Mortgage Finance for Furniture is a subject that comes up regularly, because many of our clients have furniture included in the agreed purchase price of their French property.
There are advantages of including furniture in the sale of a French property for both the vendor and the buyer
Vendor Advantages:
- No need to dispose of unwanted furniture
- The value of the furniture included in the property sale reduces any capital gain and so reduces their liability to Capital Gains Tax.
Buyer Advantages:
- No Notaires fees are payable on furnishings so the notaires fees will be lower if part of the purchase agreement shows the agreed sale price includes furniture.
- The property is ready to move into as there will be no waiting for the delivery of furniture.
Mortgage Finance for Furniture Will the Banks Fund it?
French banks will only lend on the furniture if it is modest and incidental to the purchase. They will require you to disaggregate the price you have agreed to pay into the property value and the Agent’s fees, which can be included in your mortgage, and the furniture. If the bank deem the furniture to be more than modest and incidental it will not be included your mortgage so it will need to be paid for with your own funds.
In our experience, if a buyer does not agree to pay for the furniture many vendors will often leave their furniture, or the majority of it, free of charge. This is particularly common if they are selling a second home as the cost of packing and transport can outweigh the value of the items.
Is it of Value?
As with all purchases of second-hand furniture and white goods, it is important to consider the original quality and current state of what you are offered as part of the French property purchase price.
If the furniture was bought new and has only been used for a few weeks each year for a short period it may represent good value, particularly if you also intend to rent out the property.
If the furniture is old and low quality you may find better value by spending the same sum on new furniture from somewhere like IKEA.
The decision is yours.
Negotiating the Best Deal
All property sales involve a degree of negotiation and reaching an amicable agreement over furniture can soften the blow on price.
If the seller cannot sell the furniture with the French property they are obliged to dispose of it as all property should be empty at completion unless otherwise agreed in the acte de vente.
Nearly new appliances still in their warranty or extended warranty period and chosen to fit the spaces in kitchens and utility rooms will clearly be worth more than old and well-used equipment for which spare parts my no longer be available.
Furniture more than 2 years old is probably worth very little if it comes from a mass market retailer such as Conforama, as it may have a short intended life, but a nominal value can be added to the French mortgage.
If the furniture was manufactured to a high quality, such as that from Cassina, it may have a high residual value but a French bank is unlikely to allow you to include its value in your mortgage unless it is in keeping with the property.
