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French notary fees go down – but the move will only benefit small deals
Fees collected by legal professionals in France are set to decrease, including those paid to notaires. However, savings will only be significant on small transactions while most Paris real estate buyers won’t notice much change at all.
Starting in May, buyers in France will benefit from ever-so-slightly reduced notaire fees on their purchase. Part of the Macron Law passed last year, a decree published on February 26th in the Official Journal saw these new rates apply from May 1st.
Visible discounts will mostly apply to very small transactions, and the law has been criticized for the lack of real impact it will have on buyers. Under the new rules, a notaire’s fees cannot exceed 10% of the property’s value. Thus, while the reform will benefit buyers undertaking very small transactions — for instance, purchasing a cellar or parking space for 2,000 euros will result in 200 euros of fees, against the 880 euros previously due — capped fees are not set to afford buyers significant discounts on most property purchases.
Following the announcement, the French government has been criticized for acting as though this reform will have a noteworthy impact on most property purchases while admitting itself that these new provisions will only amount to a 2.5% decrease in fees on average.
Additionally, while notaires are now able to grant an up to 10% discount on fees for real estate purchases of over 150,000 euros, this discount is not mandatory. Nonetheless, professionals who decide to grant it must do so for all their clients.
It is also important to note that this reform does not apply to taxes and other fiscal charges due. These are still collected by notaires and paid through them to the Treasury. These transfer taxes account for a large portion of what are commonly — and incorrectly — referred to as “notary fees,” and these actually increased by 0.7% last year in certain French departments.
New discounted rates apply to all notaires services — including inheritance for instance — and will remain in effect for 2 years before being revised again in 2018.
This reform is just one of the many changes brought in to facilitate and streamline the buying process when in fact making it longer. Maître Pierre-Alain Conil, a notaire specializing in wills, trusts and real estate in Paris’ 6th arrondissement, explained the large number of new documents that notaries must now hunt down before the preliminary agreement can be signed by the parties to seal a real estate deal. “The weight of these new reforms is notable, and because of them, the delay to write a promesse de vente has jumped from 1 to 3 weeks.” Many of these documents, he says, are only tangentially related to the parties or the property in question.
Kathryn Brown from Paris Property Group agrees. “We would love to see a more coherent approach to balancing the need for a timely transaction process with the need for a thorough review of information. It is now even more challenging to get the pre-contract signed, and the added delay makes both parties nervous that their deal will fall through. A streamlined approach would be a welcome relief.”
Photo credit: Wikimedia / Utr dragon