Internet and other services. The building may provide heat and/or electricity in your monthly charges, but in most cases these are metered and paid individually. If you want the building management company, the syndic, to send you quarterly statements and other information at a different address, you will need to get in touch with them to let them know how best to communicate with you.

It is customary, as well as convenient, to set up automatic debit of these bills directly from a French bank account, so that you are not struggling to keep up with bills from afar.

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