Tuesday, November 26, 2013

What buyers look for when viewing

I am indebted to an American website (apartmenttherapy.com) which conducted a survey on what prospective buyers look for in a property during viewings - and what owners should or shoult not do as a result of these findings. They were based on viewer's responses to typical 'home search' reality programmes on TV, similar to those appearing in UK and in France on channel M6 and hosted by a very experienced French estate agent Stephan Plaza.

In the American survey there were several gripes about how the programme could be 'faked' and the responses edited. That said, and in the comments that followed on the apartmen therapy website, the big debate seemed to be whether to home stage or not. In the French programme, Stephan Plaza is a firm believer in home staging, arguing that the majority of buyers (borne out by yet another recent survey) prefer to buy a property that appears ready to move into. Buyers simply want to put down their suitcases and get on with living.

This view was echoed in the US TV programmes but commentators argued that many would-be purchasers cocentrated so much on 'cosmetic' aspects of the property being viewed, and neglected to check out possible structural defects, the state of the electrics/plumbing/heating systems (all expensive to put right), or external aspects such as a noisy neighbourhood (main roads, schools, bars, restaurants, shops etc), let alone discovering - too late! - the neighbours from hell living next door.

There seemed to be considerable confusion about what could be put right: few it seems accepted the difference between changing the wallpaper or the colour of the carpet compared with altering a poor physical layout or rooms that were simply too small.

There are probably as many opinions as there are choices, but in my personal experience that most properties will (eventually) seel if they are presented in a clean and tidy state, and those annoying little maintenance and repair jobs have been attended to. Owners are doing themselves a disservice if the front door bell does not work, the gate is hanging off its hinges, the property is cluttered and untidy, there are obvious signs of pets, and rooms (particularly kitchens and bathroooms) are dirty.

While buyers are may be spoilt for choice, they may never find their ideal house even after months or  years of viewing. Unless they are looking for a second home or moving to France for the first time, many buyers move out of necessity (work, growing family, aging parents, budget etc) rather than choice. My advice is generally to change what you can and learn to live with what you can't.

Friday, November 8, 2013

Sacking the 'agent immo'

I have just sacked one the French agencies handling the (non) sale of my apartment. What brought matters to a head was when they called me on my mobile phone - I was en route to the cardiologist to have my blood pressure checked, which did not help - and announced they had an offer I 'must accept' - a mere 11 000 euros below the already reduced asking price that they and I had discussed and agreed only a few weeks ago.

I refused outright, would not make a 'counter proposal' (I feel it is up to the buyer to do that) and eventually after several fruitless discussions with them, finally cancelled my sales mandate.

Having been an agency negotiator myself for just over two years, the issue brought to mind again the differences between a property negotiator (= seller), and a property adviser. I as never totally happy as a negotiator and was never quite comfortable about if and how far I should cross the line over getting a sale at all costs (and earning my commission) and pointing out the negative aspects of a property - that buyers in their enthusasm tend to overlook - such as a potentially noisy location, high management charges, lack of public transport etc.

What I also found, observing negotiators at work when I am accompanying clients on visits (including those trying to sell my apartment), is that they often failed to point out what I think were the benefits of a particular property - sound building, good insulation, not hiddden in shade, good neighbours, low charges etc , which again some buyers tend not to think about.

On balance I feel happier in the advisory role............

Tuesday, November 5, 2013

What makes a French city top?

A number of recent surveys have listed some fifty French cities as among the most popular in France - and offered some clues as the reasons why.

The rankings were compiled using a questionnaire asking participants to rate a number of factors (climate, culture etc) in order of importance, and give them a points score out of 20. Interestingly, the search went further than that, and by establishing the age and life stage of the respondents, the researchers were able to show that while certain cities were popular overall, some scored higher within particular groups.

The outright winner was the city of Toulouse, followed by Bordeaux, Rennes, Nancy, Béthune, Paris and Fréjus. However an analysis of the different groups revealed a slight different picture and whosed why certain factors were liked by particular groups and tended to push a city higher up the ratings. It was found that Toulouse was highly rated rated by young peple, Nantes by families, and Angers by 'seniors' (another poll awarded this last distinction to Fréjus, which as seen as 'a paradise for seniors').

Certain cities or areas can acquire an identity which may be appopriate or not, and if you are thinking of moving and buying property, yet another report (reported in the Guardian 02/11/13) says you should also look for evidence of what the researchers termes as 'connectivity'. The outward visible signs of a city's connectivity can include available public transport, cycle and walkways, open spaces, sports facilities, pedestrianised areas, walkable neighbourheads and sectors where there is a good mix of housing, business, services and shops - all of these favoured as places where people can connect with other people.

'As much as we complain about people, there is nothing worse for mental health than a social desert' the Guardian article explains, 'The more connected we are to family and community, the less likely we are to experience heart attacks, strokes, cancer and depression. Connected people sleep better at night. They live longer. They consistently report being happier'.

A longer version of this article will appear in French Property News early in 2014.

Monday, October 28, 2013

Good neighbourliness

I think many people moving to France expect the French (at the risk of generalising) to be just like the British (ditto) apart from speaking a different language. Regrettably, they are often disappointed, as re-tailed in some the comments in the French property forums.

I commented on a recent case in which a British couple had fallen out with their French beighbours who had become - they thought - 'close friends', and despite their efforst to understand what has gone wrong and put it right, they have found their approaches have been rejected. This is in many ways typical, and I added two experiences of British neighbours of mine who are not here all the time but own holiday apartments.

