Step 1. Look into installing a turbine
(this could cost in the excess of 50,000 Euros, if you live in the Lot department, check and see if you are eligible for a grant from the FDE (la Federation Departementale d’Electricite du Lot). If your mill has no access to mains electricity and is isolated there is every chance you could be eligible for such financial support.)

Step 2. Get a study carried out by an environmental energy agency to see what kind of turbine is required.
(SERT is a company located just outside of Lyon and is dedicated to environmental energy. Telephone 04 72 18 02 02)

Step 3. Clean and maintain the turbine regularly.
With smaller turbines, leaves and weeds can block the grill and hinder the performance of the turbine. It may be up to 3 or 4 times a day that you have to check that it is all in good working order.

Step 4. Ensure that you are supplied with batteries so that no energy is wasted.
Not all energy that is generated will be used so it is important to store all energy that is created. The weather obviously has the biggest impact and the height of the river governs the power generated by the turbine. With such unpredictable factors having such a great effect, ensure you make the most of any energy that is created whenever possible- You never know when you might need it.

Step 5. Have a backup plan!
As most hydro installations produce varying amounts of power according to the season, it is not usually suitable as a year-round source of energy. Solar photovoltaic energy is a very reliable source although solar systems don’t work at night and you will therefore need to store the energy using the preferred method of batteries. If you then install a small wind turbine, you can be sure to have all weather types covered and have a year round power supply.

Click here to see our Mills for sale in France

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So in light of these revelations, Sextant’s Rural Property Index will be essential in helping customers’ research specific requirements, hopefully succeeding in finding their dream home!

French rural property index

Our objective was to gain an insight into what you considered to be “French”, and to see what you have found on your travels in and around France.  The entries were indeed very varied and included:  a Provencal market scene, the port in La Rochelle, a typical street in an Aquitaine town, homemade tartiflette, La Fontaine Midicis in Paris, a country house in Brittany, a frosty woodland path, a winter scene of a chateau in Les Deux Sevres, and a French tennis scene.

The winner, with 61 votes, was the entry A Country House in Brittany. The photographer captures a typical Breton house with its grey slate roof, well pointed stone-work and picturesque setting. The bright colours surrounding the house complement the neutral tones of the property. The positioning of the photograph is excellent: the house is the main subject, but the photographer offers that little bit more, and frames the property perfectly with the blue sky and trees in the background and luscious garden in the fore-ground.

Thank you to everyone who entered the competition and congratulations to the winner, Andrew Jeffery, who will soon be receiving his magnum of champagne!

Interest rates are higher than last month with 0.04% on average so it is the best time to take on a fixed rate, at their lowest value ever

French interest rates and how they work

Most of the French lenders index their rates to the Euro Interbank Offered Rate, or Euribor, the average interest rate at which term deposits are offered between prime banks in the EU wholesale money market or interbank market. Just like the LIBOR serves as a short-term reference rate for British Pound and U.S. Dollar, the Euribor is widely used as a reference rate for Euro .

The French banks usually index their rates to Euribor 3 months currently at 0.75%, 0.04% higher than in January. Each bank applies a margin of between 1.30% to 2.50% depending on the lender and the product’s features.

Variable products are usually redemption penalty free, although some banks may charge penalties in case of a re-mortgage. Fixed products are currently very low and very popular, but capped products starting at 3.10% and capped at 4.10% are also recommended in the current climate.

Best French Mortgage products currently on the market

1.   100% LTV French mortgages with capped rates starting from 3.50%*
2.   Rates fixed for the entire term starting from 3.15%**
3.   Some French products are capped at 1% above the initial rate, to give you more security
4.   Interest only mortgages with variable rates starting from 2.80%
5.   Rates starting from 3.60% for equity release and re-mortgage

* You would only be expected to pay the Notaire fees and the estate agent’s fees. Available only for properties of over €300,000
** Over a short term of 6 years on a repayment basis, for a loan of or above €230,000
***Higher rates may be applicable for longer terms and different loan amounts

For more information related to French mortgages or if you would like to receive a free quote with no obligation, contact our in-house mortgage consultants by telephone: 0207 428 4918 or by email: mortgage@sextantproperties.com

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What may be the advantages of purchasing a property through such an entity, and what is an SCI in the first place?

