Purchasing a property is an important and often symbolic step in your life journey; it’s something that demands real attention. To help you escape the pitfalls and see clearly through the maze of offers, prices, stages, and financing options, this practical guide will inform you about the invaluable things you’ll need to know when buying a property, as well as the various steps of the purchasing process.
1. Questions to ask yourself before buying a property in the mountains.
Why do you want to buy a property in the mountains? How will you choose the resort?
There are different reasons and motivations for buying a property in the mountains. Knowing what they are, listing them and putting them in priority order will let you choose a resort and refine your search.
To live and feel at home there – The environment is essential when buying a property to live in. Schools, workplaces, sports facilities… all of these elements affect your quality of life.
For your free time – If you’re buying a secondary residence for winter sports purposes, you need to make sure you’re well informed about the resort (snow cover, season length, ski area quality, quality of non-skiing mountain activities, entertainment…).
To build an inheritance, sell on for a higher price or prepare for your retirement – The choice of resort is essential. Concentrate on internationally renowned resorts (Example: Val Thorens in Les 3 Vallées), guaranteeing good snow cover throughout the winter and offering fantastic facilities. A dynamic resort with great marketing that gets itself talked about is a resort that evolves. Finally, you should prioritise a quality position in the resort that will always have high resale demand.
To let out – Research the rental market and the resort’s economic developments, collect information on the type of clientele and what they expect from a property, carefully consider geographical location and proximity to activities… For further information on rental properties, see our “rental management guide”.
How should you choose which property to buy?
Choosing between old and new properties
Older accommodation benefits from certain advantages such as:
Prices are often lower
Diversity and quality of location (there are more of them, they’re often more centrally located, and therefore more practical)
Reduced VAT for certain types of building work
New accommodation benefits from:
Reduced notary fees
Tax incentives (Duflot Law)
Higher levels of comfort (more efficient energy ratings)
Residence car parking
Maximised surface area
No building or repair work in the first ten years
Be aware that in large resorts such as Val Thorens, new builds are rare due to the shortage of developable land, and most property falls under the Censi Bouvard Scellier law amendment. When you buy, you sign a lease with the residence (between 10 and 30 years in duration), which then guarantees you an annual rent for the entire duration of the lease. You can stay in your apartment only for a few weeks per year (between 3 and 6 weeks). This is beneficial for tax reasons as it allows you to save VAT on your investment and can be set off against income tax. Moreover, you will have a guaranteed rental income minus the hassle and management fees.
A property adapted to your needs
It is essential to define what it is you want to properly focus on and refine your search. The methodology below is applicable whatever property you’re searching for: studio, apartment, chalet…
Criteria to define:
Environment – geographical sector (choice of resort), position within the resort (central, peaceful), proximity to services, shops and ski slopes, residence size and quality…
The property – surface area, arrangement of rooms, floors, aspect, functionality, annexes (ski lockers, cellar), balcony (if applicable) …
Style and decoration – wooden chalet-style atmosphere or modern interiors, colourful or neutral…
Moving-in time frame – can you move in immediately or are you looking for a property to renovate?
No property can meet all of your criteria, so you need to put these requirements in priority order according to the market and your budget. An estate agent can help you to do that.
How should you calculate your budget?
Before taking any steps with the property you wish to buy, it is a good idea to calculate your total available budget. You should estimate your budget as accurately as possible (purchase price + additional charges including agency fees, transfer tax, insurance and handling fees), if necessary with the help of a banking professional, before signing a sale and purchase agreement. Your budget will comprise two parts, your deposit, and the various bank loans to which you have access.
Deposit – this will be money that you can raise personally to invest in your property project. It may be from savings, investments, money set aside or from family help.
Monthly repayment capacity – simply divide your net monthly income by 3, as the maximum debt rate is 33%. Then refine this calculation to reflect your lifestyle. Your remaining monthly budget (once you’ve allowed for fixed charges, any existing loan repayments and the monthly property loan payment) should be enough to cover your day-to-day spending. Don’t hesitate to ask for a number of simulations showing different interest rates and loan tenures. These two variables can affect your purchasing ability.
What are the acquisition costs when purchasing a property?
In the majority of cases, property sale prices (houses, apartments…) are fixed excluding acquisition costs (often wrongly called “notary fees”). These costs are payable by the buyer and come to roughly 7-9%, depending on the type of property.