The first concerned a British second home owner and one or two others living in the same block of apartments which at the time was without a concierge. As a precaution they entrusted a (French) permanent resident with a set of keys in case of emergency in their absence (leaks, storm damage etc). It turned out that during their absence, the key holder had let strangers enter and live in their apartments! When this came to light and she was challenged about this her reply was 'Well you were not there, the apartment was empty, I can't see the problem' !

The second tale also concerns handing over keys to a 'friend' while the British owner was absent. While back home she received an angry letter from the chairman of the residents committee, followed by one from the Gendermerie, both complaining of noisy parties being held in her apartment, to which the Gendarmes had been summoned. Her frist reaction was that it must all be due to some mistake, but on investigation it turned out that the son of the woman holding the spare keys had entered the apartment and was holding parties there.

The interesting part of this sad story is that the 'friend' tried hard to deny all knowledge of this, even though an alert neighbour said she had spotted her carrying in suppplies of drink with her son. It took several fraught meetings between the British owner and her erstwhile friend before the latter admitted that her son had taken the keys - and some money the owner had left in a drawer in case of emergencies (need to call a plumber in her absence etc). She eventually offered a half-hearted apology and refunded the money, but all this has left the British owner questioning the mentality of someone she thought she could trust.

A commentator on the forum noted above suggested that a lot of this is to do with French people's inability to admit they are at fault, thus losing face, and instead try denying everything as their first line of defense. My personal view is that it is the more the result of a general lack of neighbourliness and general respect for rules - from non respect for example of tenants association rules about late night noise or undertaking DIY jobs at the weekend, right through to minor traffic violations - speed, ignoring no-turning signs, parking signs, and so on.  , and one must add, widespread tax evasion.

On French TV there are numerous programmes about neighbourly disputes and long standing family feuds, which are symptomatic of this non-caring for others attitude.  I suppose we have to accept this as a cultural difference and as I said at the outset, try not to generalise. But if as a British arrival in France you find yourself puzzled by your neighbours' attitude or behaviour, you can perhaps console yourself that you are not alone. Before I moved to France, I lived in a large apartment block in central London, where I did not meet the occupants of the flat opposite mine for ten years.....As for who lived above and below or at the end of the corridor, they could have been Martians. Living in France can prove to be much the same.

Wednesday, October 9, 2013

Look before you sign!

I have just read yet another story about a British potential buyer of a French property who claims "she was rushed into signing the compromis de vente" (pre-sale contract) and that the seven day "cooling off" period has now expired and she finds she does not have sufficient funds to go ahead with the purchase....

Fortunately the majority of buyers do not end up in this type of situation but when it does happen, it raises a number of points which I continue to emphasise to potential buyers and are worth repeating here.

1. Have your funds in place
Preferably before you even set out  on a house hunting trip discuss with your bank or mortgage provider what sort of loan might be offered in the event of a property purchase, and preferably secure a signed letter of confirmation that the loan will be available in principle. This is essential, as it will define what level of price you have available for purchase (plus transaction costs, repairs or renovation, removal costs etc) and avoid fruitless visits to properties that are beyond your budget.

2. Know what you are looking for
You may already have settled on an area, even a town or village, where you would like to buy a property. Armed with this knowledge and a clear idea of your budget, you can target your initial searches more precisely, either on your own and/or using local estate agents.
3. When you find what you are looking for
Although there is less competition now that the French market has slowed down compared with previous years, desirable properties still tend to sell fast, and you may find yourself competing with other potential buyers (with funds available!) - and you do not want to miss out. So having your funds in place or an offer of a mortgage puts you in an better position to negotiate and proceed to the next stage of securing the deal.

4. Securing the deal
The French property buying process offers a number of legal protections to both buyers and sellers, and basically proceeds in stages, as follows:

- a written offer by the buyer at or below the asking price, best time limited ("this offer is valid until such and such a time and date") which you or your agent want to get counter-signed by the vendor, confirming his agreement. Do not sign an offer unless you are serious as French case law has held that they are binding contracts (hence the time limit suggested) and above all do not sign more than one offer at a time, as you may find yourself committed to buying several properties.........

- the "compromis de vente" or pre-contract. This is prepared by an estate agent (using standard models) or by a French Notaire and sets out the details of the property, identities of seller and prospective buyers, price, any special conditions (subject to survey etc) and - importantly whether the buyer is paying cash or seeking a mortgage. It is essential that you understand exactly what you are signing, as different conditions aplly (see below) whether you are paying cash or seeking a loan or mortgage. If in dubt, do not sign anything you do not fully understand.

5. Cooling-off and time to secure your mortgage
If you are paying cash for your French property, you have seven days "cooling off" after receipt of the compromis de vente by registered post at your home address. During this time you can change your mind, promptly notify all the parties concerned and withdraw from the deal without penalty.

If you are seeking a bank loan or mortgage - and hopefully followed the advice in 1. above - you have approximately 30 to 45 days in which to firm up your offer, and proceed to the next stage of purchase. During this extended period, you are expected to show "due diligence" in securing your finances - you cannot sit back and do nothing but must keep the other parties informed of our progress. you may even need to seek a time extension and would need convincing proof of your efforts. If you are genuinely unable to secure funds and cannot proceed, you can withdraw from the transaction within the time period stipulated, without penalty.