An SCI is a civil company (as opposed to a commercial one), which is tax transparent (ie: any income it makes is taxed in the hands of the shareholders under French income tax), the purpose of which is to purchase and hold real estate property among several people, to put it at the disposal of the shareholders, to rent it and share the rental income and even, exceptionally, to sell it.

An SCI requires a minimum of two shareholders (no maximum) and there is no minimum share capital, although in practice, the capital will consist in the market value of the property (plus any advances in cash by shareholders in current accounts).

It requires at least one annual general meeting to approve the accounts, to prepare such accounts (this can be a fairly simple exercise depending on the activity of the company), which do not need to be certified by a chartered accountant. A balance sheet must be prepared along with a profit and loss account yearly, as well as a report by the manager to the shareholders on the company’s activity once a year. A number of companies in France can assist with taking care of such service at a reasonable cost.

An SCI is a tax transparent civil company, which means that any income derived from it is taxed directly in the hands of the shareholders under French income tax. Because its purpose is civil as opposed to commercial, it can rent the property it owns, but on a long term unfurnished basis. If short term furnished letting is contemplated, it is best to opt for corporation tax (such option is irrevocable).

Turning to the advantages:

-    Avoiding the rules of indivision:

A straightforward purchase of real estate in France, say by an English couple, will take place under the rules of the Civil Code regarding indivision. In a nutshell, pursuant to such rules, one can request to be bought out or force the sale of the property in auction sale, but more importantly, the majority required to make any decisions regarding the property is often two thirds (after a fairly recent reform, prior to which unanimity was often the rule). This can be a major hurdle, in particular in the scenarios of a large number of heirs inheriting a property, of a property being purchased by a group of friends or two couples, etc. In France, a fairly large number of properties are left empty to decay simply because of lack of agreement between members of an indivision.

On the other hand, the SCI offers a large amount of flexibility in decision making, which can be organised in the bylaws. It is possible therein to appoint one or more managers (“gérants”) with large decision powers, including day to day management of the property, decisions regarding works or even the sale of the property.

In addition, the majority required for decisions made by shareholders is often a simple one.

As regards the transfer of an interest in the property, the process is also simpler in the case of an SCI. As a matter of fact, this can take the form of a transfer of shares under private signatures (although a notarised deed can be recommended for publication purposes and opposability to third parties in certain cases), while a transfer of a share in a title held in indivision will invariably be more complicated and required a notarised deed. It is of course possible to prevent the entry into the company of unwanted people thanks to an appropriate approval clause in the statutes (with right of first refusal in case on intended transfer of shares).

The company’s bylaws can organise the rights of occupation of the property or how it is to be run. It is possible for members of an indivision to enter into an agreement achieving the same, but again, it is heavier, and will need to be notarised. It is also only valid for five years (although renewable).

-    Facilitating the transfer of the underlying asset:

It is quite common for a married couple to gradually gift shares in an SCI to their children with a view, ultimately, to transfer all of the underlying asset to them. Children enjoy a tax allowance of over 156,000 € on the death of each parent, but also upon a gift from them, provided that the donor survives six years, after which the allowance is reconstituted in full.

A word of caution though: an SCI must not be set up solely for the purpose of obtaining a tax advantage, as it could otherwise fall under the tax administration’s doctrine of abuse of right. It is therefore advisable to bring the children gradually into the share capital, initially with a small shareholding, and later to gift them larger amounts of shares. Provided such gifts do not exceed the tax allowance, they should not give rise to any re-qualification by the tax authorities.

