In this article, Jill Springbett considers the impact Brexit will have on Britons buying or selling a property in France now that the UK has left the European Union.

France is one the most popular places in the world for Britons to own a second home, with estimates of the number of people owning properties in the country ranging between 150,000 and 300,000.

Living in France post-Brexit

Since the UK’s withdrawal from the EU on 31 December 2020, Britons have lost their EU citizenship and are now treated the same as those from any other non-EU country. This means that if they wish to stay in their French home for more than 90 days in any 180-day period (and more than 180 days in any year), they will need to apply for a Long-Stay Visa Serving as a Residency Permit (Visa Long Séjour valant Titre de Séjour or VLS-TS).

It is important to remember that these 90-day limits apply to the total number of days spent in any country in the Schengen Area (26 European countries). So, you cannot spend 90 days in France and then live in Portugal for additional days, for example.

Buying in France post-Brexit

There is no change in the ability of Britons to buy in France post-Brexit. Nor should they have difficulties getting a French mortgage, although loan to value (LTV) percentages are now lower. While French nationals can get 100% LTV mortgages and the percentage for other EU nationals is up to 80%, for Britons, the figure is now 60%.

The good news is that there are no additional taxes for people from the UK buying in France. Purchase costs will be the same: around 7% for an existing property and 2% for a new build.

Selling a property in France post-Brexit

This is where the news is not so good. The EU exemptions that applied pre-Brexit are no longer in place, which could prove expensive for sellers.

Now, if you sell a property in France, you will be hit by two changes:

  1. If the sale is for more than €150,000 you will need to appoint a French fiscal representative (représentant fiscal) to sell your French property. The cost of this will range between 0.5 and 1% of the sale price. This requirement applies even if you are not making a capital gain from your property.
  2. You will no longer benefit from the reduced social surcharges (prélèvements sociaux) of 7.5% that apply to the sale of French properties by EU residents. Instead, the rate will increase to 17.2% (although note the taper relief referred to below).

On the plus side, the standard rate of capital gains tax of 19% will stay the same. So, the total costs of selling a French property will be 36.2% (CGT plus surcharge) plus the fiscal representative’s cost less any applicable taper relief.

CGT and taper relief

There’s a taper relief for both CGT and the social surcharge.

For CGT, the rate decreases after owning the property for five years and reduces to zero after 22 years. The social surcharge taper also starts at year five, with no charge after 30 years of ownership.

If you would like to discuss the impact of Brexit on the sale or purchase of a property, please call us on 020 7625 4545 or email us at info@mgr.co.uk

Warning: The above is merely general guidance and should not be relied upon as formal advice. The advice we give to each client will depend on their specific circumstances. We suggest you take professional advice before taking any action in relation to the issues discussed above.