6. Completion and the "acte de vente"
Assuming you have secured your purchase funds and any other conditions in the comprommis have been fulfilled (such as a survey etc) then normally within about three months of your original offer, you will find yourself before the Notaire ready to sign the final sales act and receive the keys.  Your funds will have been transfered by your bank to the Noatire's special secure account (less any deposit you may have paid earlier) and all parties sign and complete (either in person or through a proxy, usually one of the Notaire's clerks).

The property is now yours to enjoy!

Wednesday, September 11, 2013

Government reforms do not go far enough - FNAIM

FNAIM, the French estate agents membership organisation, has recently issued a statement which is highly critical of the reforms - currently being presented to Parliament by the housing minister Cécile Duflot - declaring that they do not go far enough.

In their reply, FNAIM note that they are a voluntary membership body, representing just 12 000 out of an estimated 30 000 French estate agents. They have, they say, been pressing for years for tighter government controls and, with the means they have available, conduct their own spot checks on members. 

Although they 'police' their own members - which results in some dozen withdrawals of FNAIM membership every year - these same agencies can continue to operate, as there are no legal sanctions that FNAIM can apply.

FNAIM are also critical of the present system of qualification and training. In order to secure an agency licence (issued by the local Prefecture), an estate agent must have a minimum first degree in economics, business or law. But FNAIM claims that an estimated 5 to 7 per cent of agents are piggy-backing onto a friend's qualifications, or working as unqualified 'commercial agents' atached to any agency, either independent or on salary. The recen crisis has led to a boom in this type of casual mployment.

Most of these issues are not new and FNAIM further comments that although Duflot speaks of 'qualifications and training' nothing is spelled out in her proposals, and also that she is concentrating her attention only on the rental sector and relations between landlord and tenant, rather than tighter regulating of the profession. 

Their final word on the government proposals - 'un projet trop light'.

My advice to French property buyers or sellers is to use an agency that is a member of FNAIM (or the second body SYNAP) and has an established presence locally, in the area where you are property hunting. I would avoid using any of the 'virtual' on-line agencies who use a network local home-based 'advisors' who qualifications it may not be possible to verify. 

Understanding French documents

A member of the popular discussion forum frenchentree.com recently raised a question about the wording in a sales mandate (required when you ask an estate agency to market your property for sale) they were being asked to sign.

This was a standard FNAIM document, correctly translated into English but still unintelligible! 

In replying to the member - and advising anyone reading this blog - I would always recommend clarifying the wording of any French sales document, either with the agent concerned or the Notaire, before signing. Legal documents, even when translated into English, are not easy to understand even in your native tongue.

Although I have software that can translate the various estate agency documents into English and several European languages, I always advise an advisory session with the agent or Notaire to go through each document and explain its implications. Legal-speak is not easy to understand unless you are qualified in law, and French law is very different from other national systems.

Monday, August 26, 2013

Property prices in Pyrénées-Orientales

The weekly French magazine L'Express has just published one of its periodic surveys of the French property market and as usual it maks interesting reading. Among the highlights:

1. It seems that property sales in 2013 will be around 635 000 overall, a drop of 10.2% compared with 2012 (707 000), and well below the peak years of 2006 (820 000), 2007 (810 000) and 2011 (805 000).

2. Prices have not however dropped dramatically - averaging 3.6% in 2013. Commenting on the above figures the president of Century21 group said that, in his views, there would be no dramatic rises or falls in the future.

3. Interest rates are at their lowest ever, averaging 3.29 per cent in July 2013, after peaking at more than 5% in 2008.

These trends are borne out in Pyrénées-Orientales where I advise potential buyers and sellers, with slight rises recorded in St-Cyprien on the coast, and a surprising 12.7% drop in the cost of new-build apartments in Argelès-sur-mer. Curiously the market for individual houses built to the latest BBC norms appears to be flourishing, as buyers concerned about rising energy prices are prepared to invest in the future.

Full report in L'Express 21 August 2013.

Tuesday, August 6, 2013

Decline of the French seaside holiday?

As I write, we are past the half way point of the French high season, which lasts from the first week in July until the last week in August - the precise dates closely linked to the school holidays.

I currently live in a typical Mediterranean holiday resort and for those of us who have seen the seasons come and go, there are already signs that visitor numbers are down again in contrast to previous years. Before awaiting the official statistics (usually issued towards the end of the year) it is clear from simple observation that there are fewer people about. Cars that are normally full are half empty, street parking is possible where before it is difficult, restaurants already report lower numbers, and evenings seem to be getting shorter. The square in front of my window that used to be lively until midnight, when everything is obliged to close by law, is now nearly empty by 10.30 or 11.00 pm as groups make their way back to their hotels and camp sights.

A few days ago, the Daily Mail carried a piece, with depressing photographs, about the decline of many of Britain's coastal resort towns, which have become the last refuge of the elderly and those surviving on State benefits. The only surprise is that they are writing about it now, when the decline was already in progress thirty, even forty, years ago, as continental package holidays started to offer cheaper alternatives and guaranteed sun.

Here in the south of France, just a few miles north of Spain's Costa Brava, the sun can certainly be guaranteed (after a disastrous spring), but those mindful of the long heatwave that hit the area in 2003 are wary of temperatures rising above 30 degrees, accompanied by hot, sticky nights which make sleep difficult.

