Sunday, July 25, 2010

Selling your home? Some things to avoid....

Writing in the UK Daily Telegraph, property expert Phil Spencer of the TV progamme 'Location, Location, Location' offers some useful tips on how not to try and improve your home before selling. Among his suggestions are:

- Avoid 'outgrowing your street'. 'If houses in your street cost £250,000 don't build an enormous extension and ask £400,000. People looking for a £400,000 house won't want to live in a £250,000 street'. Harsh but true.

- DIY bodging. The greatest turn-off especially for French buyers used to work undertaken by registered artisans, with the accompanying invoices and guarantees.

- Replacing all the furniture. This, he says, will not add value to the house. This does not mean neglecting to present the property well, including home staging.

- Too big a television. 'I have seen far too many living rooms that have been overpowered by the size of the plasma screen' he says. This is a common fault among French owners, whose living areas have been turned into virtual home cinemas.

- Too many bedrooms. 'There is a substantial difference in price btween two, three and four bedroom houses' says Spencer, 'after five there's hardly any'.

Although writing about English property, many of Spencer's ideas can be equally well applied to your French house or apartment. In the same article he offers a list of improvements that can add value, from re-painting to opening-up internal spaces.

Spencer also suggests that sellers should be aware of their target market. 'Work out who is your most likely type of buyer' he suggests, 'and aim accordingly. This will determine whether you present a spare room as, say, an office, a play room, a gym or a study'. Related to French property, I would add being able to offer a ground floor bedroom,  as many older buyers appear concerned about not being able eventually to climb the stairs, while younger ones are becoming increasingly responsible for looking after an ageing parent.

Source: Daily Telegraph, Property Section 23 July 2010.

Tuesday, July 20, 2010

Letting your French property

One of the attractions of buying property in France is the chance to earn additional income from letting, particularly where the property is purchased as a second home and you do not intend to occupy it all year round. However, the rental markets differ widely according to location and market demand, and can broadly be divided into short, medium and long term.

Typical medium term markets include student rentals, if you happen to live in or near a university town. Suitable properties include one or two person studios, or larger apartments suitable for sharing. Such properties are invariably offered furnished and equipped, and wear and tear can be considerable, so you need to factor in the cost of replacement and redecoration. Tenant turnover can be high as young people tend to give minimum notice and will leave if they find another cheaper apartment or decide to move in with friends. Rentals are of course confined to term time. In some areas, furnished studios or apartments could also be offered to those moving temporarily for work or house hunting.

Longer term lets are generally for three years or longer, and unfurnished if the let is more or less permanent. Many French people choose to rent rather than buy, or live in a rented apartment in a city centre during the week (where the cost of buying can be high), and return to their family home in the country at weekends and for holidays. Rental properties in high demand include three and four bedroom houses suitable for families with children, with a garden and possibly a pool. Ideal locations are suburban or in towns close to public transport and main centres of work, and offering schools, nurseries and conveneint shopping. Ideal tenants include dual-income families with children in local schools, who are likely to want to stay for a number of years.

The most common short-term letting markets are those addressed to holiday makers, and comprise the six to eight week summer season (July, August), the period around Christmas and skiing, Easter, and in some areas shorter periods outside the main season, for example during spring and autumn.

The main summer season has tended to contract in recent years, and now stretches from mid-July to the third week in August at its peak, with large concentrations of visitors on the French Mediterranean and Atlantic coast, and some inland areas of special interest, such as national parks or the mountain regions of the Alps and Pyrenees. On the Mediterranean coast, there is increasing competition from camp sites, many of which are graded 4-star and describe themselves as 'hotelerie en plein air'. Many thousands of euros have been spent on upgrading accommodation (chalets) and facilities, with the largest sites catering for 5,000 or more visitors at any one time, and are virtually transformed into temporary villages complete with supermarket, restaurants, bars, caf├ęs and all facilities, as well as every kind of sports and entertainment.

In contrast many coastal apartment and villa owners have failed to react to changing customer demands. Having managed for years to let their fairly average holiday homes at inflated prices, many are now feeling the pinch. In some Mediterranean resorts, apartment bookings are reportedly down by 30 to 40 per cent (in the third week of July 2010), and restaurants and shops are also suffering from lower takings as a result.

A few home owners have reacted by turning their apartments into 'boutique' accommodation, in competition with hotels, and specialising in short-stay breaks - typically long weekends or mid-week to weekend - possibly outside the main holiday season, and where the location has more to offer than the traditional sun, sand and sea.  Popular destinations are centres of historic interest, as a base for excursions and sightseeing. Another niche market is that catering for special interest holidays. These can range from cycling or hiking to cookery, crafts, art classes, slimming, vegetarian, yoga, nature study, languages, or culture.

In looking at short term rental options, property owners should take into account the potential of their area and its adaptability to these new markets. If your property is part of a co-ownership (condominium) complex you also need to be aware of the rules regarding visitors and letting. Invariably owners are held responsible for the 'good conduct' of their tenants and residents are quick to complain to the building managers in the event of noise or misconduct that disturbs the tranquility of other (permanent) residents.

