VINGT Paris

VINGT Paris owner Susie Hollands in New York Times article on Paris rental market

From New York Times Text: Jean Rafferty,
Image: Benoit Tessier, Reuters

Many people buy a pied-à-terre in Paris to use for a few weeks a year and to rent the rest of the time. Most of them don’t realize, however, that they are breaking the law. Now, the city government is trying to address the problem with a more direct approach to enforcement.

Mayor Bertrand Delanoë ordered an agency last year to warn property owners that renting out residential apartments for less than a year at a time violated French law. The move was intended to address the lack of affordable housing in the city center. Those who ignored the warning, he said, would be prosecuted.

Only about 25 letters have been sent since enforcement began last autumn - most of them in response to complaints made by neighbors. And only a handful of those cases have gone to court.

But the rental industry in this most-visited city in the world is concerned and, as more owners slowly become aware of the issue, confusion is growing. A few have pulled their properties off the market, others have deleted addresses or other identifying details from Internet listings. And dozens of rental agencies have banded together to try to save their lucrative business.

“No one seems to know what this crackdown means, but I feel my business will have to change,” said Susie Hollands of Vingt Paris, a property advisory and management company.

What are the costs aside from the apartment itself?

When the property is chosen we’d recommend a Surveyor visits, an additional budget of 500 euros.

When the pre-sale contract is signed, you’ll transmit 10% of the purchase price (minus agency fees) to the Notaire. So technically this is part of the purchase price but it's good to know the timelines for payment so you can be prepared.

To take advice on inheritance provisions, consider a budget of 1500 euros, it can be more or less, depending on the complexity of your estate.

There is a two to three month period till closing. Notaire fees of approximately 7% are paid at this time and the balance of the property price is paid – less the 10% you put down on the signature of the pre-sale contract - see above.

If you’re taking out a mortgage you’ll typically need 20% of the purchase price to put down as a deposit - this depends on the deal you’ve arranged with your lender.

You’ll normally need to leave aside a budget for renovation. As a very rough guide, you could leave 1000 euros per m² for a basic job, but it obviously depends on the scope of the project.

Should I buy to rent as an investment?

Your investment objectives will determine where you decide to buy. There may be 20 arrondissements in Paris but we do not recommend all of them! The majority of our clients choose to rent the apartment for at least part of the year and we are experienced in this field offering one of the only complete services in Paris where the same company organizes your purchase, renovation and on-going management needs.

Running Bonapart’s concurrent expatriate rental operation since our inception has given us a unique insight into the needs of the large international community in Paris. This is the market that we recommend our clients target if they wish to achieve good returns on their investment. We are uniquely positioned to advise you on this, even down to the best streets!

We will be happy to add your property to our portfolio of quality apartments for those searching for short term vacation rental or accomodation for 3 months plus - mainly business people, MBA students and academics.

Short term tourism rentals offer great returns and the maximum flexibility if you are able to use the apartment on a regular basis yourself. Location is understandably a key issue to consider if you really wish to successfully target this market. More flexible in terms of location are medium term rentals which suit owners who prefer the security of a steady renter and can block off their apartment for longer chunks of time.

Adding an apartment to our relocation division offers an investor great management and marketing solutions. Accountability and the ability to work efficiently with those based abroad in another time zone are our strengths. There won’t be any need for you even to come to Paris, it can all be handled here for you.

Of course you’d probably love an excuse to visit so why not book the apartment yourself too. This can normally be arranged to fit your schedule at a quiet time of year for example or between tenants!

How long does it take to get my Paris pad?

First and foremost we are very flexible to your needs - our clients have busy schedules. Those from overseas often ask us to liaise with them remotely after an earlier visit to ascertain objectives or spend a few days visiting Paris viewing apartments we have lined up for them.

Other clients are already resident in Paris and we arrange suitable times to view selected apartments either one-by-one or as a selection over a agreed period of time, based on work schedules and convenience.

After choosing your apartment we steer you through the legal process from France after you're back home. This includes visits to the property and organisation of structural survey and study of apartment dossier (diagnostics required by law, verification of size, background checks on home owner’s association).

Next comes the important process of engaging a Notaire (we can represent you at meetings with him/her if required and this is included in our fee) to draw up the Promesse de Vente/pre-sale agreement. After signing the Promesse de Vente/Pre-sale agreement it will normally be 3 months before the apartment keys are in your hands. Of course our support continues until final closing in liaison with banks and Notaires on your behalf and again we can arrange to represent you at the final signing if need be.

What is the Real Estate Agency fee and who pays for it?

Estate Agency fees if required are normally included in the purchase price of the property. In effect, both the buyer and the seller pay the agency commission because it is part of the sales price. Commission comprise (written as C/C) indicates that the price includes the agent's commission. Beware. A price quoted as net vendeur excludes the selling agent's fees.

There are no government controls on agents' fees, although they're obliged to post a list (barème) in their offices. Fees are usually levied on a sliding scale between 5 and 7 per cent: the cheaper the property, the higher the percentage.

