According to a report published earlier this month by the French estate agents' body FNAIM, property transactions during 2010 are likely to reach 700,000 - and by mid-year had already exceeded 650,000, representing an 18% growth over 2009.
These are encouraging figures after the decline in the number of transactions to less than 600,000 in 2008/2009, which had been preceded by six years (2003 - 2008) when the number of transactions exceeded 800,000 annually.
Thursday, October 28, 2010
Monday, October 18, 2010
Buying to let - caution!
The programme looked at two examples, a typical commuter town 15 kms from Paris and the city of Bergerac. In the first case, the development turned out to involve hundreds of apartments, located not 10 minutes but nearly 45 from the rail station, in an area of over-supply and lacking public transport. Much the same situation was apparent in Bergerac, where despit the promises of developers, the majority of apartments were un-let - due again to poor location and over supply according to local estate agents interviewed.
Even though the developers promised a guarantee against failure to find a tenant, in practice this lasted for only 12 months. And when desperate owners tried to sell, they found that their apartment was over-priced, and that after one year without tenants (and rental income), the tax advantages were cancelled. One owners found himself paying over a 1000 euros a month for an apartment he did not occupy, which remained un-tenanted and which he could not sell.
Surprisingly, less than half of buyers bother to visit the site or the area where they are being urged to invest an average of 200,000 euros, to check the quality and location of the property, and to find out for themselves whether a rental market actually exists. A government official interviewed admitted that the criteria for selection of projects under the Scellier scheme were being revised to include an asessment of rental potential, but the new rules would not apply before 2012.
Curiously, France currently has an estimated immediate need for over 1 million new homes.
Tuesday, October 12, 2010
Signing a 'mandat de recherche' - advisable?
Potential buyers looking for a French property may be offered the option of signing a 'mandat de recherche' (research mandate) by an estate agency, which empowers the agency to search for a property on behalf of the would-be buyer. Is this advisable?
Normally, an estate agency will present the buyer with details of those properties already on his books - for which he has a mandate to sell signed by the vendor - which approximately match the buyer's requirements. In the case of a visit to view the property, the buyer is asked to sign a bon de visite which is a simple acknowledgement that he was introduced to that particular property by the agent. This is largely to prevent an unscrupulous buyer from subsequently attempting to strike a private deal with the owner/vendor which would deprive the agent of his commission, and presumably for a lower price. Agents have been known to sue and successfully win a claim in court for payment of their rightful commission, based on their written agreement (the sales mandate) signed by the vendor.
An agent proposing a mandat de recherche will argue that this enables him to widen his research, including for example approaching private vendors and other 'hidden' sources, and generally work harder to find the sort of property the buyer is seeking. Such a mandat involves payment of a percentage commission, based on the price of the property, in the event of a successful transaction.
Confusion can arise however when for example agent X holding a mandat de recherche concludes a deal with agent Y holding a mandat de vente (sales mandate) from the vendor, under which he too is entitled to a commission in the event of finding a buyer and concluding a sale. Are two lots of commission payable? Should the two agents divide and share the commission? Does signing a mandat de recherche cost the buyer more?
The answer to the last question is probably Yes, and a potential buyer might argue that in offering to find him a property, an agent (who has nothing currently suitable on his books) is doing no more than his normal job, when he contacts colleagues to see if they can propose something suitable. Indeed, many agencies work together in this way by means of formal or informal local groupings. In the event of a transaction occurring, the commission is normally split between the two agencies involved.
The situation is slightly different when a potential buyer, possibly someone who is exceptionally busy or who has special requirements, engages an independent property searcher - one of the new-style chasseurs de bien who have recently made their appearance in France. Many of them are operating under the laws (loi Hoguet) regulating the estate agency sector, and may charge both a fee and a percentage commission for their services. In Britain, several large estate agencies have even opened 'property search' subsidiaries, leading one to question where their independence lies - and whether this type of operation is simply another device to extract more fees from the potential purchaser.
In choosing his approach, a potential buyer can weigh up the cost of using these extra services, against his time availablity, knowledge of the local area and property market, and in the case of France his knowledge of the language and the property buying process.
Normally, an estate agency will present the buyer with details of those properties already on his books - for which he has a mandate to sell signed by the vendor - which approximately match the buyer's requirements. In the case of a visit to view the property, the buyer is asked to sign a bon de visite which is a simple acknowledgement that he was introduced to that particular property by the agent. This is largely to prevent an unscrupulous buyer from subsequently attempting to strike a private deal with the owner/vendor which would deprive the agent of his commission, and presumably for a lower price. Agents have been known to sue and successfully win a claim in court for payment of their rightful commission, based on their written agreement (the sales mandate) signed by the vendor.
An agent proposing a mandat de recherche will argue that this enables him to widen his research, including for example approaching private vendors and other 'hidden' sources, and generally work harder to find the sort of property the buyer is seeking. Such a mandat involves payment of a percentage commission, based on the price of the property, in the event of a successful transaction.
Confusion can arise however when for example agent X holding a mandat de recherche concludes a deal with agent Y holding a mandat de vente (sales mandate) from the vendor, under which he too is entitled to a commission in the event of finding a buyer and concluding a sale. Are two lots of commission payable? Should the two agents divide and share the commission? Does signing a mandat de recherche cost the buyer more?
The answer to the last question is probably Yes, and a potential buyer might argue that in offering to find him a property, an agent (who has nothing currently suitable on his books) is doing no more than his normal job, when he contacts colleagues to see if they can propose something suitable. Indeed, many agencies work together in this way by means of formal or informal local groupings. In the event of a transaction occurring, the commission is normally split between the two agencies involved.
The situation is slightly different when a potential buyer, possibly someone who is exceptionally busy or who has special requirements, engages an independent property searcher - one of the new-style chasseurs de bien who have recently made their appearance in France. Many of them are operating under the laws (loi Hoguet) regulating the estate agency sector, and may charge both a fee and a percentage commission for their services. In Britain, several large estate agencies have even opened 'property search' subsidiaries, leading one to question where their independence lies - and whether this type of operation is simply another device to extract more fees from the potential purchaser.
In choosing his approach, a potential buyer can weigh up the cost of using these extra services, against his time availablity, knowledge of the local area and property market, and in the case of France his knowledge of the language and the property buying process.
Tuesday, October 5, 2010
French interest rates lowest since 1945
According to a report in Monday's Le Figaro, French mortgage interest rates were at their lowest - 3.30% - since 1945 during September 2010. The previous record low occurred towards the end of 2005 when rates were at 3.36% (excluding insurance). The number of mortgages granted by lenders was up 17% in the same month, compared with autumn 2009.
Source - Observatoire Crédit Logement/CSA.
Source - Observatoire Crédit Logement/CSA.
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