Mortgages for French Property Renovation

French property renovation, restoration and improvements can take many forms, from Do-It-Yourself (DIY) repairs and upgrades through to significant changes to a building’s original structure and purpose. As energy costs continue to rise, significant savings can be achieved by energy conservation improvements; here too, Best French Mortgage stands ready to help you finance the project through a French property renovation mortgage.

Planning permission relevant to French property renovation.

Certificat d’Urbanisme - (Outline Planning Consent):

French planning rules are set out in the “Code de l'Urbanisme".

The most important type of certificate is the “Certificat d'Urbanisme” (CDU), which states whether the owner has the right, or not, to build on specific land and gives details about the taxation of the land and buildings. In practice you should not try to obtain a French property renovation mortgage unless you are sure you have a "Certificat d'Urbanisme” (CDU).

There are two kinds of certificat d'urbanisme: certificat de simple information (certificate of information), information on the existing rights of the property and certificat opérationnel (operational certificate), which shows you whether or not a specific development can be undertaken.

Once your house has been built, or if you buy an existing property, the need for further planning consents depends on the type of renovation.

Failure to obtain planning permission where it is needed can result in the demolition of renovation work, even of the whole building, and a financial penalty. The local maire has some degree of discretion here so for small building works permission can be granted retrospectively provided the maire does not feel that there was a deliberate attempt to circumvent the planning system. With French property renovation work it is quite easy to complete a project without realising that planning permission was required so it can save you considerable inconvenience if you are on good terms with your local maire and you ask his advice before you start.

To put this into context let's give you two examples of how the planning system can affect French property renovation. At the simplest level we decided that we would like to add two Velux windows to our roof and were told by the contractor that they could not start without planning permission having been granted. We called into see our local maire, explained what we wanted to do and he nodded and said the magic words "pas de problème". On our next visit a few weeks later there was a note in the door from the maire saying permission had been granted. By comparison our neighbours, a local French family, decided to convert an atelier into a home for one of their sons about four years ago and just started work. The maire refused retrospective planning permission but son moved in with his family anyway. Both parties are now locked into an expensive legal appeal process which has now reached the Paris court of appeal.

Permis de Démolir - (Permission to Demolish):

A demolition permit may be required to demolish a building, however dilapidated; this varies by French commune. A "demande de permit d'autorisation de coupe ou d'abattage d'arbres" may also be required to lop or cut down trees.

French Property Renovations that do not require consent.

Renovations or improvements which take place inside the property, such as the installation of an en-suite bathroom, do not generally require planning consent.

Déclaration de Travaux:
(Declaration of Building Works not Requiring Planning Permission)

Small improvements, which don’t alter the use of the building, only require a déclaration de travaux. This would include improvements such as adding internal walls, skylights, replacement windows and doors, installation of outbuildings such as garden sheds, greenhouses, conservatories, and additions of less than 20sq m floor space. Open-air swimming pools are also covered by a déclaration de travaux.

The paperwork is available from the Mairie, the waiting period for approval is about a month and the notice must be displayed for at least two months, (and during the whole construction period if longer than 2 months) with the note "absence d'opposition" (no disagreement).

French Property Renovations that require consent.

Permis de Construire - (Planning Permission):

The Permis de Construire is the main instrument of planning control. A permis is required for any change to a property that will alter its valeur cadastrale (taxable value). The Mairie can grant full or conditional permission. A letter of notification will be sent following submission with the application number. Details of the application will be displayed at the Mairie. A tacit approval may be assumed two months from the date of submission and the Permis de Construire will normally be delivered within three.

Work should start within two years after permission is granted. A 12-month extension is available; the request must be sent at least 2 months before the expiration date of the original planning permission.

Amendments to the original design after approval of the Permis de Construire require a Permis de Construire Modificatif. It is imperative that the work that is undertaken complies with the work described in the Permis de Construire or the Permis de Construire Modificatif.

There is no planning application fee in France, but the tax fonciere payable on the property will be affected by any development.

When renovation work starts, a Déclaration d'Ouverture de Chantier (declaration that the work has commenced) must be lodged. The Permis de Construire has to be displayed on a panonceau (panel) at the entrance to the site so that third parties can object if you have failed to take their interests into account in the application. The authorities have the right to inspect the works to ascertain conformity with the terms of the Permis de Construire.

Once the renovations are complete, a Déclaration d'Achèvement des Travaux (declaration that the work has ended) must be completed within 30 days. The authorities will send a certificat de conformité within 3 months.

It is an offence to undertake renovation work without a Permis de Construire if one is required. This can result in a fine or in certain circumstances an order for the building to be returned to its original state prior to the unauthorised building work.

It is also an offence to carry out work outside that which is defined. If you had a Permis de Construire to convert a barn into a house and then decided to convert it into gîtes it would be necessary to submit a demande de Permis de Construire Modificatif or even a new Demande de Permis de Construire.

Small Works:

Any works carried out on the "Monuments Historiques" (historic building) require planning permission.

• Change of use of a building.
  
• Creation of additional accommodation.
  
• Construction of an outbuilding exceeding 20sq m.
  
• Installation of a swimming pool of over 20sq m.
  
• Installation of a septic tank.

Planning permission may also be required for the following:

• The removal of rendering to expose external stone work or covering stone work with rendering.
  
• The Creation of a terrace or patio over 60cm high or covering more than 20sq m.
  
• Installation of security grilles.