Like the British before them, the French have now discovered the foreign (outside France) package holiday, which can lead them to the cheaper and more exotic southern Mediterranean, Greece, Turkey and beyond, to say nothing of their Spanish neighbours over the boarder, where the crisis has hit hard. France has not so much emerged from the crisis (except in the mind of President Hollande) as pretended it is not there. True, taxes and social charges have risen, wages are frozen, unemployment is high - but pensions are still being paid, and the country's huge public sector (5 million employees) enjoys security and high pay with guaranteed special pension regimes. A lot of this money however is being spent outside France.

Can anything be done to reverse the decline? Looking at my own little resort town, the emphasis by the local Maire seems to be on providing ever more cheap attractions, whereas many people I have encountered say that the region needs to go up-market if it is to survive. Nearly all the coastal towns have a yach marina - of up to 2000 berths in some cases - and there is still a shortage of moorings. This is a sector that some argue could and should be developed, at the same time as the socialist government is talking about raising charges.

There is then the question of accommodation. My own town is booming, with several new estates of architect designed, individual houses (four bedrooms, garden, pool, double garage.......) costing 400 000 euros or more, and snapped up as soon as completed. There is considerable wealth alongside signs of real poverty. But of the total housing stock, 75% is made up of second homes which are used for only a few weeks a year, and rented out during the season (though numbers here are also in decline). They lie empty and the beach area bereft of services for 10 months of year. The contrast between summer and winter can be attractive but also unnerving.

An English friend of mind has teamed up with a younger partner experienced in the hotel industry and togeher they have taken over a rundown hotel in the centre of the village, and created a five bedroom guest house, offering full air conditioning, health food breakfasts and exceptional personal service - and they are fully booked for months to come. Demonstrating that with imagination and flair it is not necessary to cater only for the lowest common denominator.

Curiously, overall property prices have held up, as many second home owners do not want or are not obliged to sell. Those who have modernised and refreshed their apartments can still find buyers - owners of leisure boats are not without cash, and many appreciate having a pied-à-terre for themselves and their visitors. So it is an area of contrasts.

The area abounds with natural attractions, coastal paths, mountain walks, winter skiing, historic monuments, and profits from its closeness to Barcelona less than an hour away by high speed train. All the ingredients are there and it is only to be hoped that the planners and decision makers will think long and hard about preserving the best of what they have and which can be developed, and finally accept that the traditional bucket-and-spade holiday is finally out of fashion.

Tuesday, July 23, 2013

French property prices holding up

Despite the 'crisis' and rumours of French property prices tumbling, the latest figures from INSEE* and Notaires de France and based on actual transactions completed, confirm that prics remained stable in the first quarter of the year overall.

There are slight regional variations but the average reduction recorded has been under 2%. Sales of second homes, popular with non-French buyers, represented just 7% of the overall property market or around 45 000 sales. Note that in Mediterranean coastal and other major holiday areas up to 75% of the local housing stock can be represented by second homes.

As another 'stimulus to boost the property market' President Hollande has announced a special one-off reduction of 25% on capital gains tax charged on second homes for the 12 months from 01 September 2013 to 31 August 2014. The timescale assumes a smooth passage of leglislation through the French parliament.

* the French national research organisation.

Friday, June 28, 2013

Selling privately? Precautions you should take.

One of the hazards of putting your French property on the market privately is that you thereby invite anyone and everyone to come and view your home. Here are a few precautions you should take.

- Do not trust anyone simply because they say they are interested in buying your home. It is well know that con-men and worse use private For Sale signs and adverts as a means of gaining entry into the homes of vulnerable people.

- If you advertise in the press or on line, and receive phone enquiries and requests to visit, gather as much information as you can about the would-be purchase - full name, address, phone number (preferably a landline not a mobile) when making an appointment to visit. 

- Never receive visitors alone, have your spouse present, a relation, neighbour, friend with you.At the very least alert a friend or neighbour close by, saying you will call them immediately after the visit. Immediate neighbours can also be your eyes and ears - for example, noting down a car registration number.

- If you have a For Sale sign outside your house, be particularly careful with unannounced visitors. If you are alone and in any doubt, do not answer the door or say you are expecting a visitor by appointment and the ask the caller(s) to come back later by appointment. At this point, take their details as noted above and if possible their car registration. You can then arrange a visit when someone else is with you.

- Do not be afraid to ask for the above information. Potential buyers who visit estate agents will hav their identiy and other details checked (including their ability to pay!) by the negotiator , and visits will be logged on the computer. These are essential precautions used particularly when negotiators accompany visitors to a remote or empty property. They are also used to fill-in the 'bon de visite' which the visitor signs as proof of being shown the property by the agent. (Many properties are advertised with more than one agent so this is an essential procedure to avoid later disputes).

NOTE: I recently posted the above information on the FrenchEntree forum following a press report of a young woman reported missing after advertising her property for sale and receiving a visitor. At the time of writing there is no further news of her wherabouts. The post was universally applauded by members of the FrenchEntree forum as sound advice.

Monday, June 17, 2013

The time to sell is NOW?

Right now could be the best time to put your property on the market, if you are trying to sell your main or principal home - that is, not subject to capital gains tax, as in the case of a second or holiday home in France.

Last night, unveiling yet another plan to 'stimulate the property market', French president Franois Hollande announce that there will be a special reduction in the capital gains tax levied on sales of second homes, but only for the year 2014. Why wait, you may well ask, in addition to his proposed changes (this autumn?) on the length of time you have to own a second home before you can sell it without a CGT charge - recently increased to 30 years, formerly 15 and to be settled by Hollande at 22...later this year.

