November, 2004

There is an organisation that anybody buying a place in rural France should know about: the Société d’Aménagement Foncier et d’Etablissement Rural, or Safer. If you are interested in farming in France, they are here to help: from animal husbandry to gîtes, Safer helps those trying to set up a rural business to find the right property. An agricultural development body, it has pre-emption rights on large sectors of the French countryside. If it believes a property for sale would serve its members, it can stop the sale and buy the property on behalf of members at the offered price.
?Great if you are a farmer, but not if you aren’t. Harriet and Lance Kenny had never heard of Safer until they tried to buy a house in southwest France. Harriet and Lance went through the French conveyancing motions in the normal way for their €425,000 farmhouse. The notaire wrote to Safer which has a time limit of two months to state its interest in the property. It did not do so and so the notaire prepared a conveyance deed which stated that Safer had waived its rights. Harriet and Lance completed their purchase.

They moved to France and their three children started school there. Six weeks after they moved in they received a letter from Safer advising that it had decided to buy the property and that it had in fact confirmed its intention to the notaire within the two month period. The notaire denies this. The outcome is that the Kennys will have to find somewhere else to live within six months.

“We love France, but have little respect for its administration,” says Harriet. The Kennys will be financially compensated, their lawyer is still fighting to obtain the maximum amount, but the turmoil it has caused is hard to put a price on. As things stand they will be refunded for the property plus legal costs.

According to David Boutillier, research engineer with Safer, the Kenny’s case is rare. “We would only actually ask someone to leave their home in exceptional circumstances,” he says. “Normally a pre-emption would happen long before they have moved in.”

According to the Law Society a growing number of Brits are falling foul of the law when buying properties in France. There are several issues you should be aware of as a buyer. The first and possibly most important is to take proper legal advice. “You should instruct an English lawyer, who is bilingual and knows both legal systems back to front, theoretically and practically,” advises Stephen Smith of Stephen Smith France Ltd. “We have seen so many people run into terrible problems which in the long run are far more costly than just instructing a professional in the first place.”

There are several companies offering complete house-purchasing packages, including legal advice. These need to be checked out carefully. One reader wrote to me saying she had paid several thousand pounds for a legal package from one of the biggest UK agents operating in all over France, only to find they had got the completion date wrong and she couldn’t move into her home when she had planned. She has been given £500 compensation, but it is nothing compared to what she paid for the service in the first place and the trouble their mistake has caused. Before opting for a package, check if the agency’s staff has French conveyancing experience and tax qualifications. “The agency should also have a carte professionelle, which enables them to work as registered agents in France,” says Phil Turnbull who runs an interpreting service for Brits in France. “People generally don’t use a UK professional without checking credentials, why do so in France?”

According to Dawn Alderson, solicitor with Russell Cooke Solicitors, you should also be aware that the conveyancing system in France is very different. “I have had calls from clients in campsites, surrounded by all their belongings,” she says. “They took the completion date to mean the same as it does in the UK. In France it is an approximate date and not set in stone like it is here.”

Obviously checking that Safer has no claim to the property is a must. This really only applies to rural areas, although Stephen Smith has heard of cases where they have pre-empted allotments. Also be aware that the local council can exercise pre-emption rights too. Finally, make sure there are no obligations on the property. Some friends of mine bought a place recently and found there is an ancient right for an aged relation of the previous owner, living in an old people’s home nearby, to move in if he ever wants to. A year on he hasn’t shown up. But I don’t know what they will do if he ever decides he’s had enough of the old people’s home and arrives on their doorstep with a suitcase.

Dawn Alderson, solicitor and avocat, partner with Russell Cooke solicitors
email: aldersond@russell-cooke.co.uk tel 0208 789 9111

Stephen Smith, French lawyer, Stephen Smith France Ltd, www.stephensmithfranceltd.com, tel: 01473 437186

Safer website for foreign agricultural workers: http://www.terresdeurope.net
Safer website for foreign buyers looking for rural properties: www.frenchland.com

No claims bonuses in France

Direct Assurance, a leading internet based car insurer, told a reader with a five year no-claims bonus that French insurance companies do not accept bonuses from overseas insurance companies. This is not the case. However, by the time said reader had discovered his mistake he had already paid the premium. When he tried to cancel the contract the company only returned two-thirds of the premium along with a letter explaining that Direct Assurance, and not all French insurers, does not accept overseas no-claims bonuses. A spokesman from Direct Assurance confirmed that their policy is to only accept no-claims bonuses from France. Most French insurers do accept no-claims bonuses from abroad, so it’s worth shopping around, especially as car insurance in France is so much more expensive here than in the UK.

Tax on rental income

“My wife and I jointly own a holiday apartment in France and wish to rent it out to cover overhead costs,” writes a reader. “Could you please tell us what the tax threshold is, i.e. how much could we legally earn before tax becomes payable. Also, would we have to file a tax return in France even if tax is not payable? We are both over 65, retired, and British residents.”

Income from letting French property must be declared to the French tax authorities by 30 April in each year. The onus is on the tax payer to obtain, and submit the French tax returns which French tax law obliges him to make. “Even if the property was only occupied for three days and the owners were paid a bottle of whiskey in recognition, this technically would be classed as income and declarable to the French tax authorities,” says Stephen Smith from Stephen Smith France Ltd, who has written a book called Letting French Property Successfully. “Do not forget that UK domiciled owners of French property must also declare their French source rental income to the UK Inland Revenue. They can claim a credit for any French tax paid and will only be taxed again to the extent that their liability to UK Income Tax exceeds the rate at which they were charged in France. Such is the nature of the various allowances and deductions that many people do not pay any French income tax at all.”

Helena Frith Powell’s More France Please, We’re British is published by Gibson Square (1903933560, £9.99).