These acquisition costs are payable in two stages:
An advance payment made at the beginning of the process
The remaining balance paid when the contracts are exchanged
These costs are in addition to the purchase price but do not go to the vendor, nor to the notary in most cases. Notary fees are strictly regulated and fixed by the State.
These considerable costs include:
Levies and taxes owed to the State (depending on the type of property and transaction):
Mortgage and deposit fees
The notary fees, based on a fixed, proportional scale of charges (1/10 - around 1% of the sales price), go towards the running of the notary office and paying the notary’s salary.
Miscellaneous costs or expenses (1/10) to remunerate the various parties involved and/or pay the cost of compiling various documents (town planning, town planning register, surveys…)
Any charges arising from the sale not going through
The cost contains some additional proportional and fixed rate amounts.
Before committing yourself to buying a property, contact your notary. Ask them for a provisional calculation of charges the sale will be subject to. Take advantage of the opportunity to also ask them to calculate any other foreseeable charges, especially if you are applying for bank credit. The notary acts as a public servant and is thus subject to fixed fees determined by the Ministry of Justice, applicable throughout France.
When the transaction concerns a property built in the last 5 years, the method of taxation is very different. The notary fees are significantly reduced because duties and taxes paid by the buyer go from around 5% to just 1%. Other charges remain unaffected.
How should you find the right property to buy? Via an agency or privately; the pros and cons.
Using an agency as an intermediary
Choose an estate agency in the resort with excellent knowledge of the local property market. They will be able to accurately inform you about market prices and the types of properties on the books.
The agency will also accompany you through the sales contract and conveyancing process.
Note that vendors often employ agencies to put their properties on the market, particularly in ski resorts where owners of secondary residences rarely live on site.
Private vendor to private buyer
Transactions between private vendors and private buyers are one option. This can be a more economical solution because you don’t have to pay agency fees (total commission – around 7% in Val Thorens).
However, you should be aware that this takes time and requires availability of both parties. What’s more, vendors are not objective, they tend to overestimate a property’s value and underestimate any problems it might have. As a result: you risk having the wool pulled over your eyes in viewings and wasting precious time on pointless appointments.
In any case, it is essential to view the property and it can be a good idea to view it at different times of the year.
Which legal structure should you invest under?
This usually depends on the number of people investing. It is preferable to specify that when the sale and purchase agreement is drawn up. Due to the complexity of the various options including the financial, inheritance and taxation side of things, you are advised to discuss this subject with your financial advisor.
Below, you will find a summary of the major pros and cons of each available legal structure, as well as the taxation implications for each. This comparison is by no means exhaustive, and the best person to discuss your options with is your notary.
Remember that the property income and loss calculation remains the same for each legal structure.
Pros: no specific formalities, no costs arising from formalities, simplicity of purchase
Cons: your personal assets are at risk as loan security, there is no possibility of partial transfer, and the purchase may count as part of your personal assets.
Taxation: Income tax (rate depends on your tax bracket)
Benefits: no cost arising from administrative formalities, simplicity of purchase
Disadvantages: you are tied to the co-borrower until the property is sold, joint-owners must be unanimous in any decision-making, dissociation is not possible, your own assets are at risk as loan security, there is no possibility of partial transfer
Taxation: Income tax (rate depends on your tax bracket)
SCI Joint Ownership
Benefits: you buy shares instead of a property, it is possible to transfer shares, you can have multiple associates, separate transactions, it’s easier to pass on as inheritance, and you can avoid a mortgage by raising finance from associates.
Disadvantages: setting-up costs (around 1,200€), annual management cost, bookkeeping to maintain
Taxation: Income tax (tax accountability and rate depends on your tax bracket)
What benefits are you entitled to?
There is financial assistance available for primary residences in the form of tax relief or tax credit or if you are committed to a 9-year lease. See the list of benefits on this site www.anah.fr or at the local town hall.
If the property you wish to buy requires renovation work and you plan to let it out, you may be eligible for financial assistance from the town of Saint Martin de Belleville and the ski lift companies (SETAM for Val Thorens). Said assistance is calculated based on your apartment’s surface area in square metres (6,000€ for the first 20m² and 150€ for every addition m²). Renovating your property can lead to more profitable rents, local council categorisation and being awarded the Belleville Vallée quality label (invaluable for this lettings market).
To receive this financial assistance, you must meet all the specifications and let your property for a minimum of 10 weeks per year via an estate agency for a period of 9 years.
In the event that the property is sold or anything else changes, you can exit the system by paying back the amounts awarded pro rata.
