Dry rot (la mérule)

In writing recently about 'vices cachés' - possible hidden defects that may only become apparent after you have bought your French home - I thought it might be useful to add some information about dry rot (la mérule) which can affect timber and other materials and is more common in parts of north-western France than in the warm south.

Dry rot attacks timbers and other building materials, frequently in older houses, and tends to propagate in dark, damp areas that may normally be concealed or inaccessible. As a result it is not easy to detect and the first sign may be the collapse of a timber structure such as a stairway or supporting beam.It is therefore of particular concern both to potential buyers, who may be faced with an expensive problem, and for vendors concerned about their responsibility regarding 'vices cachés'. Note also that it is rarely covered by building insurance policies - that is, specifically excluded!

The current technical surveys covering lead, asbestos, termites etc ('les expertises') are compulsory and paid for by the vendor, but exclude examination for dry rot. There is a proposal before the French parliament to add dry rot examination to the list of areas covered, and meanwhile if in any doubt potential buyers and current owner/vendors might be advised to call in a specialist firm. Dry rot spreads extremely rapidly and if left unchecked can be very expensive to eradicate. In worst cases, it may result in the demolition of all or part of a building.

There are various sites in French you can access on the internet, including maps showing which areas of France as most vulnerable.

French Property News, November

In this issue I have returned to the theme of sensible house buying, basing much of my article on material from the Slow Home Movement, and the excellent book by the two founders John Brown and Matthew North. In their book 'What's Wrong with this House?' they analyse a number of properties and rate them with a points scoring system out of twenty, for their efficiency, layout, suitability and so on. I have been able to reproduce plans of two similarly priced and sized apartments, with their comments.

See: www.french-property-news.com

While on the subject of smaller home buying, I would recommend the latest book in the French ArchiPasChère series called 'Bâtiments modestes réinventés' which has illusrated case studies, complete with plans and detailed costings, of fifteen property conversions, costing around 100 000 euros or less, where redundant buildings have been turned into attractive small homes. Full contact details of all the architects concerned are listed, including their websites, which can be consulted for examples of their recent projects.

See: 'Bâtiments Modestes Réinventés' by Olivier Darmon, Editions Ouest-France, price 15.90 euros.

Vices cachés

The concenpt of 'vices cachés' (hidden defects) can be troubling for both buyers and sellers of French property. Vendors may be worried they will be later pursued for defects in a property they have sold which unwittingly contains 'vices cachés', while dissatisfied buyers may try and seize on this possibility as an excuse for litigation. However, French law and jurisprudence are fairly clear on the matter.

- In order for a buyer to establish a case of 'vice caché' he would need to prove that the vendor acted in bad faith and deliferately concealed the presence of a fault or defect of which he was aware. The vendor cannot be held responsible for defects in a property of which he was not aware.

- Nor can the vendor be held responsible for defects which are obvious or visible - they become 'vices apparents' rather than 'cachés'. The vendor cannot be held responsible also for defects accepted and agreed by the buyer at the time of purchase.

- French courts have ruled that a 'serious buyer' should take all reasonable steps to assure himself that the property he wishes to buy is free of defects, for example by employing an expert or surveyor to examine and report on the state of the property.

- Any legal action started by a dissatisfied buyer must be within a 'bref delai' - failure to act promptly may persuade the courts that the buyer accepted a 'vice caché' and this his claim is frivolous.

- French law also talks of 'vice grave' - serious defects which prevent the normal use and enjoyment of a property. As with all claims for damages, a litigant must establish a (financial) loss resulting from the fault about which he is complaining.

- It should be borne in mind that purchase agreements stipulate that the buyer accepts the property 'in the state in which he finds it' and the onus is upon him to satisfy himself about the state of the property before commiting to purchase.

- In the case of new-build properties, they are covered by guarantees and insurances against defects, which will be witten into the purchase contract. 

Tax on sale of second homes - update

Since I posted the information below, the French government of François Hollande has announced that it is studying the question and - 'in the interests of getting the property market moving again' - may introduce proposals some time in 2013.

There is some talk of shortening the 30 year 'no CGT' ownership period to 22 years, and possibly lowering the capital gains tax threshold. However the government's vague talk of reforms has had the opposite effect - instead of stimulating the market, more second home owners are sitting back and waiting to see if they will pay less CGT on sale some time after 2013.

Finally, a reader has pointed out that in my earlier post I omitted to mention that non-EU owners of second homes pay even higher rates of CGT than French and EU nationals, totalling around 50%.

French Property News, October 2012

In this month's issue I have looked at the option of investing in furnished buy-to-let properties in France. This can be an attractive option, using secure annual rental agreements, compared with letting unfurnished long-term or relying on seasonal holiday rentals (a market that is dying in some areas due to the growing popularity of modern campsites featuring chalets and all facilities).

Short-stay furnished studios and small apartments located in city centres appeal largely to single people who may be mature students or on temporary assignment for their employer. They are prepared to pay higher rentals for attractively furnished properties, and there is less risk for the owner than may be the case with long-term unfurnished rentals, where tenants have rights of security of tenure backed by French law.

I have drawn a number of illustrated examples of before and after property conversions in Paris and Lyon, undertaken by Elise Franck, who has witten a book on the subject and has an interesting website (www.elise-franck.com) which includes actual costings - purchase price, fees, conversion costs, rent charged and rate of return, as a useful guide for anyone thinking of investing in this type of French property.

TGV Perpignan - Barcelona at last !

It seems that the fast TGV international train link between Perpignan and Barcelona will be operational from the third quarter of 2013 - that's about one year's time.

This is the first time I have seen a firm date given, after numerous delays, the most recent involving problems of tunnelling under parts of Barcelona close to the famous 'Sagrada Familia' still unfinished cathedral.

Journey times are estimated at 45 - 50 minutes, which will bring Barclona within easy commuting distance of Perpignan, for work, shopping or entertainmen and for using Barcelona's inyternational airport.. Currently it can take two to two and a half hours to drive. Barcelona is also notoriously difficult to get around by car and to park, though the public transport system - including the Metro - is excellent. 

Additional taxes on sale of French second homes

Since the middle of August, the French government is now applying an additional tax on the sale of second homes in France by non-resident owners. The current tax of 19% of any capital gain enjoyed, after deductions, is now increased to just under 35% with the addition of the 'social charge' currently paid by resident owners of second homes. The exemption previously applied to non-resident owners has finally been recognised as an anomaly, and the new law brings foreign owners into line with resident owners of second homes in France.

The new has come as an unwelcome shock to owners who were in course of selling their property before the law changed and now find themselves paying a further 15% on any capital gain. This follows on from the recently introduced abolition of capital gains exemption (after 15 years of ownership) on French second homes and the introduction of a modified system of reductions extending over 30 years ownership of the property before CGT is finally reduced to zero (after 30 years when it was previously 15).

An analysis of sales involving second homes reveals that the majority are in fact sold by their owners within 10 years of intiail purchase. Among the reasons cited are changing holiday habits, children growing-up and wanting to take holidays away from their parents, travel to cheaper foreign destinations, and the declining holiday rental market.

In many  holiday destinations, as much as 70% of the local housing stock can comprise second homes - typically apartments and villas designed for summer occupation, which can be difficult to sell in times of crisis. Many date from the early tourist boom of the 1960s and are now in need of modernisation, to improve sound and heat insulation, and plumbing and electrical installations which need to be brought up to current norms. Summer resorts can be deserted in winter and may lack essential services needed for year round living.