France

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Moss49

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Hello,
I am thinking of buying a small semi-retirement property somewhere in France within 1.5 hours of the sea.
I would expect to use it for three or four months annually ( not necessarily high season ) and would not be adverse to letting it for a few weeks if the possibility arose. I would be looking more at semi rural rather than touristic hot spots.
Anyone know how the French poperty market is currently holding up and what its prospects are?
Any recommendations as to possible locations, websits or,indeed pitfalls would be appreciated.
Thanks, Moss
 
2. Please make the heading of your question relevant Don't post a general heading such as "help !" or "Mortgage query". If you post a heading such as "Mortgage for separated couple", it will get a better response and will be much easier to find if you need to go back to look for it
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"Property in France" might get you a better reply
 
One thing you need to consider is the inheritance laws, depending on if you are married or not. The wife is not recognised is france to inherit the property if something was to happen to you, it goes to your kids. And the kids can in fact make your wife leave the house, depending on if theres any black sheep in your family...
I beleive there is a specific way around it, but get firm legal advice on it
 
Hi Moss49

The property market in France is not as volitile as in Ireland and also not as expensive.

I think if you buy in a tourist area it would be much easier to do seasonal renting. Not so easy in a semi rural area

But the rural area would also be much cheaper.

If you email me privately I can put you in touch with an Irish person living on the French Riviera who sells property both new and second hand.

You can get a reasonable apartment from €250K approximately. Villas would be a bit more expensive.

The inheritance laws have changed recently to acknowledge the rights of the wife.

Proximity to an airport should be a priority for ease of travel.

France is a stable country and with the variety of locations a wonderful place to have a second home.
 
Hi Moss49, be wary of those who are recommending agents in France and avoid leaseback if you have doubts about it.

Go to France and do your own research.

We have a place on the seafront in SW France. We also looked at something semi-rural, but the rental potential wasn't great.
 
Moss49 said:
Hello,
I am thinking of buying a small semi-retirement property somewhere in France within 1.5 hours of the sea.
I would expect to use it for three or four months annually ( not necessarily high season ) and would not be adverse to letting it for a few weeks if the possibility arose. I would be looking more at semi rural rather than touristic hot spots.
Anyone know how the French poperty market is currently holding up and what its prospects are?
Any recommendations as to possible locations, websits or,indeed pitfalls would be appreciated.
Thanks, Moss
Click to expand...

For rentals, its really only the coast or the ski resorts that you will rent. But then again these places are more expensive than a random village 1.5 hours from the coast.

Market conditions vary. Lots of micro-markets. e.g. Luxury property is full steam ahead. Suburbs are slowing down. etc..

France should escape the worst of the world property slowdown for a variety of reasons.

I think its time to narrow down the potential locations. France is a big place. Then perhaps people reading this could advise you a little better.
 
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Hi Moss49

I think your idea is sound and I agree with Gilly2 that the property market in France is not as volatile as in Ireland.

After a good bit of research we bought a 2-bed apartment in SW France a couple of years ago, we use it for the summer and the odd weekend, and we don't rent it out. We bought an older apartment (about 1960s) in a developed part of a coastal town. About half of the apartments are owner-occupied and the rest are holiday homes.

I would recommend that you avoid the leaseback schemes - I don't understand how they make good sense from an investment perspective - and Mr Buffet counsels against investing in anything you don't understand!

We're really happy with our purchase, both from a holiday and an investment perspective we have 330 days sunshine a year and easy access via Carcassonne, Perpignan and Girona airports. The TGV will come to Perpignan in 2009 and that will make getting there from Paris (or nipping down to Barcelona) much easier.

I'm not a lawyer but I understand that French succession law will not affect you if you execute a French will that deals with your French assets or, perhaps more simply, execute document called a marriage convention by which it is recgnised in law that the property was bought by both partners and that full ownership rests with the survivor in the event of one passing away. The notaire who dealt with the sale/purchase of our property did this for us at a cost of €350. (As this is not dissimilar to remarrying for the purposes of French property law you and your partner may feel entitled to another honeymoon ;))

Finally, I would fully agree with FranceRes' advice to go to France and do your own research.

Good luck
 
riviera said:
For rentals, its really only the coast or the ski resorts that you will rent. But then again these places are more expensive than a random village 1.5 hours from the coast.

Market conditions vary. Lots of micro-markets. e.g. Luxury property is full steam ahead. Suburbs are slowing down. etc..

France should escape the worst of the world property slowdown for a variety of reasons.

I think its time to narrow down the potential locations. France is a big place. Then perhaps people reading this could advise you a little better.
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Why is Riviera permitted to advertise his/her business, including a link, on askaboutmoney.com when others are prohibited from doing so?
 
I too bought a place near to Perpignan 3 years ago and am very happy with the pruchase.
We pop down as much as we can ( in fact we are going this weekend and again in May) and get lots of use out of it.
The first thing you need to ask yourself is why are you buying the property : if it is for personal or investment use or both? Leaseback is a major no-no for so many reasons - we did lots of research into it and it just does not stack up from any angle.
 
"....Leaseback is a major no-no for so many reasons..."

Sorry but could you please expalin the pitfalls of leaseback?
 
You can find a piece on the pros and cons of Leaseback [broken link removed].