There is good news in all this for owners of principal homes (main residence in France) who are anxious to sell now, perhaps to down-size or even return to the UK. The Hollande announcement is bound to encourage second-home owners to withdraw their properties from the market, until 2014, in anticipation of a better CGT deal. While any gaps in the market can be filled by principal-home owners not subject to CGT on sale.

It is rare that one can truthlly assert that now is a good time to sell, but I think this may be the exception. 

Saturday, June 8, 2013

Rights of pre-emption

Many French communes, as part of their powers over building planning and use of land, have certain rights enabling them to buy a property that is offered for sale, in precedence over a normal acquirier (whether an individual or an enterprise, charity or similar). This may come as a shock to vendors and can cause delays and other problems in conclusing the sale.

One of the first things that the Notaire handling your sales transaction will do - once the initial sale contract (compromis de vente) has been signed by both parties - is to notify the local Mairie of the proposed sale/acquisition and obtain confirmation whether or not the Mairie intends to invoke its right of pre-emption. The Mairie must respond within two months, which explains why completing the transaction can take some time, but in the vast majority of cases the response is negative, and the same goes ahead normally.

If the Marie chooses to exercise its right to buy, it must prove that the purchase is in the interests of the local community, particularly as public money from taxation is involved. Typical purchases can include land or buildings needed for development - a road scheme, extension to an existing public building or other similar public need.

When it comes to price, this should normally be the agreed 'market price' after valuation by experts (such as an estate agent) and the vendor may accept or not the price offered by the Mairie. At this stage, both parties enter into negotiation but if this fails the Mairie may press for a court judgement. All this can take time as delays - usually of a maximum of two months - are often over-ridden.

Vendors caught on this (rare) situation should remain calm but determined, and try to reach an agreement by neogitation and only in the final resort proceed to litigation. That said, Mairies have been forced to pay the market price and in some cases their efforts to pre-empt a sale have been ruled as illegal by the courts. You CAN fight city hall, as the Americans say.

I shall be writing a fuller article on this issue later in the year for French Property News.

Monday, June 3, 2013

You and your syndic

If you live in a typical French apartment building or in some cases an enclosed estate comprising a mix of villas and apartments, it is likely that the complex will be managed by a professional organsiation, known as the 'syndic'. They charge fees for their services, which are collected from each occupier according to the size of their apartment or villa.

The syndic can be either the property management division of a local estate agency or increasinly an office of the one of the specialist companies such as Foncia or Nexity, which are in turn owned by major banks and financinal institutional. A recent consumer report has criticised a number of syndics for over-charging, poor management, lack of communication and in some cases outright fraud. How can you guard against such excesses?

The first point to note is that residents have the right to dismiss and appoint the syndic, a decision which can be voted on at the annual general meeting of all the residents. If you have a strong residents committee, one of its tasks will be to keep a close watch on expenditure, both on management fees, and building maintenance costs and necessary repairs. As the consumer report noted, where there is no strong representation by residents - often in very large complexes - abuses can go unchecked.

As a resident you have a right to vote on all issues, your vote depending on how many shares you have in the complex (according to the size of your property) and if your French is up to it, you could consider taking a more active role by joining the residents committee. At the very least, you should study carefully the agenda for the annual meeting, describing what issues are to be voted on, and either attend or appoint a fellow resident as your proxy, with the power to vote on your behalf.

If you are buying into a complex that is managed by a syndic, your estage agent or Notaire should provide you with copies of recent decisions by the syndic, so that you can check for any major expenditure that may have been voted, and the cost of which you may inherit.

Major cost items can include interior and exterior painting, lift maintenance and repair, the salary of a concierge if resident on site, maintenance of grounds (including swimming pools etc). A property in a well maintain complex has added value and a strong residents committe will ensure that expenditure is kept to a minimum. A good syndic will also have sensible rules to regulate the complex for all concerned, covering such issues as noise, pets, sub-letting etc.

Some very small shared buildings - such as a group of less than 10 apartments - may be managed by a voluntary syndic made up of the residents. This is quite legal but the only point to watch is that routine repairs and maintenance have not been neglected, as failure to act soon can create more serious problems later.

Tuesday, May 28, 2013

French estate agents

Reading the various French property discussion forums, it seems that many (British) contributors have a veritable fear and loathing of estate agents, who are invariably blamed when their property fails to get sold!

To put the issue in perspective, whether you like them or hate them, French estate agents are still responsible for over 70% of property transactions, the remainder being transactions between private sellers and buyers, and the remaining few handled by some Notaires,  who are also licensed to act as estate agents (not all choose to do this). Overall property sales have declined by under 20% in 2012-13 so far, but prices have not declined dramatically, and there is not an over-supply of properties.

Various commentators argue that France needs a further 500 000 properties every year, to replace older properties reuiring updating but no-one wishes to take them because of cost, and to house a growing propulation. The collapse of an estimated one in three French marriages has also fuelled a demand for larger properties (3 or 4 bedrooms) to accommodate 're-composed' familes, where the partners may each bring children into a newly formed household.

Not surprisingly in a time of economic uncertainty - over jobs, taxes, spending power - the market for second homes has stagnated, with a lack of buyers in coastal and country areas, and owners trying to offload a second property they use less often, as children grow up and holiday habits change. In some areas, second homes can represent 70% of the local housing stock, so the decline in sales is particularly noticeable.

The decline in sales of first-time properties results as much from general economic uncertainty as the difficulties young would-be owners face when trying to secure a mortgage, particularly after the ending of the PTZ (no-interest government guaranteed loan) in January 2012. As a result many are stuck in rented properties, when they could be paying the equivalent amount in loan repayments as they do in monthly rentals.

