Five updates for owners in France

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Government plans to limit property tax rates

The French government plans to limit increases in property tax rates, with inflation expected to reach nearly 7% later this year.

French property tax is calculated on the basis of inflation and other elements, including local rates. The amount is reviewed each year.

The government is now considering imposing a limit on any increase as part of a series of measures to counter the rising cost of living and soaring inflation, Le Figaro reports.

It comes after Finance Minister Bruno Le Maire confirmed earlier this week his intention to limit the rise in rent prices to 3.5% for a period of one year.

Read more: What will (probably) be included in France‘s July purchasing power law

About 30 million households pay the property tax each year, with invoices sent in September and payment normally due in October.

Several French municipalities have already announced that bills will increase by more than 10% this year, barring government intervention.

Read more: Property tax bills up by more than 10% in several French municipalities

Charging neighbors for boundary walls or fences

Article 663 of the French Civil Code states that you can essentially force your neighbor to agree to pay half the cost of a party wall or fence – but only if you live in a built-up area.

The code does not strictly define what an urban area is, so if your case goes to court, it will go to the judges.

There are other conditions for your neighbor to share the cost of building a dividing wall or fence.

  • The land must have a house built on it. You cannot force your neighbor to agree to build a fence or a wall on empty land
  • If you’ve already built a wall or fence to divide your properties, you can’t force your neighbor to pay for it retroactively. On the other hand, your neighbor can ask to share the ownership of the wall or the fence.

If you live in a built-up area and want to build a wall or fence to create a division between your property and your neighbour’s, you can offer to split the construction costs and the property with your neighbor.

Your agreement can be made orally but it is preferable to have a written and signed agreement in case of dispute.

If your neighbor refuses, you can take your case to court to have your neighbor share the construction costs.

Otherwise, Section 663 will be strictly followed, which means that if the judge rules in your favor, he will order the construction of a solid wall, not a fence or any other type of adjoining construction.

If there are no other local regulations, the wall must be at least 3.2 meters high if you are in a city with more than 50,000 inhabitants, or 2.6 meters high in the case opposite.

Record savings needed to buy a property

People wishing to buy a property by taking out a mortgage were expected to have record savings of €55,519 on average in the first half of 2022, property company Capital 21 reported.

This represents 21% of the price of an average property sold via Capital 21 (excluding notary fees). This amount is required by banks when deciding whether or not to grant mortgages to potential buyers.

This is a huge increase from the second half of 2021, when buyers needed an average of €32,153 (13% of the average property cost) or the first half of 2021, when buyers needed €24,872 ( 10% of the average cost of ownership).

In 2016 and 2017, buyers did not need to have personal savings to buy property with a 20-year mortgage and repayments of €1,000 per month.

The increase in the amount of savings that buyers must have, called personal contribution, is linked to the rise in property prices in France.

Overall, properties in France were 7.3% more expensive in the first quarter of this year compared to the same period in 2021.

Read more: Property prices, wind farms: five updates for homeowners in France

Read more: Latest notarial data: Where are property prices rising the most in France?

The Banque de France relaxes the regulatory rates for mortgages

The Banque de France has announced that it will increase the usury rate from July 1 so that banks can grant individuals larger mortgage loans.

The wear rate is the maximum rate at which a loan can be granted. It is in place to regulate interest rates and to prevent borrowers from taking out loans or mortgages that could put them in financial difficulty.

It is set each quarter by the Banque de France as a percentage.

When a potential buyer goes to a bank to apply for a mortgage, the bank calculates the

annual percentage rate (APR) of a loan, which includes the base interest rate as well as loan insurance payments, premiums and other fees.

This APR cannot exceed the wear rate, which has fixed values ​​set in percentages.

The Banque de France has now revealed that it will raise rates from Friday July 1.

The wear rate for 20-year mortgages will increase from 2.4% to 2.55% or, in certain cases, to 2.6%. For mortgages of 10 to 20 years, the rate will increase from 2.43% to 2.58% or in certain cases to 2.63%.

This increase will allow potential buyers to borrow more from banks.

This was deemed vital due to rising property costs and the complications people face in getting mortgages.

Bordeaux/Montpellier will put in place rent control measures

Bordeaux and Montpellier are set to become the next major cities in France to introduce a rent control system known as rent control.

When in place, landlords cannot legally charge more than a fixed ceiling rental rate, which varies depending on the type and location of the property.

It already applies to Paris, Lille and Lyon.

The system will come into effect in Montpellier tomorrow (July 1) and on July 15 in Bordeaux.

Bordeaux Mayor Pierre Hurmic said the reason for its introduction was not to “wage war on landlords, but on excesses, that’s what we want to prevent”.

“The majority of landlords are asking for decent rents, this measure targets those who take advantage of an overly competitive rental market to make money.”

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