For further information on this renovation programme, visit www.renovationlesmenuiresvalthorens.com.
2. The different stages of buying a property
An initial viewing is a chance to evaluate the surroundings, local area and any possible problems. Be equally vigilant about the condition of shared living spaces, facades, roofing and exteriors. You should also pay attention to the condition of ceilings, walls and windows.
Find out what type of heating the property has (make of equipment and annual cost), the type of hot water system, the total sum of management charges and when the property will be available.
If you like the property, you will need to have a second detailed viewing. Look closely at all of the equipment, checking for any signs of dampness, check the condition of the cellar and ski lockers and, should you wish to, take a professional with you who will be able to survey the property’s overall condition. All of these steps will prepare you to accurately assess any repair, decoration or building work required.
Documents to request
Documents required for the purchase of a commonhold apartment.Technical survey reports.
Energy performance survey (DPE),
Surface area (Living Space),
Natural, geological and technological risk report (ERNMT).
The ALUR law, which came into force on the 27th of March 2014, (access to renovated accommodation and town planning) requires new documentation to be provided when the sale and purchase agreement is signed (commonhold file, surface area certificate, information notice, building survey).Building organisation
Commonhold regulations and amendments,
Building maintenance records,
Description of the division of the building and amendments,
Minutes from the last three years of Commonhold Association general meetings, if the vendor has them.
Total charges in the current budget forecast,
Total charges paid by the vendor outside the budget forecast over the last 2 accounting periods,
Sum of the shared building costs (where relevant) relating to the principal unit sold and the sum of the previous contribution to funds paid by the vendor relating to the unit sold.
Any amounts that the vendor may still owe to the commonhold association,
Any amounts that the buyer must pay to the commonhold association,
General statement of the Commonhold Association’s outstanding payments and debts to suppliers.
The unit vendor (or the notary looking after the sale in their absence) must ask the Commonhold Association for a commonhold unit information certificate specifying the commonhold assessment (contributions relating to the unit being sold). This document summarises, subject to the balancing of accounts, any debt the vendor owes to the Association.
In the same way, this document also indicates any sums the Commonhold Association may owe to the vendor (advances), as well as any sums payable by the buyer.
Please note: charges for compiling the unit information certificate are payable by the vendor.Commonhold Association certificate
Before signing the sale and purchase agreement with the notary, the vendor must present a certificate from the Commonhold Association issued no longer than one month earlier, proving that the vendor is free of any obligations regarding the Commonhold Association.
Offers in writing
So you don’t lose a property, it is sometimes necessary to make an offer in writing. This indicates the price that you are prepared to pay for the property and how long that offer stands (e.g. eight days).
Note: you are advised to take the following precautions (making such an offer commits you to the purchase should it be accepted by the vendor).
State that, if the vendor does not accept the offer within the specified validity period, it will become null and void.
Ask that the vendor respond to the offer in writing by recorded delivery.
Indicate that the sale will only be considered legal when the sale and purchase agreement is signed subject to conditional clauses.
It is possible to negotiate within this written offer. If the asking price seems higher than the market average, make a counter offer that the vendor can either accept or refuse.
Sale and purchase agreement
You have found an apartment, chalet or a plot and you don’t want to lose it. You therefore need to sign a sale and purchase agreement with the vendor.
These agreements officially certify the agreement between the vendor and the buyer. They are usually valid for a few months. During this time, the notary will compile the sales documentation. It usually takes three months, sometimes longer, to collect the administrative documents required for the sale: civil status certificates, mortgage statements, copy of the local land registry, town-planning file, mandatory technical surveys, Commonhold Association questionnaire... Time must also be allowed for the buyer to raise the necessary funds for the purchase.
The sale and purchase agreement can be signed relatively quickly, usually a few days after the vendor accepts the buyer’s offer. However, you should be prudent and not sign it lightly. The sale and purchase agreement is a reciprocal obligation that commits the vendor to sell and the buyer to pay a deposit (usually 10% of the overall price, by cheque which will be made out to the notary) to signify commitment. You will however have a 7-day cooling off period after signing the sale and purchase agreement during which you may withdraw from the transaction without incurring a penalty.
The notary also includes conditional clauses in these contracts. These clauses render the contract null and void, releasing each party should certain events occur before the definitive sale: the bank refusing the buyer’s loan, the town enforcing the right of pre-emption, a major town planning easement being discovered,...
