The true cost of a pied-à-terre
In addition to the purchase price, the owner of a pied-à-terre must take on certain fixed costs. These range from “notary’s fees” to co-op charges and local taxes. An explanation.
Owning a pied-à-terre in Paris, as elsewhere, generates recurring fixed costs that an owner must cover even if the property is not occupied for the whole year. Professionals estimate that this spend is around 1-3% of the property’s value. Here’s a reminder of the principal expenses.
The costs related to an acquisition
Becoming a homeowner generates acquisition costs that cannot be reduced. Notably, payment of “notary’s fees” on the day the final act of sale is signed. In the past they have amounted to 6-7% of the value of the property. This payment officially closes the real estate transaction thanks to the intervention of the notary, the only representative empowered by the State to do so. A portion of these fees pays for the services of this government administrator and above all (80%), pays taxes, the expenses and taxes collected by the State and local authorities.
Every real estate owner must pay the annual property tax. This local tax is payable every autumn to the town in which the property is located. Housing tax is payable if the home is occupied on 1 January of each year.
Note: since 2015, second homes located in France’s capital are also subject to this tax, which was recently increased to 20%.
It’s mandatory to have home insurance that covers any unforeseen accidents (fire, flood, etc.). When an apartment isn’t occupied throughout the year, insurance companies aren’t shy about increasing the premium they charge. Proof of this insurance cover is often required at the signing of the final sale agreement before the notary.
If you are borrowing to finance your purchase, it is also necessary to take out death and invalidity insurance linked to the mortgage. This insurance cover is charged for (variable according to age and profession) and is a mandatory condition of all banks before they authorise the release of funds.
Home upkeep costs
Every month, whether the property is inhabited or not, utility bills are payable (electricity, gas, internet, home security) not forgetting housekeeping costs, maintenance of the boiler, of plants on the terrace, etc.
Due every quarter, these charges applicable to apartments owned in co-ownership cover the operating and maintenance costs of the communal parts of the building. Added to these regular charges come one-off expenses, usually significant sums associated with major building works (re-roofing, exterior restoration, bringing the lift up to modern-day safety standards). Such exceptional expenditure is necessary to preserve the value of the building.