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Purchase of Property in France by Non-Europeans

Friday 13 August 2021

The French government has given its position on the right of non-Europeans to purchase property in France.

We get a regular flow of mails into the office from non-Europeans, seeking guidance on their right to property ownership in France, notably from Americans, Australians and Canadians. In the past year or so it has also included British nationals, concerned about the consequences of Brexit.

Although Europeans have an automatic right to own real estate in any country of the EEA, arising out of freedom of movement, several countries in Europe have put conditions and restrictions on purchase by non-Europeans, including Malta, Denmark, Hungary and Poland.

The EU has stepped back from regulating the issue at a supranational level, stating, under Article 345 of the Treaty on the Functioning of the European Union, that: 'The Treaties shall in no way prejudice the rules in Member States governing the system of property ownership.'

Within France the issue is one that is often a topic for discussion, although not one that any French government has chosen to launch or in which they seek to engage. In Brittany, in particular, there have been minor protests about foreign ownership, as has also occurred in Provence Cote d’Azur. However, the resentment has been as much about Parisians buying up homes as foreign buyers.

The French national rural land agency, SAFER, regularly exclaims about the loss of agricultural land to foreign owners and they are sometimes joined in their remonstrations by others when a famous wine chateau falls into foreign hands.

It is perhaps not surprising, therefore, that parliamentarians sometimes raise the issue, as occurred recently when Patrick Chaize, a member of the Senat upper chamber from the Ain department, which borders Switzerland, asked the government whether the government would consider introducing a quota system for the purchase of property by non-Europeans, as currently occurs in Switzerland.

The senator expressed concern at the scale of acquisition of vineyards, farmland, forest and second homes to non-Europeans, which he considered was putting up prices in certain regions.

On second homes, he stated that: "It must be noted that these residences, which are essentially secondary, are occupied occasionally by residents who are therefore not involved in the life of their municipality and the territory."

In response, the government acknowledged that demand in some areas caused prices to rise but stated that: "a quantitative restriction on the acquisition of land by non-EU nationals, the causal impact of which on price dynamics remains to be demonstrated, could constitute an infringement of the right to property and freedom of establishment."

So in answer to those readers from the UK, USA, Australia and other non-European countries, who ask us 'can I buy French property? the answer is 'most definitely'.

The government also pointed out that the capital gain tax rules in France were designed to dissuade speculative acquisition of property, as relief to the tax was based on duration of ownership.

There were also other tax measures the government had taken to moderate price increases, notably with a tax on vacant homes and higher local rates payable on second homes in areas of housing stress. There were also tax incentives in place to encourage new housebuilding, such as the Loi Pinel.

Moreover, although purchases of holiday homes by international buyers unquestionably causes prices to rise in some areas, over 90% of second homes are owned by French nationals and, as a result of Covid, demand by urban dwellers in France has soared in the past year, causing significant price rises in many areas.

The government might well have also pointed out that the rural housing agency SAFER does have substantial powers of prior acquisition of rural land and property, which the government have increased in recent years. Those powers are used regularly to ensure important estates do not fall into foreign hands, whether European or non-European.

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