Friday, June 25, 2010

Electrical installations - new norms

As a result of a new law passed in June 2009, anyone selling a French property must now provide a further expert report concerning the state of the building's electrical installation. This is in addition to those covering termites, lead, asbestos, gas installation, flooding and natural risks, and energy efficiency.

The inspection, undertaken by a certified professional, is extremely thorough, and covers everything from the mains supply, distribution panel and fuse box, wiring, electrical sockets and switches. The expert's report includes an obligatory list of comments and recommendations.

The result is that many existing properties will not be in conformity with the latest norms (as they may well not be in terms of energy efficiency) and in extreme cases an expert might recommend shutdown of the system by the supplier (EDF) until alterations have been carried out. Similar procedures apply to gas installations.

The new inspection imposes another obligation on vendors, who have to pay for the expert's report, and may encourage buyers to seek a further reduction in the sale price if it appears that there is a considerable cost involved in bringing the electrical installation up to standard.

In all cases and especially where defects or 'anomalies' have been identified by the expert, the report emphasises that the new owner inherits the risks and responsibilities associated with the installation as it exists, and notes that in some cases insurers may decline to offer cover until alterations have been carried out.

Wednesday, June 16, 2010

500,000th auto-entrepreneur registered this week

This week, France's minister for small business, announced the registration of the 500,000th auto-entrepreneur, another clear sign of the popularity of this simplified form of self-employment created in January 2009. Originally registrations were expected to reach 100,000 in 2009 but this figure was later revised as they excceded 320,000 in the first year of launch, finally reaching today's figure of half-a-million registrations in just 18 months.

This week's announcement notes that combined income generated by new auto-entrepreneurs was over 1 billion euros in 2009, and is expected to reach three billion in 2010, represented a significant extra income for many new full and part-time businesses.

A recent study has found that 64% of new auto-entrepreneurs are men against 34% women; 16% are aged 30 or under, and 19% are aged 60 or over. This last figure is particularly encouraging, given the very low percentage of French people actually in fulltime jobs after the age of 55, five years before the tradtional retirement age of 60.

In January 2011, the French government intends to launch another new regime - the E I R C or Entreprise Individuelle (avec) Responsabilit√© Limit√©e. This will be similar to the single-person limited company (EURL) but enables an individual who is self-employed to enjoy the same sort of protection, with the added benefit of limited liability.

Individuals opting for the auto-entrepreneur regime are self employed, and pay a combined total of tax and social contributions (at a rate of 13% for commercial activities and around 21% for services), based on actual income earned, and declared quarterly. There are limits on annual turnover, currently around 80,000 euros for commercial activities and 34,000 euros for services, such as consultancy. Auto-entrepreneurs are not alllowed to deduct or charge VAT on their activities, and some reserved occupations are excluded from the regime.

Activities as an auto-entrepreneur can be combined with full or part-time employment in another occupation, including students. The regime is open to those out of work (11% of AEs), pensioners (about one quarter of AEs) and EU nationals, including British who wish to work in France. A search on Google will reveal a wealth of information on the subject, much of it in English.

Monday, June 7, 2010

French property sales up, interest rates down

A recent batch of reports has produced the usual confusing picture of the French property market.

Among the certainties are the fact that typical interest rates are at their lowest since 2006, with some lenders offering 15 year loans at a fixed rate of 3.35%, with borrowers contributing 10% of their own capital. The T3 (three rooms, kitchen and bath) is still seen as the most secure investment by buyers. A rise of 10% in loan approvals was recorded during the first quarter of 2010.

Some sources also report an average 16% shortage of good saleable properties, and 21% for apartments. As a result small price increases have been noted in some of the most popular sectors, including Paris and other large centres.

In Languedoc-Roussillon we are currently experiencing a shortage of good, saleable properties, with too many still coming onto the market over-priced and not in a fit condition to show to potential buyers.

Would-be sellers have only themselves to blame if their property fails to sell within a reasonable time, while these near ideal market conditions continue to prevail.

Sources: Argus du logement, Universimmo, Notaires de Paris.