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 LibĂ©ration 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'. 04 January 2013