How to buy property in France as a foreigner
Check out 14 important steps to get your French home. And be ready to paperasse!
Buying property in France: how to transfer money?
French Property Guide
If you are moving to France or buying a property there, you'll need some way of moving money into the country. The easiest way might be just to tell your regular bank to shift the funds - but if you don't do a bit of research first to find out exactly what rate you're getting, you could end up losing heavily in the process.
On big sums, it's the exchange rate that will kill you. Big banks simply don't offer the best rates. For instance, if you wanted to transfer £150,000 from the UK to France, you'd get approximately EUR 3,000 less using a High Street bank than you would using a currency broker like HiFX or Transferwise.
On smaller sums, you'll find you're paying a high up-front charge. NatWest, for example, charges £10 for transfers in euros - which doesn't sound like much, but if you're paying small bills for a holiday house, could add up to a significant amount over time. Some banks charge as much as £40. (On the other hand, HSBC makes no charge at all to its Premier account holders for transfers between two HSBC accounts, wherever they are in the world.)
Using a specialist currency broker, you'll get better rates and lower charges. You may also get a quicker transfer. The downside is that currency brokers don't have the same level of protection for your money that a bank will give you. If a firm is 'authorised', like Moneycorp or FC Exchange, your money is held in a client account that's separate from the firm's own money, which helps protect you - if it's only 'registered', there are no safeguards at all.
Most brokers won't charge you anything to open an account, and it's quick and easy to do so. It's worth having a couple of accounts so that you can check which firm is giving you the best rate.
Do you need a French bank account?
If you're looking to buy a house in France, currency movements between now and the purchase date could put your transaction in peril, and if you don't already have a French bank account, you may not have time to open one before the money is needed. Some brokers offer a forward contract - you arrange to buy your currency at the current rate, so that you have locked in your Euro amount and you know you can afford the property you want. If your currency weakens against the Euro, you're protected. You'll generally be asked to put down a 10% deposit, rather than the whole amount, but you're committed to purchasing the full amount later. An option will cost you more up-front, but you can reserve a currency price without being required to pay up if the market moves in your favour; that can be worth the cost if you have a large transaction to make.
Many currency brokers also offer a service for recurring payments. That's particularly useful for retirees whose pensions are paid into their home country bank account, and need to remit the funds to France. Using a forward contract to set the rates for the next year can help you budget, though of course if rates improve, you won't get the benefit.
Money transfer from most jurisdictions is relatively simple in terms of government paperwork. You're required to report transactions over a certain amount; US residents also need to report any foreign bank account they hold with a value of more than $10,000. In some countries you just need to notify tax authority about the fact you’ve created a bank account in a foreign country. Anyway, it would be wise to consult the domestic bank.
However, if you're moving large amounts into a French bank account, make sure you have paperwork on the source of funds handy. French banks apply quite strict money-laundering rules, so they'll want to see some evidence of where the funds came from, such as the sale of an existing property, your last couple of years' tax returns, or the closure of a brokerage account. It wouldn't be good to start your time in France being suspected of criminal activity!