» French Property

French Property mortgages increase by 17% according to study

Rachel — Fri, 30 Jul 2010 11:34:29 +0000

The total figures of French property mortgages granted by the French banks in 2010 should reach €140 billion in 2010, which is 17% more than in 2009, but remains far from the 2007 record of €170.23 billion, according to a study by the French central institution of property mortgage security “Crédit Logement/CSA”, published last Wednesday.

However, French mortgage rates have continuously kept on dropping since the end of 2008, getting closer to their historical floor (3.36% in the 4th quarter of 2005), to settle around an average of 3.42% in June, whereas they were still at 5.07% in the last quarter of 2008. The consequence for borrowers is a decrease of almost 10 % in monthly payments in comparison with 2008, emphasizes Crédit Logement.

“Unemployment and purchasing power outlooks are still standing in the way of a real upturn in mortgages” says Michel Mouillart, the author of the study.

Despite the war for new customers among French banks, the other phenomenon affecting the mortgage market is the soaring of French resale property prices, which are now about where they were before the 2008 crisis.
Since the end of the 90’s, French prices have risen by 140%, and are now 22 times higher than in 1964, which is much more than the inflation, Crédit Logement notes.

Source: Le Figaro

Lower prices for holiday homes in Normandy and Brittany

Rachel — Thu, 22 Jul 2010 15:37:27 +0000

According to the well know French Magazine Capital, fifteen years ago France counted 2.2 million holiday homes. Nowadays, 3.3 million holiday homes are spread all over France. Since the financial crisis in 2008, the French countryside has seen price decreases for several holiday homes. However, you should be aware that it is not the same in all regions of France. For the last decade, country house prices had doubled but have fallen in the past two years. This is mainly due to the fact that foreigners sold their holiday homes in France in a hurry during the crisis. So now is a great time to buy your holiday home in France.
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Before buying, you should be aware that owning a holiday home has a cost. Depending on the area, maintenance works cost an average of 2% of the value of the house and can go up to 4% when your house is located on the seaside with a pool. Of course, if you want to buy a house on the Mediterranean, prices won’t go down because it has always been and will always be the most privileged area for foreign and French buyers. But if you are looking for beaches, pleasant weather, pine forests, pastures and plains, how about considering the areas of Normandy and Brittany?
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Even if the coastline remains expensive, the countryside in Normandy and Brittany has experienced a price decrease for old houses from 10% to 20% since 2008. In fact, during the crisis, most of the properties were sold extremely quickly. Normandy has numerous advantages for British people who want to purchase a property in France. Also, it is not too crowded with Parisians, who would rather buy a house in the large periphery of Paris such as the Oise or the Eure-et-Loir departments. With 600 kilometres of coastline, Normandy offers a temperate climate thanks to the proximity of the sea. Finally, it is not too far away from the UK as there are numerous ferry ports.
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In this area of France, prices are extremely variable due to the vast amount of properties available. Small stone houses to renovate can be purchased for approximately €50,000 and half-timbered houses for €500,000. Prices can goes up to €3,000,000 for castles.
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In Normandy, the Orne department allows buyers to find property with interesting price reductions. For example, a stone house with 150 sqm of living space has decreased in price by 39% since March 2009. With a price of €189,500, this south facing renovated stone house offers a 1600 sq m landscaped garden, barn, bread oven, terrace, oak door and beams. In the same department, you can find a charming half-timbered property offering two houses. With a total of six bedrooms, the property is priced at €239,200. One year ago, the property was for sale at €291,200. This decrease of 21% speaks volumes of the opportunities that can be found in Normandy.
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Going through the Manche department, properties are closer to beaches. You can find a large character stone house set in 15,000 sqm near Gavray, offering 300m2 of living space and in great condition. With a price of €640,000 in March 2009, an exceptional decrease of 62% allows you to buy this property for €395,050. This is certainly one of the greatest opportunities with Sextant Properties in terms of price reduction. Of course, this exceptional decrease is not that common and it’s far more usual to find properties with an average price decrease of 10% to 20%.
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Brittany is an excellent place to invest in a property. In fact, the SNCF (The French railways) will extend the West TGV (high-speed train) to Brest in the Finistere department in 2015, meaning the town will only be three hours away from Paris. Nowadays, it takes at least four hours and a half to link the French Capital and the western tip of Europe. Prices will increase with this faster transportation link so now is a good time to benefit from lower prices. For example in Carhaix, for €96,500, a typical country house is available, the price having decreased by 27% since February 2009. The property offers outbuildings in 4875 sqm of land.
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Cotes-d’Armor and Morbihan are also popular departments in Brittany with many Breton style properties on the market. In this area, the real estate market plunged in 2008 and 2009. Consequently, properties that were expensive two years ago are now affordable. In the Cotes-d’Armor department, a village house of €46,200 allows you to renovate according to your own tastes. With a large cellar and attics, the price of this stone house has known a decrease of 15%. Finally, In Saint Aignan in the Morbihan department, an outstanding property with gite and swimming pool is available with a price decrease of 26% from October 2008 and is now €455,000. What is good to know with this professionally renovated house and three bedroom gite is that no work is required and it is ready to move into.
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Thus, there are many price reduction opportunities in Brittany and Normandy. If you want to find out more about these properties, don’t hesitate to visit the Sextant Properties website or to contact one of our property advisors.

