Tuesday, July 21, 2009

Buying a French property 'en viager'

Older persons living pemanently in France and concerned about their longer term financial security sometimes consider the option of selling their home 'en viager'.

This is a peculiarly French legal device which enables a buyer to invest in a property that is usually occupied by its owner/owners (though occasionally not), which comprises a down payment - known as the 'bouquet' - followed by regular monthly payments (known as the 'rente') paid to the owner/owners until their death. The purchase is a bit of a gamble and based on the life expectancy of the property's owners - put bluntly, the sooner they die, the less the property will cost the buyer.

From the owners' point of view, they benefit from the 'bouquet' and subsequent monthly 'rentes', as well as in most cases continuing to live in the property until their death. There have however been cases where the person whose house was sold 'en viager' managed to survive the buyer, whose inheritors then had to take on the burden of the montlhy 'rentes'. In one case the owner lived to over 100 while the buyer died in his 90s and never enjoyed the value of the property he was buying.

By way of example, a property valued at 100,000 euros might be offered 'en viager' with a 'bouquet' of 30,000 euros and monthly 'rentes' of between 200 and 300 euros, payable until the death of the owner(s).

Buying 'en viager' is at best a form of long term saving for the purchaser but is not without its own special risks. For the seller it can represent a source of extra income in old age and in that sense offers a measure of financial security, though at the cost of sacrificing their inheritance.