The agent's commission is built into the asking price and can sometimes be negotiable but not by the buyer by the seller. If the agent is anxious to sell, he may be willing to reduce his fee to the seller in order to encourage the sale.

The search begins....

Once formally instructed we get down to the all important search process. In Paris there is (unfortunately for the buyer) no market-wide database of properties for sale (like the multiple listing system in the USA) and your perfect apartment in the Marais might well be listed with an estate agency on the Left Bank, on the other side of town!

Bonapart’s knowledge of Parisian estate agents and other property sources ensures we leave no stone unturned in finding you that property with the Wow factor. We are constantly in contact with our networks and alerted immediately when suitable property comes on the market, often before it goes into the window of the shop. We cover all available sources: Internet, private sale listings, trade journals, word of mouth, you name it.

We aim to save you time and hassle and you’ll visit only those properties that really match your requirements. We’re conscious we need to maximise your time and show you only those we’ve cherry-picked which truly fit your requirements. At this stage we also provide a detailed analysis of price relative to market valuations, property taxes and monthly charges.

How can I sign a document if I don't understand French?

I am often asked this question and the language issue is naturally a very important one to address. It's a kind of psychological barrier to many people considering purchasing property in a foreign country.

Contracts and agreements must be drafted in French in order to be valid under French law. We work with bilingual Notaires and other experts and can arrange an English translation of any documents relating to the property purchase. We review the contracts in English so that clients are fully aware of their rights and obligations. A Bonapart Consulting representative accompanies clients to all official meetings and makes certain they are comfortable with any document they are presented with, every step of the way.

Promesse de Vente - going into contract

The Promesse de Vente is the first formal and legally binding stage in the property purchase process in France. It is a written contract of sale agreement which legally binds together the seller and purchaser. The agreement can be drafted by the Estate Agency handling the sale (but this is not at all to be recommended) or more safely by the Notaire. A Promesse prepared by an Estate Agent will need to satisfy the Notaire of it's legal validity in any event and it is best to go straight to the real professional. Whatever the agency says, it's absolutely fine to wait until it is drawn up properly and it takes time to do this correctly.

The format may vary but all should state clearly the key points of agreement including:

* Details of purchaser and seller (you will need to provide "Civil Status" information including your full name, contact details, profession, birth and marriage certificates, passport copies, details of ex-husbands and wives - we can provide you with an exhaustive list of what to prepare in advance.

* Confirmation of the name and ownership "Title" details of the property

* A description of the property including reference and map of the plot as it is recorded in the Land Registry

* The price agreed (sometimes furnishings and fittings may be negotiated as a separate amount)

* The deposit agreed (usually 10% to be held by the Notaire in an escrow account)

* The circumstances under which the deposit may be forfeited

* Provisional conditions (Clauses Suspensives) - these will include certain standard conditions which will be inserted by the Notaire drawing up the agreement (e.g. that there are no other claims to the Title or that the searches conducted by the Notaire's office do not reveal any problems). A Promesse de Vente also allows for the substitution of another person or entity to purchase the property at closing if need be.

The purchaser can request and negotiate the insertion of additional Provisional conditions before the Promesse is signed e.g. vendor to service the electrical equipment or provide additional guarantees, complete building work or planning approval etc

* Full details of the real estate agent's fees

* The target completion date (note this is not definitive or guaranteed and can be changed by agreement between purchaser and seller or if the Notaire has not completed his work for any reason)

Seven Day Cooling Off period
Note that under La Loi SRU you will be given a seven day cooling off period during which time you can withdraw from the purchase without penalty.

After signing
Once the Promesse is signed the Notaire (who acts for both parties under French law) will carry on the process of checking records and documentation regarding the property and land. Two to three months is generally allowed for this process but it is possible to move more swiftly if both parties are agreed and the Notaire is able to conduct documentation searches without delays.

This also gives the buyer sufficient time to get a mortgage for the property. At the time of contract, in the contract, the mortgage criteria are listed (interest rate, mortgage amount, etc) and if the buyer cannot find a mortgage that meets the criteria, then this will annul the sale, the buyer will recuperate his 10% down payment.

Completion date
Note that the completion date shown in the Promesse is a target date which will allow you to plan removals, funds transfer etc however the date will need to be re-confirmed as completion draws nearer. The completion date is the date when both parties will attend the Notaire's office to sign the Acte Authentiqe.

What happens after I get my keys?

After purchase, Bonapart will keep you on track with introductions to our hand-picked Paris proffesionals to aid you with every need - from architects and contractors to interior designers to suit differing tastes and budgets.

If you plan to rent the apartment don’t worry, Bonapart has a relocation division and will be happy to add your property to our portfolio of quality apartments for and we're perfectly placed to recommend the best solution for you and your new property, having already got to know your personal and financial objectives.

Bonapart can set up the essential services - water, gas, electricity, landline phone, Internet and Cable TV, home insurance and other services you require.

For on-going concerns it’s important to be prepared to attend meetings pertaining to the property and be ready to liaise with the body which runs the property. We've got it covered and can take care of this on your behalf or accompany you to the meetings until you find your feet.