France’s sky-high estate agent fees: what reform is being proposed?

A NEW REPORT HAS RECOMMENDED THE GOVERNMENT INTERVENE TO LOWER THE AVERAGE ESTATE AGENT FEE OF 5.78% TO THE EUROPEAN AVERAGE OF AROUND 4% _Article published on June 9, 2023_ Estate agent

fees in France should be reduced to the European average of around 4%, in a move that would save households €3billion per year, a new report has recommended. WHAT ARE FRANCE’S CURRENT ESTATE

AGENT FEES? France has relatively high estate agent fees of 5.78% per property sale on average, far above the European Union average of 4%. That is according to a report from France’s

competition authority _l'Autorité de la concurrence_. It said the average overall gain by households in France would amount to €3billion if fees were lowered to 4%. This rate is still

high compared to the average in some other European countries. For example, in 2019 property website PropertyWire ESTIMATED: * Denmark: 1.25% * UK: 1.42% * Ireland: 1.75% * Greece: 2% *

Spain: 2.75% * Belgium, Luxembourg, Netherlands: 3% Even countries with higher rates were still lower than France’s current rate (4% in Czechia, Portugal, and Sweden, and 4.5% in Germany,

and Italy). The rates can make a significant difference to the cost of selling your property. For example, on a €500,000 property, 5.78% equates to €28,900. At the European average of 4%,

this lowers to €20,000, and at the lowest rate of 1.25%, it lowers to just €6,250. One estate agent, Rudy Harosch at Orpi Optimum, defended France's rates, saying they are justified due

to the complexity of the French market and the procedures involved. "Diagnostics and contacts with notaires are time-consuming processes,” he TOLD FRANCEINFO. WHAT DID THE AUTHORITY

CONCLUDE? In its REPORT, WHICH WAS PUBLISHED on June 7, the authority concluded that the current fees should be lowered and that the profession’s current law, the loi Hoguet (January 2,

1970), is no longer fit for purpose. This is because it does not apply to the many new types of agencies that are not bound by its rules (such as online estate agents or ‘property coaches’).

The report also concluded: “The authority notes that this law acts as a brake on new innovative services, and on the lowering of commission rates.” It said that the loi Hoguet needs to be

“clarified and relaxed” to fit in with modern practices. READ MORE: ESTATE AGENTS BYPASSED AS FRENCH PROPERTY PRICES RISE Overall, the authority said it wanted to “strengthen the economic

protection of consumers and, secondly, to make estate agent conditions more flexible”. It also recommended that: * Estate agents must present an exhaustive list of the services provided by

the professional so that the customer can have complete information when negotiating the fees. * Property advertisements be standardised, regardless of whether the fees are payable by the

buyer or the seller, to improve the clarity of the information, and limit fees being passed from seller to buyer. * Online property advertisement sites must be subject to the display

requirements set out in the 2017 decree on consumer information provided by professionals involved in property transactions. * A summary sheet must be drawn up for the technical diagnostic

file to make it easier to understand and read. * Estate agent data held by notaires on property sale prices and commissions received by real estate brokers must be made available to the

public free of charge, and transparently. Currently, the way this data is presented “is likely to artificially increase the sale price of the property”, the authority said. * The ban on

notaires displaying property advertisements in the windows of their office be overturned. It also offered details on two options for relaxing the_ loi Hoguet_: * Relax the conditions under

which real estate brokers offer their services. This includes removing the law’s control over estate agent brokerage for property sales and adding a rule in the Consumer Code that asks for

proof of a financial guarantee when handling money. * Clarify the scope of the law, and simplify the conditions for entry to the profession. WILL THE RECOMMENDATIONS BECOME LAW? The

authority prepared the report at the request of the government, and it has said it will now “send its recommendations to the government”. However, it can only act in an advisory capacity and

has no power to force the government to take on its suggestions. RELATED ARTICLES HUNDREDS OF ESTATE AGENTS IN FRANCE ARE BREAKING THE LAW ONLINE ESTATE AGENTS IN FRANCE WIDEN HORIZONS FOR

HOUSE-HUNTERS IS IT CHEAPER TO SELL FRENCH PROPERTY WITH A NOTAIRE OR ESTATE AGENT?