The French Alps are a very attractive location when considering a French property purchase, especially now with many ski “stations” also pushing the development their fair weather activities. However there are some specific legal issues to be on the lookout for to ensure a smooth and successful transaction and that your chosen property meets your requirements. Here are our top 7 tips to consider, based on our experience of advising our clients on purchases in this area.
1. Housing developments / ZAC
A lot of the Alps has been developed through resorts developments and as such even a standalone detached chalet can still be part of a ZAC (a type of housing development). What this means is that you could still be subject to sometimes very specific rules and regulations (Meribel is famous for example for the fact that no one is allowed to build fences within some of its developments). You could also have to participate in the costs of maintaining the common areas of the housing development such as the roads, trails, and trees. Those additional obligations need to be carefully considered.
2. Leaseback scheme
Whilst leaseback purchases are not as frequent as when they were first introduced, there are still many properties being sold on this basis, including already built properties still under the scheme. A leaseback scheme allows a purchase of a new build property to be exempt from French VAT, but in exchange the buyer must commit to renting the property out through a commercial tenant for a period of 20 years. The terms of the commercial lease must be carefully reviewed to ensure that they meet the VAT waiver requirement. They are also strictly regulated and it can be difficult/costly to exit them under French commercial tenancy laws.
3. Loi Montagne
The “Loi Montagne” is a French law which has the objective to ensure that mountainous areas in France can be developed, whilst maintaining a certain degree of environmental protection. What this means is that there are additional restrictions put on development and new builds in mountain areas, which includes the French Alps. If you are purchasing a plot of land with the objective of building your own chalet, in depth research needs to be carried out as regards compliance with the Loi Montagne and in most cases a specialist architect will need to be involved, with the purchase being subject to planning permission being obtained, a condition which will need to be carefully negotiated.
4. Planning considerations
Even if you are not planning on building your own property, planning is of particular importance when purchasing a property in the French Alps. In particular, if your seller has themselves had building work carried out on their property, you will need to ensure that the relevant planning permission was obtained and complied with, and that all paperwork is in place. French sanctions for lack of planning/planning infringement range from administrative to criminal sanctions and can go as far as an order to destroy any illegal building work. In less extreme cases, the local authority could refuse to grant new planning permission where they find that prior work was not compliant. Without the possibility of relying on indemnity insurance, which does not exist in France, a buyer needs to have a good understanding of the specific planning circumstances of the property and the risks associated in case something was not complied with in the process.
5. Copropriété ownership
If you are purchasing a lovely skiing pied-à-terre apartment rather than a standalone chalet, you need to be aware of the rules in relation to the French copropriété regime (which is the loose French equivalent to a leasehold). As a copropriétaire, you will have to pay a pro rata of the associated shared charges. Before committing to the purchase, you will be provided with various financial documents which will need to be scrutinised to gain a good understanding of the financial commitment you are making, particularly where large building work looks to be required on the common parts of the building in the future. Finally, you will need to ensure that you are happy to comply with all the rules set out in the building’s regulations, some of which can be as odd as “no drying laundry on the balcony”.
6. Copropriété building work authorisation
Copropriétés also come with their own building work restriction. Whilst for example some building work such as replacing windows may not always require planning permission from the local authority, this is not to say that the building’s regulations do not place stricter restrictions in place. You will need to gain a good understanding of what are common parts and privately owned parts, and which require specific authorisation before building work can be carried out on them. Especially where the apartment comes with a terrace or balcony, which can sometimes have a hybrid status, the maintenance could be at the cost of the owner, but substantial repairs a shared copropriété cost, and the relevant authorisation obtained both from the local authority and the copropriété.
7. Restrictions on short term lets
The French Alps are a touristic area, and many towns (Communes) will have their own rules as to how they approach short term lets. If you are considering letting the property out on a holiday let basis, it will be key for you to have a good grasp of the local rules. Most Communes will at least have a requirement that the short term lets are declared, so that they can levy a tourist tax. Some will require them to be authorised, and will have their own accreditation scheme. You will also need to ensure that the building’s regulations do allow for this as the Commune rules cannot trump the building rules, and especially for apartment buildings in wealthier area, short term lets will be undesirable due to the risk of nuisance they cause. Or will be subject to entering into a commercial lease with the commercial tenant. Do not forget to check at both levels as short term lets need to be authorised both by the Commune and by the building regulations to be carried out ! A buyer should also be aware that French source income must be declared and taxed in France and that the double taxation treaty between France and the UK is not the easiest document to navigate, often requiring input from a dual qualified accountant.
