French Property News, December 2011

This month's issue looks ahead to the major London property exhbition in January which normally provides a post-Christmas stimulus to a market that is traditionally quiet from mid-Novelber until early new year.

Based on my personal experience of currently selling my property on the Mediterranean coast and moving inland to Perpignan, I have been forced to analyse my needs and requirements (budget, amount of space, long term prospects etc) and ask myself the sort of questions which face every potential French property buyer - I include my Twelve Golden Rules for Successful Property Searching.

Also some of the frustrations of property searching, not least of which are the major property websites - one boasting nearly 800 000 French properties came up with nearly 350 meeting my basic parameters; and the poor quality of both photographs and descriptions - such as 'city centre' (well, there are parts I would not consider living in), floor level (I prefer a top floor), charges and taxes (which can vary widely), all the sort of information I want to be in possession of before even considering a visit.

Buying to let

An interesting article in the French daily newspaper Le Figaro has highlighted the situation of people who invested in French property to rent before the spectacular price rises of the 80s and 90s compared with the situation today. Investing in studios and apartments to rent was particularly attractive to future pensioners at the time, with one example cited of a lady able to add some 1 500 euros monthly to her retirement pension (in addition to a further 1 500 from her employment!).

Another investor, a lady teacher, recalls buying three studio apartments in a sort-after area of Lyon, spacing the purchases over a period of ten years each, giving her time to repay the bulk of the mortgage. She reckoned on contributing a further 100 to 150 euros a month, but overall is currently earning a 6% return on her investment. For someone starting out today, this would be more likely 2.5 to 3 per cent, she admits.

Although monthly rentals are now approaching the levels of mortgage/loan repayments - and in some cases exceeding them - many investors admit that the market is less attractive than it used to me. Among the complaints cited in the article include higher taxes and charges, including the new CGT rules on resale, the higher turnover of tenants and the attendant costs of refurbishing the property between rentals; and unpaid rents as tenants disappear when unable to pay the rent due to job loss or other circumstances.

In the correspondence following the article, many complain of the attitude of French banks towards new borrowers who are forced into renting when they could easily afford monthly loan repayments, and the resulting rise in rentals. For their part, landlords talk of increasing irresponsibility among tenants and complain that the new laws allowing them to accept only a one month deposit mean that tenants can leave behind them a trail of damage, with subsequent repair costs and loss of rental income to the owner.

Source. LeFigaro.fr 19 november 2011

French Property News, November 2011

In this month's issue I have taken a look at France's buoyant rental markets, from the point of view both of owners wishing to rent out their property, and renters needing guidance about how to secure the best long or short term deal. France's rental market is highly controlled and tenants are carefully protected by law from summary eviction, including in cases of non-payment of rent. However, many French choose to rent, particularly in large cities where the cost of buying an apartment may be prohibitive, and instead invest their savings in a second home in the country or on the coast, which may have been in the family for several generations.

The article also looks at seasonal/holiday rentals and the formalities that need to be completed in order to reach a satisfactory agreement between owner and tenant - guarantees, responsibility for repairs, periods of notice, a tenant's options to buy are all covered. 

French Property News is on sale in newsagents or see www.french-property-news.com

Spending on your property to beat the downturn?

According to an article in today's Telegraph* newspaper, many Britons are being advised to spend money on improving the property they already own, in order to 'prepare it for the market' when prices are predicted to rise again in two or three years time.

However, the writer Caroline McGhie, offers some words of caution - including not over-spending for example, to the extent that a property stands out as 'expensive' compared with other houses in the same street. It is well known that seekers of four-bedroom houses do not search in a three-bedroom street, and adding luxury items such as a swimming pool or jacuzzi can tend to put a property out of context with its neighbours. After all, birds of a feather tend to flock together...

Some estate agents also advise caution - not spending excessively on a property that is already seen as at the top of its price range, and thereby making it stand out among similar properties in the area. Another advises that certain improvements are only worth their cost if the owners are convinced they intend to stay in the house long term - and who can tell these days? - rather than sell up and move within a couple of years.

