Drop in notary fees: what impact for property?

Current news, obviously focused on the coronavirus epidemic, nevertheless offers us some good news. The notary fees have been reduced thanks to a decree of 1st March 2020, which comes into force on 1st May. Looking back at the ins and outs of this measure which comes within the framework of the Macron Law and which should make some people happy. If indeed we have here a real windfall for property purchasers.

How to understand the government measure?

The announcement is as follows: the notary fees will decrease by 1.9% for a period of two years. Careful, this expression must be taken literally, as only the portion of the fees benefiting the notary is impacted by the government’s decision, not the entire bill presented to the client. The notary’s fees will represent, within the framework of a property purchase, approximately 18% of the bill, with the remaining 80% made up of taxes destined to the State, the department and the city and 2% of various costs.

The notary’s remuneration is itself broken down into four tranches, on which a different fee rate will be applied. From €0 to €6,500, then up to €17,000, a third rate from €17,000 to €60,000 and finally a last rate beyond this sum. The sum of the fees from these four tranches defines what the notary will pocket. The decided decrease concerns a few tenths of a point on each tranche. For example, beyond €60,000, the notary will deduct 0.799% against 0.814% previously.

What benefit for property purchasers?

Let’s take the example of purchasing a property worth £200,000. If the notary fees reach 7 to 8% of the purchase price, therefore an amount between £14,000 and £16,000, the notary’s fees represent for their part a sum of £2,033.41, as explained on the official website of French notaries. The new applicable scale from May onwards will bring this sum to approximately £1,995, for a saving of under £40.

On the same calculation basis, the amount of the gain will be approximately £53 for a property costing £300,000 and £82 for a property worth £500,000. Thus, in most cases, only a few dozen pounds will be saved.

The final advantageous point of the measure concerns the possible negotiation on fees. The authorised discount increases to reach 20% (against 10% previously), and it can apply to tranches above £100,000, against £150,000 until now.

If for other acts such as the signing of a PACS or the mortgage release, the decrease in notary fees is significant, it remains more marginal in property. Some will regret that a decrease in taxation does not accompany this measure in order to further support household purchasing power. But as the popular saying goes, every little helps!