Going overseas for a first buy

Rachel — Wed, 21 Jul 2010 09:30:50 +0000

.According to foreign exchange and international money transfer specialist Moneycorp, prospects are poor for the British real estate market, as 25% of potential first-time buyers consider purchasing a property overseas. This conclusion was reached after having asked 2000 Brits in the process of buying a property for the first time.
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This reluctance to buy properties in the UK can be explained by several reasons.
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First of all, housing prices in the UK have risen again since the 2008 drop and have reached expensive heights, which is rather disheartening for a person wanting to start out on the property ladder.
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When asked what the first thing to be taken into account during a property purchase was, 31% of first-time buyers consider currency to be the most important criteria. Unfortunately, the pound exchange has been very unstable lately, falling 17% in comparison to the euro and taking up again for 19 months in a row. These changes in value are an obstacle to a purchase, and even though the pound is getting stronger, buyers still think buying overseas the right decision to make.
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According to Moneycorp, 86% of first-time buyers are convinced that they will get more for their money in countries with stable currency and a thriving economy, preferably in the hottest, sunniest regions of the globe. The main trend among British buyers is that they would rather buy overseas instead of struggling to get an expensive home in the UK.
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The first destination for British real estate investments is Australia. According to Mr Wilson, head of the overseas property department at Rightmove.com, buyers see this country as a real alternative because of its homely image and the difficulty in getting an English mortgage. Then comes France, outranking Spain for the first time. Italy has fallen behind and so have the USA in the global popularity ranking.
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For more information, visit the Moneycorp page on the Sextant website.

New Mortgage with variable rate available

Rachel — Mon, 12 Jul 2010 16:06:27 +0000

.The French banks usually index their rates to Euribor 3-month currently at 0.827%. But if you are currently looking for a mortgage to finance your project, a new financial product with variable rate might be suitable for you.
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One of our French bank partners just launched a new product in order to finance a holiday home or a leaseback: “the Foncier 3-month variable rate”. This mortgage is based on the variation of the Euribor 3-month index that allows the product to perform like a reviewable rate. Currently at 2.70 %, this variable rate means that only the monthly payment evolves; the term of the mortgage remains unchanged. With a term from 6 years to 25 years, this mortgage offers a large flexibility as you will be able to pay back part or totally after 12 months without any fees.
Moreover, the borrowers who earn at least €50k/year can change to a fix rate at anytime during the length of the mortgage.

To sum up, here are the main points of this 3-month variable rate:
- 2.70% rate
- Based on Euribor 3-month Index variation
- Term from 6 years to 25 years
- Possibility to pay back after 12 months

Here are the main criteria to be eligible for this mortgage:
- Minimum joint income of €50k per year
- Age: from 18 to 80 years old
- Maximum debt ratio: 35%
- Must be a home owner

This brand new product is the perfect combination of flexibility and an attractive rate, a perfect way to finance your estate project.

If you want to receive more information regarding the Foncier 3-month variable rate, do not hesitate to get professional advice from our Mortgage Advisors in order to receive simulations for this mortgage. You can also visit our French Mortgage website for the latest rates available.

Which French Leaseback should I choose?