Will it work in France? Although as the previous post (below) indicates the French are 'starting to think more like Anglo-Saxons' and see their home as an investments as well as somewhere to live, transaction costs tend to be high, including agency fees, the notaire's fees and French government taxes. As a rule the French are reluctant to change areas, for eample to find work even in times of recession, because of family ties and responsibilities - children in school, spouse's own job, caring for ageing parents.

However, mong the principal reasons for moving are the need for more space, as children grow up and more bedrooms are needed, so any improvements that offer more living space as opposed to greater comfort will generally add value to a property, though all the cautions noted above also apply.

* The Telegraph online, 01 November 2011

French becoming more 'anglo-saxon' in their approach to property buying?

After decades of traditional thinking that you buy a property as a place in which to house your familly and create a life, it seems that the French are finally starting to look at property buying also as a form of investment - an approach that has always been regarded as anglo-saxon rather than continental.

According to a report from the group Credit Foncier, some 70% of French people questioned said that when buying their next property, they would also be keeping a close eye on its re-sale potential. This compares with a figure of just 50% from surveys taken 30 years ago. Principal reasons for buying however still include the feeling of security and the wish to avoid paying rent on a property they do not own.

A spolesman for the finance company notes that the doubling of property prices in the last ten years has also encouraged the French to look at buying property as a form of investment, with many of today's buyers wishing they had purchased their property a decade ago.

However, due to the French banks' traditionally cautious approach to lending, first time buyers are still finding it difficult to finance a property purchase, at a time when monthly rental payments are rapidly approaching the level of repayments of a typical mortgage.

One of the many effects of this is the inability of (young) workers to move to where jobs are more readily available. This last situation is being partly addressed by some employers investing in 'low cost' housing for their employees, to encourage greater mobility. This policy has been attacked by the state organisations responsible for providing social housing (HLM) but employer/investors respond that as France's housing crisis is so severe - 1 million new homes are desperately needed - they are doing their bit to ease th housing shortage.

Source: Le Figaro 15 October 2011

French Property News, October 2011

In this month's French Property News*, entitled The Business Issue, I have written the introductory article about the various ways you can set up and run a successful business in France. The article covers all the possibilities from the recently created auto-entrepreneur scheme (a simple form of self employment that can be combined with a job or retirement), options for limiting your business liability, and the use of either a French or British limited company as your chosen business vehicle.

I also also highlight which business sectors are in decline and those where you can expect to make a profit, and all you need to know about your business plan, qualifications, finance and how to get started.

The nearly 100-page business section of the magazine looks at a wide range of issues connected with starting a French business, including case studies, suggestions, more expert advice and regional reports.

*French Property News is on sale in newsagents and on subscription. Web http://www.french-property-news.com/

What the vendor leaves behind....

A recurring problem between vendors and purchasers is reaching an agreement on what is or is not included in the sale of a property - in terms of furniture, fixtures and fittings that are not strictly part of the building fabric.

Over the years, vendors have been accustomed to removing virtually anything that could be unscrwed - from light fittings to door furniture - to the surprise and chagrin of the buyer when he took over the property. As a result, some  notaires are now insisting that an explicit list of contents is drawn up and agreed by all parties, at the time of signing the compromis de vente (pre-sale contract). Sometimes in the case of a house that is sold empty and uninhabited, the notaire will include an 'indicative' list of what must not be removed by the vendors, without explicit consent of the buyer, between the signature of the compromis de vente and the acte finale.

It is advisable for buyers to re-visit the property shortly before completion in order to verify that the property has remained in the 'state it was at the time of signing the compromis de vente' as in signing the acte finale the buyer agres to accept the property 'as is' and has no further recourse against the vendor.

These general rules also cover issues like make alterations or changing the decor between signature of the initial and final sales contracts.