Although bank interest rates are at their lowest for decades, lenders are increasingly reluctant to lend to employees in 'unsecure' jobs, which translates into any job that is not in the public sector!

As I have so often said on this blog, the French market is huge and complex, with many regional variations. Depending on what type of property you own and where it is located, you may have to wait for a general upturn in the French economy and/or a radical change of direction by president Hollande, before the market recovers.

Friday, May 17, 2013

French Property News, June 2013

In this special 'house hunting' issue, I have discussed some of the points to watch when house hunting that are sometimes overlooked by buyers. I have had to concentrate on some of the boring details such as planning permissions, regulations that may apply once planning consent has been given in the case of a new-build or extension, and some tips about buying land for building. Other points to note are flood-risks and how the degree of risk is classified and what are the consequences of living in an area liable to flooding (some 10% of all land in France).

I take another look at the often misunderstood workings of the system known as co-ownership, and its benefits and occasional restraints.

French Property News is available on subscription or on sale in newsagents.

Wednesday, May 1, 2013

French Property News, May 2013

Under the title 'Spanish connection' my article in this month's issue of French Property News focuses on the effects of the new fast TGV train service that will shortly connect Perpignan with Barcelona in just 50 minutes.  Since writing the piece, the projected date of 1 May has been put back again to some time in the autumn, due to technical difficulties still to be resolved (while the French trains take their electric power from overhead cables, the Spanish trains use the track).

Services from inside France and from the UK and other European countries currently reach Figueras, just over the border in Spain, and passengers have to switch to a Spanish AVE train to complete their journey to Barcelona and beyond.

The new service will be of particular interest to travellers who prefer the train, with a return fare from London to Barcelona already available at 203 pounds sterling, and an SNCF special one-way ticket from Paris to Figueras (via Perpignan) for 49 euros.

On both sides of the border hopes have been raised regarding increased cultural, tourist and commercial links resulting from the new services, and with Barcelona (eventually) just 50 minutes away, it is easy to imagine taking a shopping or business trip by train, as opposed to using the frequently congested A7/E15 motorway (2 to 3 hours depending on the time of year).

Barcelona and Spanish Catalonia are Europe's richest regions, with a GDP some 20% higher than the rest of Europe, due to well established manufacturing industries, culture and tourism - including the Costa Brava.

French Property News is available on subscription and fom newsagents. 

Monday, April 22, 2013

Paying a deposit when buying French property

Buyers and sellers of French property are often confused about the implications of paying or receiving an initial deposit when buying or selling a French property. Note the following guidelines:

- There are no hard and fast rules or applicable laws, either as to a precentage or the amount requested/paid over - this can range from Nil to 10% of the property selling price.
- Some licensed French estate agents (not all) are authorised and insured to receive deposits from buyers, and this information should be posted prominently at their place of business, including the maximum amount they are legally permitted to receive and details of their appropirate insurance cover. Any sums received are paid into a special sequestered clients account.

- French Notaires  are authorised to receive deposits from buyers and these are paid into a special state-controlled bank account, which does not earn interest.

- Deposits can be paid at the time of signing an initial agreement (offer to purchase) but more often on signature of the 'compromis de vente' (initial contract) drawn up by the Notaire or an estate agent. Buyers however may prefer to wait until the end of the seven-day 'cooling-off' period, after signature of the 'compromis de vente', before handing over a deposit.

- In the event that the sale falls through - for example, the buyer simply changes his mind after signature of the 'compromis de vente' and after expiry of the seven-days 'cooling off period' - the deposit may be witheld as compensation to the vendor. This however is not automatic and normally requires the consent of the buyer.

- Where a buyer is purchasing a property and seeking a mortgage or loan, the 'cooling off' period is extended by a further 7 - 8 weeks to allow him to secure and agree a mortgage or bank loan to finance the purchase. During this period the buyer must prove 'due diligence' in actively seeking such a loan - he cannot simply sit back and do nothing and then withdraw from the sale. In such a case he could be at risk of losing any deposit paid, subject to the conditions noted abouve.

- The above are general guidelines only and not a substitute for appropriate legal counsel.

Sunday, April 21, 2013

Having confidence in your French 'notaire'

Recently on one of the popular French property discussion forums, a contributor stated that 'it would not surprise me if some French notaires told a foreign seller that capital gains tax was due on the sale and pocketed the money htemselves' - a statement for which no evidence was produced!

The discussion arose following a question about capital gains tax, which is applied to the sale of second homes in France which are not the owner's principal or main home. Whether a property is the owner's principal or second hime is relatively easy to established, and proof of the former is normally provided by annual tax returns, utility bills etc and other signs of continuous residence. Part of the Notaire's role is to ensure that any taxes due to the state are collected and paid over.

Clearly the Notaire has a great deal of power and responsibility in this situation, and as a result his/her role is highly circumscribed by legilsation and subjhect to unannounced annual checks by independent, external authorities. Monies collected are lodged in a special non-interesting bearing account in a French state-owned bank, and subject to continual scrutiny. Notaires are grouped under local Chambres de Notaires, who have considerable powers of control over their members. Many firms have been established for decades, and one of the ones I use is now run by the grand-children of its original founder and has been in business for over 50 years.

It might be useful to mention in passing that French estate agents are also highly controlled, licensed by the local Prefecture and also subject to unannounced checks by the police. Most belong to one of the professinal bodies FNAIM or SNPI who also exercise considerable control over their members.