Rachel — Fri, 09 Jul 2010 10:00:00 +0000

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Nowadays, if you want to finance your French leaseback property, it is better to select one which has a yield lower than 5%; otherwise, banks might decline your mortgage because they will be afraid that the management company of your leaseback will not fulfil all the financial requirements.
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However, buying conditions in France are currently excellent. The exchange rate is extremely favorable since Sterling reached a 19-month high against the euro at the end of June reaching €1.203. If you’re thinking about purchasing a leaseback property, you might be interested in one of our new programs in Argeles Sur Mer, a traditional small village located in the south of France on the Mediterranean coast, at the foot of the Pyrenees Mountains and the Spanish border. With its 7km of sandy beaches, long flower-bedecked and landscaped seaside promenade, Argeles draws in the crowds every year. Les Demeures de la Massane is a new residence offering apartments and villas with terraces and/or gardens. Purely Mediterranean in style, its architecture is a harmonious blend of wood, light coloured stone and ochre shades. The communal area comprises an aquatic centre with a swimming pool and a paddling pool, a spa with sauna, gym and a Jacuzzi, a games area for children and a bowling pitch.
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If you purchase a 1 bedroom apartment for 120k€ HT in this residence, you will receive an annual rental income of €4,560 HT with a yield of 3.80%. The rent will be paid by the management company, regardless of the actual occupancy of the premises.
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In order to obtain a mortgage for this leaseback, you can ask for an interest only mortgage with 100% LTV (Loan to Value Ratio). Accordingly, it will cover 100% of the purchase price of your property excluding VAT (the VAT is financed by the developer) but you will need to secure 30% of the total amount on a side investment such as on a life insurance contract or a bond. It is important to know that when you purchase a leaseback, you will need to fulfil financial obligations. Indeed there may be some shortfalls that mean that the capital required to fulfil these obligations may exceed the available capital. But there is no need to worry; with this kind of investment you are more likely to have a low shortfall.
If you want more information regarding investments options on this leaseback, we can send you a detailed leaseback simulation.
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In addition, as the rental income of your new property will be revised every three years in line with the reference rental index, there will be a clear capital appreciation after a few years. The rise in the value of your asset is also an important part of your investment.
To sum up, there are four major points that will allow you to develop the value of your asset:
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- The capital appreciation. This is part of the return on investment and must be considered as an investment goal from the beginning of the project. The property value of your investment will increase through the years due to price inflation.
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- The side investment interests. By securing 30% of the total amount required, you will not just be making a classic deposit as this side investment will add revenues to your asset, by generating interests. For example, with a secured amount of 36k€ HT on a life insurance contract for a purchase of 120k€ HT, you are able to obtain a yield of 4%. It will be a considerable capital received just from the interests of this side investment.
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- The rental appreciation. It should definitely be considered as the main part of the leaseback investment. Revised every three years, your rental income is likely to increase from a minimum of 1.5% to 2% maximum per annum. Consequently, shortfalls will certainly decrease every three years.
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- The diversification of your investments. These leaseback mortgages are a good way to generate additional revenues and are more rewarding years later if you are able to purchase another one in a different location. These assets will be a major security for your golden years.
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So if you are interested, do not hesitate to get professional advice, for example from Sextant Mortgages in order to receive simulations for leaseback mortgages.

French resale property: prices almost break records

Rachel — Fri, 09 Jul 2010 08:53:19 +0000

.During the first semester, the average price per square meter increased by 8.48% to €2,508, which is very close to the unprecedented prices of 2008. This year, real estate agency Century 21 (a network of 850 agencies) expects a 6% increase in resale property prices in comparison with 2009.
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“We are very worried about this sharp increase and fear a freeze in sales, because the prices have reached the maximum buyers can afford” declared Laurent Vilmont, chairman of Century 21, during a press conference.

The average price has reached €2,508 per square meter during the first semester of 2010, an 8.48% increase in comparison with the first 6 months of 2009 and very near (-1.6%) the record of 2008 with the American subprime mortgage crisis and its worldwide consequences.

Throughout 2010, Century 21 expects a 6 % rise in resale property prices in comparison with 2009.

In Paris, after a 15% rise within a year – including a bit more than 10% in the last six months – a record was eventually broken with an average price of €7,079 per square meter, that is to say 5.4% more than in the first months of 2008. These sky-rocketing prices in the French capital, due to the demand of higher socio-professional categories and retired people, has not affected the number of sales, which have grown by 11.3% within a year.

