French Property & Brexit: what will change for UK residents from 1st January 2021?

After the end of the transition period (31^st December 2020), the United Kingdom (UK) will be a third country with regard to the European Union (EU) and the Economic (EEA). Hereby is a summary of what will change or not change from the 1^st January 2021 for UK residents owning a French property or planning to purchase one.

What will not change?

• The purchasing cost (Notaire’s fees, stamp duties and land registration fees) is the same whether the buyer is residing in or outside the EU/EEA:

            -around 7% for purchasing a resale property (+1% if purchasing via a mortgage);

            -around 2% for purchasing a newly built property (+1% if purchasing via a mortgage).

• France does not impose restrictions on purchasing a French property unless the buyer comes from a blacklisted country. Therefore, the buying process will remain unchanged for UK residents.
• Estate planning: when the UK voted for Brexit in 2016, it was already not a signatory of the EU Regulation 650/2012 on international successions and the EU Regulation 2016/1103 on matrimonial regimes (marriage contracts). Brexit will not impact on inheritance planning for owners of French assets. Wills made under English or French law will remain valid after Brexit.
• The great British love affaire with la vie française and French Property: chasing a dream to own a French property, living the French way of life, beautiful landscapes and the climate are factors which will still bring British buyers to France after Brexit.

What will change?

• UK residents will have to pay social security contributions at the rate of 17.2% (instead of the solidarity tax of 7.5% for EU/EEA residents) on their annual rental income.
• UK residents will have to pay social security contributions at the rate of 17.2% (instead of the solidarity tax of 7.5% for EU/EEA residents) on their capital gain when selling their French property.
• When selling their French property, UK residents will have to instruct a tax representative to file their capital gains tax return (some exceptions will apply): tax representative’s fees will amount between 0.4% and 1% of the sale price.
• The end of freedom of movement: UK nationals residing in the UK will lose the automatic right to come and go in France. UK nationals will be limited to visit France for up to 90 days within any 180-day period without a visa. British nationals who wish to move to France after 31^st December 2020 will be required to obtain a long-term visa before applying for residency at their local French prefecture. For UK nationals already residing in France before the 1^st January 2021, they must apply for  a French residency permit before the 1^st July 2021: https://contacts-demarches.interieur.gouv.fr/brexit/brexit-residence-permit-application/  

If you already own a French property and need advice on cross-border estate planning or you are planning to purchase a property in France and need legal support, please do not hesitate to contact Loic Raboteau at loicr@bandmlaw.co.uk