For any French property renovation project to renovate or construct a building over 170sq m Surface Hors Oeuvre Net (SHON), net habitable space, the law states that an application for a Permis de Construire cannot be investigated unless an architect registered under Architectes des Bâtiment du France has "established the architectural project". This means that the architect has to draw up plans and make the planning application on your behalf.

Calculating the relevant SHON must include all habitable areas and measurements must include the thickness of the walls, which must therefore be measured to the outside face. The calculation normally excludes open areas at ground level such as a porch, balconies, basements, garages and any habitable area where the headroom is less than 1.8m, such as rooms under the eaves.

Each French département's Direction Départementale de l'Equipment (DDE) has a consulting architect (architecte conseil) who will provide advice on the type of building permit required, and confirm if a project constitutes more than 170sq m net habitable space and therefore require the services of an architect. This service is free of charge, available by appointment, and is invaluable if you are planning on a large scale French property renovation project.

The technical dossier which the architect has to produce must contain a written submission explaining the visual impact of the project, as well as site plans (scale 1:5000 or 1:10000 for the land and scale 1:500 for the property), floor, section and elevation plans (scale 1:100), photographs of the existing site and an elevation of the proposed improvements.

Building regulations:

There are legal requirements for French buildings concerning safety of persons, sanitary requirements, hygiene, and energy consumption.

The code of practice is set out in Documents Techniques Unifiés DTU and all public contracts must adhere. There are also Avis Techniques (technical advisory notes) for materials, components and equipment, where no standardisation yet exists.

For private contracts, it is the contractor’s responsibility to comply with "Règles de l'Art". The Règles de l'Art include the norms, the DTUs and the "savoir-faire" (know how) of the contractor. The norms and DTU's may be made binding in private projects by being prescribed in the contract.

AFNOR (Agence Française de NORmalisation) is the French institution that sets out technical or technological recommendations applicable to products. When a product has the mark "NF" (Normes Françaises) it means that it has been inspected, that it conforms to the relevant norms and is suitable for use. Representatives of AFNOR can inspect works in progress, carry out tests and request to see all official documents. They can do so for two years after the completion of the construction. This does not happen very often on private construction.

Insurance:

The Loi Spinetta says that all parties involved in all types of construction work should be insured.

• Responsibility for perfect achievement: runs for a period of one year starting from the delivery of the works to the client.
• Biennial responsibility, two years starting from the delivery of the works to the client: covers minor works and equipment defects (electrical appliances, doors, windows...) that can be taken off the construction without damaging it.
• Decennial responsibility, ten years starting from the delivery of the works to the client: targets structural defects or non-structural defects.
• Third party responsibility: starting from the moment the third party is damaged and lasting for a period of 10 years.

The owner (or Maître d'Ouvrage) should also be insured for the works on property other than the maintenance works, including construction, renovation, or alteration. This insurance is called the "dommage-ouvrage" (DO). Few private owners take this insurance and, in that case, the work is not officially sanctioned by the French government.

Using a Project Manager.

The role of the Maitre d'Oeuvre (Project Manager) is to:

• Advise the client.
• Design the project.
  
• Supervise and coordinate the project.
  
• Assist in the choice of builders and artisans.
  
• Analyse and negotiate the estimates.
  
• Assist in the financial conclusion of the contracts.

For people living in one country but trying to complete renovation work in another, the use of a locally based Project Manager can keep the work rolling. Most Project Managers submit regular progress reports. The widespread availability of e-mail and digital cameras allows owners to see how the renovation is progressing.

By having French property renovation work completed in stages, with interim bills, French mortgage funds can be released in matching stages, as they are needed, so that you don’t pay interest sooner than necessary.

Builders

Property renovations in France may be carried out by professionals or individuals. The main types of professional you can hire are entreprise général du bâtiment (general contractor), who will co-ordinate all the separate tradesmen, the constructeur de maison individuelle (house builder), who will also have access to the individual skills required or individual artisans (craftsmen), who each have their particular skill. French artisans will have a Siret number for their professional registration and Décennal and Responsabilité Civile Insurance (third party insurance).

Any renovation done by professionally registered builders or artisans is insured for 10 years. Buyers can request the insurance details of the contractor prior to the purchase.

Work on buildings over 2 years old, carried out by recognised builders and craftsmen, will be charged at 5.5% VAT, rather than the standard rate of 19.6%.

There are many people, French and foreign, who are willing to work “on the black”, especially for cash. The work may cost considerably less, because tax and social charges will not be paid. The main disadvantages are that the builders will not be insured, the work will not be guaranteed and you will not have a receipt, which may be needed for the tax authorities and lending institutions. In addition, materials used will have been subject to the full VAT tax rate.

Individuals also undertake their own property renovation, using materials bought at the standard tax rate, 19.6%. If you install a new heating system or replace a roof yourself, this work will not be insured, which could affect the resale value of your property.

Reselling your property, Capital gains tax

Capital Gains Tax applies to property other than a principal residence that is sold within 15 years of purchase. It is levied on the difference between the sale price and the original purchase price.

If you are non-resident, but resident elsewhere within the EU, the gain will be taxed at 16%. French residents are taxed at 26%; this rate includes 10% social charges (CSG and CRDS). Residents of non-EU Member States are taxed at 33%.

No tax deductions are available in the first 5 years’ ownership. After the fifth year, and during the following 10 years, there is a 10% discount allowed for each year. The cost of works done on the property is deductible if a registered company completed the works and that you have the invoices. Deductible works include extensions and renovations (such as a new kitchen or bathroom), but exclude decorative works such as painting and decorating.