Another advantage of a gift of shares in an SCI is that debts of the company will be taken into account in order to assess the value of the gift (provided that the donee accepts to take over the indebtedness), in particular mortgages, while this is not the case for an outright gift made by an individual. Also, it is accepted that the property’s market value taken into account for the purpose of a gift can be reduced by up to 15% to reflect the fact that there is no market for the sale of shares in SCIs.

It is also possible to transfer the bare title to the shares in the SCI and for the donors to keep the usufruct thereof (ie: the right to use the property and to receive any income from it). The usufruct holder is deemed to be the full owner for tax purposes, which can be convenient in cases where parents want to benefit their children without imposing a tax burden on them.

-    Overcoming the rules of French law on forced heirship:

Under French law, children have a right to a share in both their parents’ estates, which cannot be taken away from them even by will.

However, in the case of an SCI, provided that the family remains domiciled in the UK for inheritance purposes, the shares in the SCI, as chattels (as opposed to real estate), can be dealt with as the testators see fit in their UK wills, while the real estate property remains owned by the company.

The death duties, if any, will remain the French ones, as the SCI is a company with French real estate preponderance, but the shareholders can transfer the title to the shares freely. This possibility makes the SCI very attractive to many British buyers.

A lot more could of course be said about the SCI, but it should be considered as an option in any purchase of real estate property in France.

Hervé Blatry
Avocat
TEE FRANCE
STANLEY TEE LLP
High Street
Bishops Stortford
Herts CM23 2LU

Tel 01279 710621 and 01279 710654
heb@stanleytee.co.uk

The performance of sterling against the euro continues to depend on a trade-off between bad news from Britain and bad news from Euroland. (There is almost no good news from either.) For the euro zone, the bad news relates to deficit funding and politics. In Britain’s case it is deficit funding and, er, politics.

To cover the simplest one first, the UK government is in the process of borrowing in just a few years more money than every previous government has borrowed, added together. By way of illustration, the net £4.2 billion in January market the first ever occasion when January had not been in surplus as a result of tax receipts. The chap in charge of managing Britain’s national debt has said he is not worried. He expects to be able to sell every gilt he needs to issue. Investors are not so sure, especially if the nightmare of a downgrade to Britain’s credit rating comes true.

Sterling’s political handicap is the upcoming general election. For one thing, Gordon Brown’s administration has made it abundantly clear that it will take no draconian steps which might alienate voters ahead of the vote. For similar reasons, neither he nor the Conservatives want to spell out in too much detail how painful any future measures might be. It must be assumed that, whichever party wins, it will do what it sees fit to reduce the size of the debt mountain but what if nobody wins? Investors fear that a hung parliament, where no party has an absolute majority, will be frozen by indecision.

The euro’s problems revolve around Greece and its own huge pile of debt. Greece’s credit rating is already only a hair’s breadth above ‘junk’ and the big ratings agencies are threatening that to push it over that cliff is the Papandreou government does not get its act together. Were that to happen, Greece would find it yet more difficult to sell the bonds it needs to fund its activities. In a perfect world Greece’s rich Euroland partners would help it out with a loan or a credit guarantee but Germany’s outright refusal to do so and France’s Gallic shrug make it look as though Athens will have to work its own salvation. But what if it can’t or won’t? The chap in charge of managing Germany’s national debt offered a harsh assessment of the situation. He told a conference in London that ‘if a country goes bankrupt, it will be the end’ of the euro. It was not the rosiest possible picture that he painted.

At the moment sterling is the market’s whipping boy, especially after various members of the Monetary Policy Committee stood up to say that there might be a need for more quantitative easing (what the tabloids describe only slightly unfairly as ‘printing money’). Investors seize on every piece of bad news while ignoring the occasional nugget of good. A case in point was the market’s reaction to an upward revision of Britain’s economic performance in the last quarter of 2009. Instead of expanding by just +0.1%, the latest guess is that gross domestic product grew by +0.3%. Rather than rejoicing at the good news, investors sold the pound because alongside the improved figure for gross domestic product was another showing that government spending over the same period had been much higher than anyone thought

Sterling could well be in for more rough treatment unless things go seriously pear-shaped in Greece and the euro zone. It might have further to fall before it has its next shot at a place in the sun.