French Mortgage Success Story with Sextant

Rachel — Wed, 07 Jul 2010 15:42:41 +0000

On the 15th February 2010, the office received a call from a new client called James D., requesting additional information on certain properties in France that were for sale on the Sextant Properties website. Emmanuel immediately sent the information requested, and James D. replied within twenty-eight minutes , informing Sextant that he would be in France in April and would like to arrange a viewing during that time.

James D. also needed information on French mortgages so Emmanuel passed on his details to the Sextant mortgage department. The financial advisor, Mansoor, wrote to the client for further personal information, sourced a few products and sent them to him (5/3/2010).

The client was happy with the quotations and chose the one recommended by Mansoor. The decision in Principle was created and immediately sent to the bank. The mortgage department then received the Agreed in Principle status from the bank within forty-eight hours, and sent the approval to the client together with a mortgage application form and a list of documents required, on the same day.

James D. went to France, and found his dream house (10/4/2010). He wrote back to the advisor, who recalculated the figures and together with other requested documents, sent off the paper work to the French bank. James D. was extremely happy as he was mortgage ready thanks to the Sextant mortgage department and staff; consequentially he managed to sign the “compromis de vente” within a week and completed his purchase.

If you are also interested by getting a French Mortgage visit our website: www.sextantmortgages.com

Leaseback Resales: Why are they attractive investments?

Rachel — Tue, 06 Jul 2010 16:06:50 +0000

There are a number of reasons for buyers to invest in France through leaseback property resales as opposed to buying off-plan. Before we list those reasons, we shall remind you what a leaseback is.

Buying under the French leaseback scheme is like obtaining a discounted purchase price, with the VAT element ( 19.6% of the price ) which is advanced by the State. On completion of the purchase ( e.g. signing of the acte de vente) you are required to enter into a formal lease with the management company who will then rent the property out on short-term holiday lets. The leaseback contract covers a nine year period. Where the intention is to occupy a property for only a limited time each year, or even not at all, leaseback ownership can offer a regular rental income, without the burden of having to market the property personally, or employ local agents to do this. While such schemes normally offer a regular rental stream, it is commonly the case that the amount of the rent is lower than may be obtained for a similar property if sold directly, although this is probably the counterbalance for not having the burden of marketing the property, cleaning it, managing guests and so on.

So, here are the reasons why they are attractive investments:

- In hard times as we have recently seen and that some are still facing, there are great opportunities arising from the property market. For those who purchased a few years ago and need to sell quickly for whatever reason, some are happy to sell below the current market price for new build or close to the price they originally paid, so it is extremely favourable to buyers.

- From an attractive purchase price, you can benefit from a more competitive rental return. If you compare with what a new leaseback can offer, you could be better off with a resale in terms of profit margins.

- You will still benefit from the VAT advantage as you will ‘inherit’ the VAT benefit from the existing owner with no procedure involved as long as you accept that you will continue with the existing lease in place

- You get the same LMNP or leaseback tax incentive as if purchasing new, meaning that you can deduct your Notaire fees, mortgage interest, etc…from the rental income received to avoid paying taxes on rental income. And finally you can view the apartment you are purchasing, there is no off-plan mystery…which appeals to many investors who want to avoid any unpleasant surprises.

Virginie Hopps-Delplace | Specialist French Property Lawyer
for and on behalf of Charles Russell LLP

5 Fleet Place, London EC4M 7RD
(T) +44 (0)20 7203 5313
(F) +44 (0)20 3023 8024

Discover France regions with the Tour de France

Aurelie — Mon, 05 Jul 2010 15:47:25 +0000

During three weeks in July, France is a nation of cycling. Most of Frenchs enjoy the Tour de France, famous annual race stage. This year, the famous race started in Rotterdam, in the Netherldans on July the 3rd and will end, as usual, in the famous Champs Elysees Avenue in Paris on July 25th.
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The famous race was born in 1903 with its first edition. At this time, the race was shorter with only six stages in the main cities of France. It was “the biggest race ever organised”. This 97th edition is organized by ASO, Amaury Sport Organisation. In fact, the race was not held every year since 1903 due to the war periods (from 1915 to 1918 and from 1940 to 1946). The race is famous for its yellow race worn by the leader of the race. But it did not exist in 1903. It has only been created after the First World War in 1919. The race also offers also famous jerseys: a green jersey for the best sprinters (created in 1953), a white jersey for the best young cyclist (created in 1970) and finally the white and red dots jersey for the best climber. Cyclists from all over other world play in this race which offers a variety of races in only one race: team race, against the clock, mountain race and plain race.