Financing the property
Before committing yourself to a loan, there are some rules you need to know to help you make the right decision. There are multiple options available and the best financing sometimes comes from combining several of these.
Commercial and privately owned property loans are available to everyone, with no regulatory conditions. They allow you to finance your purchase: buying a primary or secondary residence (new or old), buying a buy-to-let property, carrying out building work of any kind. They are also very flexible. Subject to conditions and depending on the loan in question, they allow you to: extend or shorten the loan tenure, defer capital repayment for a pre-determined number of instalments, fix monthly repayment amounts as equated instalments, defer capital repayment during construction or while on “VEFA” off-plan contracts, or to create a “step-up loan”, which offers varying equated monthly instalments spread over the loan's tenure.
You have to choose between a fixed or variable interest rate for your property loan.Fixed interest rate loans
The rate fixed at the time you take out the loan is guaranteed throughout the loan tenure. The monthly payment amount and the maturity date are fixed when the loan is taken out.Variable interest rate loans
Variable interest rate loans are often cheaper at the beginning of the loan period (around 1.2%), and risk can be limited (using a cap), the choice depends on what interest rates are predicted to do (always difficult to forecast) and the amount of risk that you are prepared to take.
To help you make this decision, banks are required to supply clients with precise definitions of the chosen index and how it is reviewed, as well as several index variation simulations demonstrating the impact on the total sum and/or repayment period (and thus the cost of the loan). These loans can benefit from the ability to change to a fixed rate at any time and, when capped, having a guaranteed maximum and minimum rate, limiting interest rate fluctuation.Interest-only loans
Adapted for lettings, this package combines a loan from which interest can be deducted as property revenue, and a life insurance policy (which guarantees the loan), taken out for identical periods. At the end of the loan period, the capital is repaid from savings made during its tenure.
Even if you have access to sufficient liquid assets not to require a loan, some financial and taxation packages will allow you to combine investment of your liquid assets and make valuable use of credit.
For further information, contact your bank.
Deed of sale
When all of the terms of the sale have been met, the deed of sale is signed by you, the vendor and the notary/notaries.
Authorisation of the sale by notarised deed constitutes the final stage of the transaction letting you progress to disclosure formalities and making it effective against third parties. The property deeds will then be transferred to the buyer and the vendor will receive the sale price.
The balance of the property price and the notary fees are transferred when the legal documents are signed.
Who draws up the deed of sale: the vendor’s notary and/or the buyer’s notary?
In principle, the vendor’s notary compiles the deed of sale, where necessary assisted by the buyer’s notary.
Other costs related to the sale (notary fees and duties and taxes payable to the Treasury) remain payable by the purchaser and are included in the price.
You can always bring your own notary with you. If you have requested that your notary and that of the vendor collaborate in drawing up the deed of sale, then it is signed by both and the notary fees are shared between the two of them.
Date of notary signing: who decides when it is and organises it?
The notary fixes the date according to how long they need to collect all the necessary information.
Releasing funds: when should it be done and by whom?
Payment is carried out by the buyer when the deed of sale is signed, whether by cheque or bank transfer. It is thus their responsibility to request the finance be released by their bank and to confirm how long that will take.
Handing over the keys takes place at the notary’s or vendor’s office when the deed of sale is signed. That’s when you will be given proof of property ownership, which is very useful for administrative tasks (setting up gas, electricity, telephone, fire insurance…). If you don’t receive it, then you need to take out Multirisk Habitation Insurance as soon as possible if you are going to occupy the property, or Non-Occupation Property Insurance if you are going to let it out. You will need to provide your insurer with your property’s exact details and characteristics.
4. Buy an apartment in Val Thorens with Ma Clé IMMO
Ma Clé IMMO is honoured to be your partner in the property-buying process and is here to help and guide you through your choices. Simplicity and professionalism are the watchwords of our team’s approach to a clientele that is, quite rightly, demanding more. Our advisors are one of our agency’s major assets thanks to their availability, reactivity and expertise.
Our high-altitude resorts and the 3 Vallées ski area’s global reputation may be solid guarantees, but purchasing a property in the mountains, either for your own use, as a financial asset or both, is an investment that requires specific expertise.
Beyond falling in love with a property and working out its profitability, our knowledge of the market and the quality of different sites and buildings is an invaluable time-saver for you.
According to your criteria, the Ma Clé IMMO estate agency will present you with a selection of properties that meet your requirements, and advise and accompany you throughout the process; from the first step to putting your final signature on the deed of sale.