For the tax issues involved check [broken link removed] out.

There are recent changes to inheritance law in France outlined [broken link removed].
 
Well, I'm not an expert but my own investigations revealed :

1) you can never live in most of these properties as they are deemed residence de tourisme ( akin to hotel rooms for taxation purposes)

2) this will limit your resale opportunities

3) Also you cannot rent long term

4) Every lease back property I looked at was at least 40% inflated in price compared to similar properties close by

5) Very difficult to sell on - they day you buy is the day you sell etc

6) Couple of management companies have gone bust recently

7) Very limited use of your own property

8) Usually built in depressed areas

9) Building quality generally poor

These are just a few that spring to mind, it's three years ago since we were looking at this option. We looked at quite few.
I think initially they were probably a good idea with some investment value but they have become a bit of scam now ???
 
Re: Buying property in France

We bought a leaseback place from Pierre & Vacances in 2003 or so, it's a ski apartment in the French Alps so it suits us just fine that we can only have it 6 weeks a year. We pay nothing for it, anything faulty is fixed, it is well maintained, good quality, and what's even better is that when we bought it, it wasn't P&V but another smaller company. Since P&V took over we can now swap unused ski weeks for apartments anywhere else in France owned by P&V ie summer hols! We also bought a 'cave' - underground storage - where we keep our remote control, radio, coffees etc....

I don't see any drawbacks with our purchase, we are both working and have two kids so we are limited by holidays. We also don't have to pay large amounts out during the high season for skiing as that is the only time we can go now what with kids in school. We got exactly what we wanted, no hassle, no further outlays, and it has gone up in price. We do have to hold onto it for 11 years otherwise we need to pay back to the French Gov the VAT we didn't have to pay initially. I agree the price was slightly inflated bearing in mind you didn't have to pay 20% or so VAT but it was still better value than other apartments. We have gone there in summer, our parents have benefited from our place in the summer and our swaps...it suited our needs, we had money, we wanted to invest in property, too expensive in Ireland, and at least this place we have had great benefits in all respects and have not made a loss...

Anyway research is key and each person's needs are different. This suited ours.

(Forgot to say Mr Wishbone is French, we have registered marriage and kids with France and have drawn up wills in France to protect us all! France as one poster said protects the kids - sometimes a bit too much!!)
 
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I would have to agree with rbg. I would also add that advertised guaranteed yields are pretty poor.

Wishbone, with all due respect, how can you assert that your property has increased in value and at the same time say that you cannot sell it for 11 years otherwise there is a VAT clawback. AFAIK no-one has ever posted their experience of selling a leaseback property on AAM, so their actual resale value is unknown. You also state that the price you paid was slightly inflated. I really don't understand how you can also say that 'we pay nothing for it' .

Also, there is the hassle of making tax returns in Ireland and France every year.
 
The reason I posted this was to show that not all leasebacks are negative - at least I don't interpret it that way.

We could sell it now so long as there were people willing to take over the VAT commitment. Advertised in the ski resort are properties similar to ours which are selling. We checked out how much ours would go for, it is more than what we paid, there is a demand.

When I say we pay nothing for it - we don't hand out any money for management, fixing anything that is broken etc, the management company do that but then again they do receive the rent.

Just to be clear here, we do not receive rent for this property, our deal was that we got the apartment minus VAT, for that we get 6 weeks per year, and we receive no rent. I believe you can opt for 3 weeks and receive rent. At the end of 11 years we can then renegotiate with the management company to enter into similar agreement or discuss rent. No tax returns are necessary, although Mr Wishbone wouldn't find that a hassle for French system, he has been doing them every year since he worked anyway...it's how it works over there.

Each to their own, we have been very happy with our investment so far. We have found it a hassle free way to purchase a low(ish) priced property in what we see as a stable enough economy. We have certainly gained with the skiing and the swaps we have had each year, rent free accommodation in almost anywhere in France at peak season.
 
I'm not an expert on French leasebacks but I have been helping a relation with the purchase of one last year and with doing the tax returns, same as Wishbone, they are delighted with their purchase, get 4 weeks and guaranteed rent, they are very happy not to have to manage it. In relation to guaranteed rents I know P&V, one of the biggest operators in France, we're staying with them this summer (and many other times) and their rents are very high but it's a short season and they keep the property in great shape. As Riviera said you have to pick your area but also be careful with whom your purchase. France's biggest business is tourism and they mind it, also the leaseback schemes are very well run - if that's what you're into.
 
To clarify.

A "leaseback" is in fact an "asset back security", a bond if you will.

You pay up a specified amount and the the counterparty offers to you a regular fixed stream of cash flows (possibly indexed in some way). Sometimes (as indicated above) part of the fixed payment (i.e. the "coupon") might be provided in kind as a period of rental. This is priced into the deal by the counterparty. You take a risk that your counterparty fails to make the required payments to you, but you have some security in that it is asset backed and a new investor might buy out the counterparty if it goes under and honour the terms of your contract. Note that you do not necessarily have recourse to the asset itself.

The point being. If you are looking for a holiday home, or semi retirment home, this is not for you. As I said this is a financial instrument, not a property purchase.

If you are interested in a financial investment, price a leaseback compared with a government bond or corporate bond, that might offer a superior return with less risk.
 
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