Visit our Currency page here

Enquiries are coming from Brits of all ages- young families relocating or looking for holiday homes, couples thinking of retirement and even commuters. The latter is possible in these days of low cost airlines, with international airports dotted around the country.

Apart from the aesthetic attractions (from chateaux to cheese, the wine to the weather), France’s proximity is indeed ideal as driving or taking a train is still a viable option for those who dislike flying. And France still retains its international appeal making it perfect for holiday lets.

According to the Sextant French Property Index, house prices are actually rising. Sextant’s figures are based on its database of 10,000 French rural properties and indicate that the rise in prices started in November 2009 and peaked in January, with a 6.86% rise since October 2009. This means confidence in the French housing market is slowly being restored and also indicates a period of slow growth for France, out of the recession since August 2009.

In case people are wondering, the top 5 areas people are rediscovering are Gascony and the Dordogne, The Loire, the Cote D’Azur, Provence and the French Alps.

The no interest eco-loan allows individuals to finance works which improve energy efficiency in their main residence (it is not available for holiday homes). The green loan can be up to 30 000 € and repaid over 10 years. According to the FBF, the average amount of this first wave of eco-loans is roughly 17 000 €.

Although off to a promising start, the system remains complex and may put some people off. There aren’t any fund conditions but there are certain restrictions. For example one cannot simply replace the windows. One must choose 2 or 3 different works to be carried out from an official list, or reach a specific level of global energy performance after the work has been carried out.  Additionally, the loan only concerns properties built before 1990. As for those who choose to increase the energy performance of their home, the dwelling will have to have been built since 1947.

The FBF estimates that the authorities have not provided enough clarification or simplification, which would accelerate and increase the number of projects.
The French Agency for Environment and Energy Management started a campaign last week, communicating all one needs to know about eco-loans. Florence Clément, who works for the Agency, recognises that the system is complex even though the principle is simple: “It’s about subsidising the most efficient and coherent works, and avoiding the patch-up jobs. There’s no point in replacing the windows if the rest of the house leaks energy.” In order to get a more global picture of the work to be done, the Agency recommends turning to independent energy advisors, present throughout France for further advice.

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A vineyard and Spa estate, Saint Benoit offers both the ancient and the contemporary in its modern styled furnished apartments, with private gardens, set within the estate’s 12th century renovated gardens. Set in the heart of all this modernity is the estate’s reception centre which incorporates:

-    Restaurant/bar
-    Lounges and libraries.
-    Spa facilities with indoor and outdoor swimming pools, saunas and Jacuzzis.
-    Kids’ area.

These delightful apartments are €245,180 with a required deposit of 2% on agreement.

At Sextant French Properties, we can offer you a top quality mortgage service whether it be an interest-only mortgage, a traditional repayment mortgage or even a hybrid mortgage should you so require.

The property will be under the watchful eye of a management specialist with rents guaranteed on a 9-year renewable commercial lease and paid on a quarterly basis. The buyer receives 19.6% VAT cash back and the property can be offered on 5 different options from a pure investment (yields can be up to 4.5% per annum) or a 6-month personal use scheme that sees nil return on the investment but you can nonetheless enjoy the property all by yourself!

There are only a few units left in the estate so hurry now and make good on a great opportunity!

Before they make their big move, Keith has to sell his IT business in the UK. Antoinette takes on the task of managing a group of French builders while Keith divides his time between France and England. Not only is Antoinette alone on this project for much of the time whilst having to look after their four children, but she does not speak fluent French either. They hope to have the guest accommodation ready to rent for the summer season, but as their financial situation worsens; their hopes and dreams begin to recede.  Can Keith and Antoinette realise their dream?

Here is the link to the Video on Channel 5