Owning
a Piece of Paris
by Adrian Leeds
When my landlord said "Sorry, but we want to
sell the apartment," I went into cardiac arrest.
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After three years of "schlepping" the groceries up three flights of stairs, I had become suddenly attached to my spacious Marais 17th century flat with its sunny southern exposure, its little idiosyncrasies and the friendly quartier merchandises. The thought of uprooting was frightening and I knew in my gut that finding any other space as homey and comfortable as this at a similar price would be almost impossible. There were sleepless nights.
Buying the apartment immediately became my number one project. The first questions to arise were: Most importantly, did I want to own a piece of Paris? How permanent a resident would that make me? If so, then is it a good investment? What price is reasonable? Can I get a loan? Can I afford it? Who can I trust to help me?
Nine months later (equivalent to giving birth!), I had the answers and I had the apartment. If you are considering owning a piece of Paris, then possibly what I learned in nine months, you can learn in this article.
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You don't have to
be a resident.
Owning a piece of Paris doesn't make you, necessarily, a permanent
resident. Many people are purchasing property in France for the sheer
pleasure of renting it and earning money from their investment. Renting
it can be for short-term (by the week) or long-term (by the month
or by the year). There are many agencies and management firms that
can keep your apartment rented and profitable for you. Of course,
like me, you can simply live in it and enjoy it, although I have had
very good experiences renting the apartment while on vacation and
making a few extra bucks to help pay the mortgage.
As it turns out, the Marais, and particularly my tiny part of it, has become one of Paris' wisest investments. In this past April's special report by Le Monde about real estate in Paris and the suburbs, overall prices had increased in the city by 9.2% from 2000 to 2001 with an average per-square-meter price of 3,199 euro. The extremes reported were as low as 481 euro in the 11th compared to 17,761 euro at Place des Vosges in the 4th. The 6th continues to be the most expensive neighborhood in Paris with an average price per square meter of 5,271 euro. The arrondissement which increased in price the most was the 12th, but the 3rd was second in line with an increase of 16% and in my particular part of the 3rd, a whopping 22%!
Don't get taken advantage of.
My landlord was offering the apartment at a price per meter comparable with the average at the time. He likely would have offered it at a higher rate to an outside buyer, to include agency commissions and losses he might incur should the apartment remain empty while offered for sale. Instead, I was a ready buyer and we were both in a win-win position.
In France, it is necessary that a notaire record the property deed. The notaire drafted the promesse de vente (promise to sell) contract allowing two to three months to obtain a loan. I provided a deposit of 10% of the purchase price, kept by the notaire until the completion of the sale. If a loan cannot be obtained and the sale should fall through, the deposit is returned. If the sale is completed, the deposit is deducted from the final sales transaction.
The notaire provides a variety of other services, too. He collects all the administrative and town planning documents needed to complete the sale. He checks the seller's financial and mortgage position and repays any bank loans. And, where relevant, pays any sums due the manager (syndic) of the property by deducting the proper amounts from the sale proceeds. The notaire fees, most of which are actually tax assessments, are added to the cost of the transaction. Be prepared to pay up to 10% of the purchase price in these fees!
I sought out a notaire who could speak English to get me through the 'rough spots.' I discovered that some notaires take advantage of foreigners by leading them to believe that their transactions cost additional fees. This isn't true, so be careful whom you choose. Ask your friends until you find good references and then interview each of them.
The best way foreigners can get a mortgage for French property The next step was to obtain a loan. I made an appointment with my personal agent at my bank in Paris and discovered tout de suite that if I didn't have a salary deposited in the bank monthly I wouldn't be considered. That was rejection number one. I made a trip to my hometown in the States and met with my bank, my accountant, and my attorney. My bank immediately said no, they would not lend money on property outside the United States. My accountant crunched the numbers and told me what kind of loan I could afford. My attorney offered a way I could take out a business loan and my U.S. business would buy the property. Still, it was expensive at U.S. interest rates of about 9% and complicated in having to set up the legal aspects of the deal. I considered it rejection number two.
Then a close (and wise) friend asked one simple question: "Have you thought about asking at the British banks?" No, I hadn't! Turns out, these lending institutions make loans available to international customers. I visited three banks: Woolwich Bank, Abbey National and Banque Transatlantic. All have agents who speak English, of course. Banque Transatlantique was not interested in working with me as I was not a customer of the bank with a large 'portfolio.' Both Abbey National and Woolwich had very creative loan options and were happy to take my application. I chose to put 20% down on a variable rate mortgage that maintained the same monthly rate, but varied the term of the loan. The interest rates at the time were more than 3% lower than the U.S. rates and more than 1% lower than the French banks' rates. The result was a monthly mortgage payment almost the same as the rent I had been paying, so in effect, the apartment purchase was costing me only the down payment!
My loan application was accepted and the closing of the sale took
place without complications, to everyone's satisfaction, especially
mine. I now have a little piece of Paris I can call my own and now
I wouldn't trade it for all the square footage, king-size beds and
walk-in closets I used to think life was all about.
About the Author
Adrian Leeds has been living in Paris nine years. She is the director
of the International
Living Paris office and president of Adrian Leeds Group, LLC, her Internet U.S. based company. She is the author
of the "Insider Paris Guide for Good Value Restaurants" published by International
Living, the result of her insatiable desire for great food at bargain
prices, writes the Parler Paris
email newsletter, and co-hosts her own brainchild, the popular
Parler Parlor French/English
Conversation Group in Paris where members from almost 50 different
countries meet to practice speaking French and English. Email : Info@AdrianLeeds.com