Friday, April 5, 2013

French Property News, April 2013

In this issue I have looked again at some of the points to watch when buying into a co-ownership property, such as a block of apartments.

Issues include owners' rights and obligations under the typical co-ownership rules, the quality and cost of managing the property by the owners' 'syndic', and the average costs involved when exceptional work is required and voted by the owners - outside painting, lift renewal, indoor decoration etc - exceptional costs that may be inherited by a new owner.

I also explain the workings of the owners annual meeting and the voting rights of each individual owner, each of whom owns a number of shares in the building according to the size of their apartment (the latter being owned outright, with the right to sell at any time).

French Propeerty News is sold on subscription and in newsagents (£3.99); www.archant.co.uk for further information.

French property prices in 2013

The regional chambers of Notaires de France have recently published statistics of property transactions in 2012 and their forecasts for trends in 2013.

- Overall sales of older properties were down by 12% in previouis years, with prices reflecting an average 6% drop (well within the usual margin for negotiation between vendor and purchaser).
- Within Pyrénées-Orientales (French Mediterranean coast) average price reductions were 6% for apartments and 8.6% for houses. This contrasts with the 'unrealistic' rise in prices witnessed since 1990 of 87.6% for apartments and 69% for houses!
- Notable variations within the region include properties in and around Perpignan and on the Mediterranean coast, where prices have generally stayed firm.
- Smaller properties such as studios can cost up to 5000 euros per square metre, and two-room properties average around 3000 euros.
- Sales of some 'second homes' - particularly small apartments located in older buildings - have slowed down but prices have not reduced significantly.
- The Report blames the uncertainties about the Hollande governments taxation policies - still undecided - on the purchase and sale of holiday homes, as both vendors and potential purchasers adopt a wait-and-see attitude.

Source: Chambre des Notaires des Pyrénées-Orientales

Note that in some sectors, such as Perpignan centre, there is a shortage of larger apartment properties suitable for 're-composed' families (after divorce or separation), where each partner may have one or more children from a previous marriage, and need three or four bedrooms, as well as larger living areas. P-DdeR.

French Property News, March 2013

In this edition I have taken a look at the advantages of converting older buildings into attractive houses and apartments, based on a number of illustrated cases studies from another book in the ArchiPasCher series, by author Olivier Darmon and titled 'Bâtiments Modestes réinvenrés'.

Darmon describes a number of town and country properties - from dilapidated cottages, old workshops and former industrial buildings - which have been converted and restored by their owners, sometimes at minimal cost. One of my favourites is a former garage and workshop situated in a gated mews in Bordeaux, which architects and the owner redesigned to create an attractive 40 square metre apartment.

Another triumph of design is a former garden summer house located in the shared grounds of a co-owned complex in central Paris. Although planning permission was given by the local authority to add two more storeys, this was overruled by the syndicate of co-owners (who have the last word). Saddened but unbeaten, the young owners decided to make the best of the situation and succeeded in installing a mezzanine (made from builders scaffolding) within the confines of the existing 40 square metres, which they were not allowed to extent. The result is a low-cost, attractive home in central Paris.

Each case study includes photographs, plans and detailed breakdown of costs. 

'Bâtiments modestes réinventrés' by Olivier Darmon, Editions Ouest-France, 15.90 euros.

Thursday, February 21, 2013

Cost of new-builds continues to rise

A recent article in the French LeFigaro newspaper notes that the price of new-builds rose by 7% in 2011 and a further 0.9% in 2012. New-build properties cost an average 15 to 20 per cent more to construct but continue to attract potential home owners and investors.

The reasons include owners' concerns about the continuing rise in energy and fuel costs, which some predict could be as high as 30% by 2017, and the feeling that it is wiser to invest in energy saving measures (insulation, heating systems, waste recovery etc) now rather than face higher costs some time in the future. Even in my local area on the Mediterranean coast south of Perpignan, holiday apartments dating from the boom years of 1960-70 are failing to sell, while two blocks of brand new apartments were sold out before even the foundations were laid.

Hower spokesmen both from the construction industry and estate agents argue that continually changing (and costly) building norms are helping to price properties out of reach of the average buyer, particularly when combined with new measures - some still to be announced - governing the taxation of second homes. France meanwhile suffers a serious housing shortage, despite the presence of around 2 million empty homes, and the government's pronouncements that it wants to do all it can to stimulate tye property market.

Source. www.lefigaro.fr 14 February 2013.

Monday, February 11, 2013

Spanish links

One of the interesting aspects of living on the Mediterrane coast near Perpignan is that it takes only a couple of hours to be in Barcelona by car - and from April, in less than one hour by the new TGV rail link. A partial service is already operating, necessitating a change at Figueras, with a total journey time of under 2 hours.

These new developments of part of a wider European rail network scheme, which should eventually see a direct link from London to Barcelona by TGV. The new line passes under the Pyrenees and engineers have finally resolved the problems at the Spanish end where the line passes close (under ground) to Barcelona's 'unfinished' cathedral, the Sagrada Familia.

There are already extensive cross border links between Spanish and French Catalonia, including the same language spoken by many. With the high levels of unemployment in Spain, Spanish workers are crossing into France to find work in the building trades, which has upset French artisans. However, a recent programme on French televison revealed that many construction companies in other parts of France are so desperately short of skilled workers that they are recruiting - yes, you guessed it - Polish plumbers, electricians and other skilled tradesmen.

