Foreign Perspectives

Archive for the ‘Buying a house in France’ Category

The French excel at administration. If there’s something that can be documented, it is required to be documented. Or, to put it another way, this section of the guide will be long.

We’ll be covering the more essential areas of French administration and will cover the areas of health, education, social security and tax of course but will also be touching on other areas such as employment in France, retirement and the like plus other aspects of French life such as the electricity company, mobile phones, TV, the electrical system and so on. We’ll also touch on a number of aspects of what to do about your life back home’ as these also impact on the administration that you will come across in France.

The number of abbreviations and terms in French administration is astronomical but don’t worry as we’ll define the terms required as we go along.

Finally, in this section of the guide, we’ll be moving further into the topic of how to settle in France although we will also cover the issues involved from the point of view of those who are buying a holiday home in France. For example, with a holiday home you deal with the health system in a totally different way from that if you are living in France.

To begin with, we’ll be starting with the most common sets of documents that you’ll be asked for: the ID card, Livre de Famille and proof of address.

If you’re used to the wide variation of mortgage offers in the UK, the French marketplace is child’s play: as far as we can tell, all mortgages are either fixed or variable rate and they are all the repayment type.

If you are buying your house “subject to mortgage”, you will need to see the bank before you see the notary as you will need to say “subject to obtaining a mortgage from X bank at Y% over Z years”. If this isn’t added to the “compris” then you will lose your deposit if you can’t get a mortgage.

French investments are incredibly simple too. The only problem with them is that you need to buy them through an advisor which is even more of a pain than trying to do something banking-related through your bank advisor. Due to this and the very limited range available, it’s best to continue to do your investing through the companies that you are already using.

This is part of our series on buying a house in France; next week we start venturing into French administration.

French banking practices are very different from those in the UK in several key areas and it’s those differences that we’ll concentrate on here.

Conseilleurs

In the UK, a bank advisor is there to do things like advise you what to invest your money in and to sell you insurance but in France Conseilleurs don’t do anything as complex as that and are required to do really simple stuff like changing a direct debit or opening a savings account. This wouldn’t be so bad but you always need to make an appointment to see “your” advisor because, for reasons which escape me, the others that may be there on the day you go in can’t do that kind of simple task for you. Of course, this approach means that each advisor is clogged up with work at the trivial end of the scale. If you want to open a savings account in the UK, you fill in a form, hand in ID and cash and the cashier opens it there and then. Here it can take several weeks to open even the simplest account. So, ’tis best to develop a relationship with your advisor here as you’ll be making untold numbers of appointments to see them.In the UK, a bank advisor is there to do things like advise you what to invest your money in and to sell you insurance but in France Conseilleurs don’t do anything as complex as that and are required to do really simple stuff like changing a direct debit or opening a savings account. This wouldn’t be so bad but you always need to make an appointment to see “your” advisor because, for reasons which escape me, the others that may be there on the day you go in can’t do that kind of simple task for you. Of course, this approach means that each advisor is clogged up with work at the trivial end of the scale. If you want to open a savings account in the UK, you fill in a form, hand in ID and cash and the cashier opens it there and then. Here it can take several weeks to open even the simplest account. So, ’tis best to develop a relationship with your advisor here as you’ll be making untold numbers of appointments to see them.

Overdrafts in the UK are “permanent” in that there is no problem in running an account that is constantly in the red. In France, you can only be overdrawn for 10 days per month and for the rest of the month the account must be in credit. That said, you can get a permanent overdraft facility from some of the proper banks. They all seem to implement this by giving you a credit card which is linked to your current account; when you are overdrawn outside the 10 day limit an automatic cash advance from this card takes you back into credit. French banks don’t charge cash advance fees so in practical terms this gives you something that works very like a UK overdraft.

Debit cards come in two basic varieties: immediate debit or deferred debit. Immediate debit operates just like a UK debit card ie purchases are charged to your account right away. With deferred debit, your purchases are charged to your account at the end of the month. In both cases there is a spending limit of around EUR 3000 per month and a withdrawal limit of EUR 300 per week.

Credit cards are quite rare in France at the moment but operate much the same as in the UK with the exceptions that there is no cash advance fee and they charge per transaction for all international purchases. Interest rates are generally higher than in the UK too. The other difference is that the amount you repay per month isn’t a set percentage but goes in bands eg EUR 15 or EUR 30 per month.

Store cards are available but usually require proof of your French income so can’t be obtained until a year or two after you get here. The one exception that we’ve found is Auchan which offers you it’s store card about a year after you sign up for it’s loyalty card and doesn’t require anything beyond a passport.

For historic reasons, the various post offices and co-operative banking organisations in Europe maintain loose connections with their opposite numbers in other countries and it’s therefore often useful to open accounts with these organisations before you move.For instance, the co-operative bank offer a service called Tipanet which offers quite cheap international money transfers: around £8 as compared to the £25 that a normal bank would charge you. In the UK, it’s the Co-Operative Bank that does this, in France it’s Banque Populaire. The co-operative movement is quite frequently used by various unions and in France Banque Populaire offers special deals to public servants.The post office links are even more widespread and various special arrangements exist between considerable numbers of national post offices for their account holders. However, information on these isn’t widely distributed and it can take a little searching to find out about them. One advantage that almost all give you is that a post office account effectively gives you government issued proof of address once your first statement arrives.

Offshore banks are banks that operate in various tax havens around the world. The most familiar in the UK are the Channel Islands and the Isle of Mann but there are many based in small islands in the Carribbean.

If you’re moving abroad, it can be useful to have an account with one of these banks both to simplify your taxes a little and for the additional services that many of them offer to the expat community. None of the legitimate centres offer tax-free interest on your accounts these days but offer you two options for the interest on your accounts: 1) a withholding tax roughly equivalent to the tax that you would normally pay in your country of residence and 2) no tax but they report your income to the authorities in your country of residence.

Although no longer taxfree, the additional services that many of these banks offer can still make them worthwhile. Even the simplest of them are much more familiar with international bank transfers than a normal high street bank could be expected to be but most go beyond that offering multi-currency accounts, debit cards in a range of currencies and often expat advisory services.

On the whole, the range of services on offer increases in proportion to the increase in the minimum income that the banks ask for. A reasonable compromise with this seems to be Abbey International which offers accounts and debit cards in pounds, euro and dollars for an opening balance of £5000.

Most people will think of Switzerland in terms of “offshore” banking, but is there anything special about it? The banks there are generally more aware of the needs of international clients but this generally comes at a price. By and large, unless you have fairly sizeable amounts of money (say 25,000‚€ upwards) to deposit or invest, they probably aren’t worth it. However, even the post office in Switzerland is geared up for international clients and in this case a relatively modest amount of money (about £3,000) will get you quite economical banking.

We’ve included a list of the main banks operating in this arena in the directory which should let you choose the perfect combination of prices and services for you.