If the Tour de France is obviously a huge sport event, it has become also a cultural and historical event. In fact, with the important media exposure, it is a great occasion to discover France, from cities to small villages. The race is also extremely popular in France with the activities that take place before, during and after the race. At the beginning, teams were representing their countries. Since 1930, the companies represent the team that have to cover large expenses such as materials, hotels accommodations. The race has also an important cost. That is why the advertising caravan has been created. It is one of the best moments for the audience. The caravan goes one hour to two hours before the race. Here, the advertisers distribute publicity materials such as caps, shirts or key rings. Of course, the media exposure with the apparition of the television gave a new dimension to the race. People can follow the Tour de France and discover different regions of France. This 2010 edition will go through various towns such as Avoriaz, Revel and Paris.

Located in the Alps, a mountain race will take place in Avoriaz. At an altitude of 1800m, this ski resort has the advantage to be located in the middle of the “Portes du Soleil” which is a domain of 14 slopes in France and Swiss. Extremely attractive since the sixties, the resort is also known as the capital of snowboarding. If you enjoy spending time in the French Alps, you can buy an amazing new build in Avoriaz with 2 to 4 bedroom apartments available. But there are also various apartments and chalets near the station such in Morzine or Tignes.

After this demanding step, the cyclists will go to the south region of Midi Pyrenees. It will be the occasion to discover Revel, in the Haute-Garonne department. This village of approximately 8,000 inhabitants is located at 50 km of Toulouse. Revel is also known for its craftsmen and the excellence of its engravers, tapestry-makers or cabinetmakers. Located at the foot of the Black Mountain, Revel is a fortified town created in 1342 by Philippe V de Valois and the region is amazing. You can find many properties for sale in the surroundings of Limoux.

Like each year during 35 years, the finish line of the Tour de France will be crossed on the Champs Elysees Avenue in Paris. This step will be the smallest of this 2010 edition with only 102.5 km. It is the occasion to celebrate the bicycle in the French capital. This year, the third birthday of the “Velib” (public bicycle rental in Paris) will be celebrated with 600 km of bicycle paths and 71 million of rides available throughout the city. If you are dreaming of your own apartment in Paris or in the surroundings, take a look at those apartments in Paris.

From one country to another: what you should know about health insurance

Rachel — Wed, 30 Jun 2010 14:11:47 +0000

Health is a major concern when travelling abroad, equally for a short stay or a permanent move. That is why you ought to be very careful about your health insurance policy and get informed beforehand.

Nowadays, every European country has its own national health system, which allows its citizens to benefit from medical cover for free or at a lower price. However, the extent of the medical coverage can change from one country to another, and services that are free of charge in a country such as the UK might be costly in a country overseas like France.

Created in March 2002 by the European council, the European Health Insurance Card (EHIC) allows the person holding it to benefit during a temporary stay in a foreign country (up to 120 days) from free medical treatment, though only necessary treatment is covered. For example, this card allows its holder to be treated in a French hospital, just like any other French citizen. The EHIC is the same in every European country and is registered to one person only. It is completely free and is valid for a year. It is now a must-have, for if you travel without an EHIC, you will have to pay for every single service provided, a bill that can easily reach dozens of thousands pounds. However, the EHIC has been designed for short stays only and because of the diversity of the NHS you may have to pay for something you are used to getting for free.

That is why private medical insurance remains important. Medical insurance companies offer supplementary coverage such as dental, optical or maternity treatment, in addition to the core services provided. Moreover, they also deal with your case from A to Z: they can choose the hospital for you, fill the administrative forms or arrange your medical evacuation and repatriation. Thanks to them, coverage gaps left by NHS disparities can be filled for an additional cost.

By obtaining an EHIC ( www.ehic.org ). and subscribing to private medical insurance, you will get the serenity of being taken care of for free or at a lesser cost.