Some large apartment or villa complexes include attractive gardens and a pool, as well as easy parking, and can be attractive to holidaymakers who do not wish to stay on a campsite or in a hotel. Agencies handling seasonal rentals demand a fairly high standard of furnishings and equipment, such as washing machine and possibly a dishwasher, and will take care of rentals, security deposits, insurance and cleaning between rentals.

An attractive location such as facing the sea or a marina, together with a balcony or terrace, will help make your apartment or villa stand out among the hundreds on offer. If you are offering a country house for short term holiday rental, minimal requirements will be a garden and a pool, as visitors do not like travelling every day to the beach due to the inevitable traffic congestion around the coast in high season.

Income can be made from renting but you need to research the different markets and decide how your particular property can be best adapted to varying local demand.

Wednesday, July 7, 2010

French property prices nearly back to pre-crisis levels

Prices of older properties have almost reached the pre-crisis levels recorded before 2008, according to figures just released by Century 21 for sales during the first half of 2010. With an average cost of 2508 euros per m² (7079 euros/m² for Paris), prices have risen by an astonishing 8.48% in just one year, and an even more remarkable 15% in Paris (5.4% higher than the first half of 2008).

Commenting on the figures, Laurent Vimont chairman of Century 21, which has 850 offices throughout France, noted that "We are now suffering a shortage of properties for sale, with 50,000 compared with 63,000 a year ago; with very narrow margins for negotiation, just 4% for apartments and 6.3% for houses. We are also seeing vendors demanding unrealistic prices which only serve to stifle the market".

The French Mediterranean coastal regions continue to record rising prices, an average of 11% in Provence/Cote d'Azur and nearly 7% in Languedoc-Roussillon.

With mortgage interest rates at their lowest for several months, averaging 3.6% over 20 or 25 years, a typical borrower who had access to 146,500 euros in 2008 can now borrow 169,000 euros to finance his acquisition.

Vimont predicts that average property prices will rise 6% during 2010 before stabilising.

Tuesday, July 6, 2010

French Property News, July 2010

In this month's issue of French Property News I look at a number of reasons why you should sometimes NOT buy a French property, and at all times use your head and not your heart. Among the reasons for not buying I include falling in love with the owners or their lifetyle, or being seduced by cosmetic improvements which may be the result of preparing the property specifically for sale. Bear in mind that attractive curtains, carpets and furniture will not be left behind - unless you intend buying the contents - though they may give you an idea of what might be achieved.

It is tempting also to imagine buying into the owners' lifestyle, which in part we do, as almost all advertising and selling is based on our aspirations. However I do recommend sometimes taking along a dispassionate third party on property viewings - an estate agent's worst nightmare but possibly your best ally.

As someone who advises potential buyers of French properties, my personal list of problem areas includes uncertainties about ownership, boundary rights, unclear rights of way, sitting and protected tenants, DIY renovations and other factors that can make a sales less straightforward than normal. Prolems can be ironed out in most cases, provided the property is worth the extra effort, but sometimes it is easier to simply move on and find something else.

Thursday, July 1, 2010

Another twist to French estate agency sector

Although an admirer of the French estate agency business - I used to be an agent but now prefer my role as adviser - I am also aware of its many defects. The sector is in theory highly protected under French law, such as the 'loi Hoguet' which closely defines estate agency activities and sets down standards for anyone wishing to apply for an estate agency licence, normally a business degree and/or several years experience.

In practice, estate agency operations can be open to anomalies, notably in the use of freelance 'commercial agents' who are self-employed and loosely attached to an agency as property negotiators. They depend for their legitimacy on the agency's professional licence, issued by the Prefecture to the principal/owner.

A recent and worrying development is the establishment of several national networks of freelancers, recruited for the most part without previous experience, and relying for a living on the commissions they could potentially earn from mandating properties for sale and subsequently negotiating a purchase. These activities require considerable professional expertise and experience if they are to be performed correctly, including an in-depth knowledge of the property market, estimating property values and completing the transaction from initial pre-contract to final signature.

Many of these sub-agents depend on an estate-agency licence issued by a single Prefecture and used to legitimise the activities of an entire national network. FNAIM, the French estate agents' national body, has expressed concern about "the reality of control over the activities of these negotiators at a time when we are trying to strengthen the guarantees offered to consumers" (Le Monde 06 July 2010).

Checking up on one of these networks (which continues to recruit) I found that my small local town has two of their 'agents' in place (in addition to more than 20 properly licensed estate agencies), operating from their home addresses. A search of their property website revealed just two properties listed, where the average licensed agency has a minimum of 100 on offer.

These developments are worrying not only for potential buyers, who may find themselves in the hands of these fringe operators, but also for individuals who imagine that joining a network as a commercial agent is a viable route into the French estate agency business.

Picture - Daily Telegraph, UK