What restrictions are there on foreigners buying property in France?

There are several things to consider before buying property in France. You may want to visit the area during different seasons to be sure that you enjoy it rain or shine, and you will want to consider how much you would end up paying in property taxes, as well as whether or not it will be a main residence or second home.

The law

Let's start with the good news - there are no official rules in France against non French-citizens purchasing property, neither is there any requirement to be resident in the country in order to buy property - indeed foreign second-home owners make up a small but significant slice of the property market.

Revealed: Where in France do foreigners buy second homes

But in practice there are a number of challenges foreigners face when buying French property, especially if they need a mortgage.

Property sale process

Before making your decision, learn the steps to buying property in France and the expected timeline.

Roughly, there are five steps: making your offer, a cool-off period, signing a 'Compromis de Vente', providing the notary (notaire) with your deposit, and signing the 'Acte Authentique de Vente' (deed).

READ MORE: How long does it normally take in France to buy a property?

The French property purchase system is likely to be different to what you are used to - especially the role of the notaire.

Also Americans might be surprised to learn that in contrast to the US system of having a realtor who guides you through the entire process, in France - as in most of Europe - buyers are expected to do much work of the house-hunting work themselves.

Bureaucracy

There are a few extra steps added if you need a mortgage, but generally all foreign buyers should be prepared to have a valid ID (passport), as well as other documents including your marriage and/or divorce papers (to demonstrate your civil status).

At some point in the process, you will need to open a French bank account, even if that ends up just being for utilities after you've made the purchase. The earlier you can open a French bank account, the better.

You should know that purchasing property in France does not automatically give you residency rights. If you are not an EU citizen, then you will need a residency card or visa to spend extended time in France.

READ MORE: EXPLAINED: What type of French visa do you need?

Getting a mortgage

While there are no laws stopping foreigners from buying property in France for most people the biggest obstacle is getting a mortgage, as there are conditions that many foreigners cannot fulfil.

In France, the vast majority of loans are guaranteed by banks, and one bank's offer to you may not be the same as another's. You are free to contact several banks to find the best offer for your situation.

READ MORE: French property: How to get a mortgage in France

While there are alternative options besides banks, such as a 'vendor loan' (prêt vendeur) - where one sets up a credit contract directly with the seller of the property via a notary - this is much less common.

The biggest issue is that banks will require that foreigners prove that they will be able to legally remain in France for the entirety of the repayment period. As such, it can be very challenging those on short-term residency cards, to be accepted for a mortgage loan.

For the same reason, it is very difficult for non-residents to get a mortgage via a French bank.

Foreigners can also consider international options, or independent, specialised mortgage brokers, like those geared toward expats - however some have minimum income levels and minimum property purchase prices.

Another point to keep in mind is the fact that French banks also look favourably on 'stable' employment statuses, such as CDI (indefinite) work contracts, which, by their calculation, reduce risk of unemployment. It's not impossible to get a mortgage if you are self-employed, but it's harder.

Additionally, age can be a factor - lenders tend to be less likely to award mortgages to those nearing or above retirement age.

Americans - The situation is even more challenging for Americans in France, as banks can be reticent about working with Americans due to FATCA - which, according to the US dept of treasury, requires that "foreign financial institutions (FFIs) report to the IRS information about financial accounts held by US taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest."

This has forces French banks to collect and maintain more information about their American customers. If the banks fail to disclose information to the IRS, they risk exclusion from the US market as well as penalties.

In a survey about the effects of citizenship-based taxation on Americans in France, one respondent said: "Multiple banks have denied me a mortgage because I am American.

"We used the services of a mortgage broker and when we went in for the final presentation a few weeks ago, only one out of the many banks queried offered us a mortgage, and it wasn’t even a good offer."

READ MORE: Divorce, stress and fines: How citizenship-based taxation affects Americans in France