On the French side, it is estimated that most of the cigarettes smoked in the south are purchased across the border in Spain, along with petrol and alcohol, as a result of lower government taxes and generous cross-border allowances. Customs posts have officially closed but spot checks may be carried out - usually at rest areas either side of the border. Spanish and/or French police and customs are also be to be found on the international trains between Perpignan and Barcelona.

One final note, despite stories of heavily discounted property prices, holiday properties on the Spanish Costa Brava north of Barcelona are much the same as on the French Cote Vermeille, while Barcelona remains prosperous and attractive, and property prices are high compared with, say, Perpignan or Montpellier.

French Property News, February 2013

In this month's issue I have looked at the problem of 'vices cachés' - hidden defects that may cause problems for both vendors and buyers of French property. By definition, 'vices cachés' are defects that are not known about by a vendor, and for which he cannot be held responsible after sale of the property. Normally written into the sale contract is a clause in which the buyer accepts the property 'in the state in which he finds it' which normally absolves the vendor of any responsibility.

French courts have ruled that a 'prodent buyer' is expected to take all reasonable precautions, for example by employing an architect or surveyor, and he cannot later take action against a vendor if he has been casual in his approach. He is also expected to be aware of 'vice apparents' - defects which are obvious - such as out of date electrical or plumbing installations - which are not necessarily pointed out by the vendor.

By using an architect or surveyor, some of the responsibility for 'vices cachés' may be shifted onto the professionals (and their insurers) but again if they cannot access all parts of a building, their guaantees may be limited.

French Property News is on sale by subsription or through newsagents.

Sunday, February 10, 2013

French property - getting the market moving again

It is that time of year, after the Christmas and near lull, when property commentators start to publish their predictions for the French property market in the next twelve months.

Curiously, FNAIM - the French estate agents national body - announced recenlyt that all that was needed is a drop in property prices of up to 5 per cent! I consider that frankly laughable, as it already possible in today's market to negotiate a 5 or even 10 per cent price reduction during virtually any transaction. And as always, there are huge differences between sectors of the market, with some properties selling well and others not.

Among properties that are selling well are new-builds, constructed to the latest BBC norms for energy saving, even though their cost can be 10 or fifteen percent more than traditional dwellings. Among the reasons cited for their success are buyers' concerns about every costs, which continue to rise. Among recent examples shown on French TV were detached two and three bedromm homes which came with a guarantee that heating, lighting and hot water would come to no more than 15 (fifteen!) euros per month, using the latest heat exchangers.

The houses shown were in Normandy not the traditional sunny south. However in my area of the French mediterranean coast, holidays home sales are in total free fall, particularly those constructed in the 1960s and 70s and which have reached the stage where they need complete renovation (insulation, electrics, plumbing etc). Second home sales are also adversely affected by the French government's stop-go announcements about rates of taxation on second homes, which have still to be clarified. Nonetheless, in my local town, two drand new blocks of hooiday apartments are in course of contruction, one of them sold out before the foundations were laid.

Another type of property that is increasingly required are those offering three or more bedrooms, including new-builds, the reasons given being the rise in divorce and separations. which is turn lead to 'recompsed' families with several children. Adolescents need their own space and the traditional one or two bedroom apartment or house is no longer adequate. In my local town again, several estates of three and four bedroom houses have been built - priced from 400 000 euros average - and all are occupied. Conspicuous signs of prosperity include swimming pools and two or more cars parked outside.

So the picture is far from being uniform and depends very much on location and current requirements. Languedoc-Roussillon where I live has the highest rate of unemployment in France but is also France's fastest growing region.

Thursday, January 10, 2013

Buying a French property 'en viager'

Buying a French property 'en viager' is a legal mechanism whereby a buyer can acquire a property paid by a deposit and instalments, over the life of the owner who may or may not choose to remain in the property until death.

The initial deposit - known as the 'bouquet' ' represents part of the purchase price is paid over on signature of the purchase contract, while monthly instalments (known as the 'rente') are calculated according to the market value of the property and the assessed life expectancy of the owner(s) - who are generally of advanced age. The mechanism enables the owners to receive a cash sum plus the month 'rente' while remaining in their property until death.

From the point of view of the buyer, he/she takes a risk in relation to the owner's life expectancy, and should the owner outlive the buyer, the latter's family or descendants inherit the burden of paying the monthly 'rente' until the eventual death of the owner(s).

In a famous case in France, the country's oldest resident sold her home 'en viager' to her lawyer, who died in his eighties, while she lived on until the age of 126! The lawyer's family continued paying the old lady until her death, well over the value of the property.

Sunday, January 6, 2013

Buy to let in France

The French newspaper Libération has published an interesting profile of typical French private landlords, who between them house one fifth of the French population - 14.4 million inhabitants,  or 22.7% of all households.

There are nearly 3 million private landlords, of which 30% own a single property they rent-out, and 25% have two. Larger scale owners are divided into 29% owning between three and five properties, 10.5% between five and ten, and 5.5% own more than ten house or apartments.

Of the properties themselves, 63% were purchased specifically to rent-out, 18% were their owners' former principal or private residence, and 14% were inherited. Some 80% of owners bought the property using a mortgage, with interest deductible from income.

Finally, the 'ideal tenant' is seen as someone aged between 16 and 35, with the rent guaranteed by parents. Older tenants (50+) are not seen as ideal 'as they are likely to be/become unemployed, and go into retirement with markedly reduced income'.

Source:www.liberation.fr 04 January 2013