Read news from:
Austria
SHARE
COPY LINK

PROPERTY

Why now is the time to buy a house in France

Buying a house in rural France is still the dream for many Anglos, particularly those from Britain and with prices having fallen and exchange rates improved, it seems now is a good time to buy once again. And there's some eye-catching deals out there.

Published: 11 April 2014 16:50 CEST
Why now is the time to buy a house in France
Thinking of buying a house in France? Now is a good time to do it saythe experts. Photo: Mychele Daniau / AFP

It seem Brits who have been putting off their dream of buying a quaint little cottage in rural France can wait no more.

With a fall in house prices and a property market that looks as accommodating as it has been for a few years, estate agents say there are plenty of bargains out there and international buyers are starting to snap them up again.

“It obviously depends where but you can pick up some extremely good deals on properties in France," Mary Hawkins from Leggett Immobiliere told The Local. "There’s houses going for 400,000 in rural France that would probably cost around 1 million in the UK."

"And there's still a lot of properties for renovation out there that can be snapped up for as little as €50,000.

“Rural France is still a big pull, it’s still their dream and it’s easy to get to from the UK. But it’s not just Brits starting to buy properties again. There’s a lot of international buyers from places like Australia.”

Down in the Dordogne in the south of France, an area that has long been popular for British expats and holiday makers alike, things are also picking up.

10 things you need to think about when buying a house in France

“I think they have just got fed up waiting over the last couple of years and now the exchange rate is a bit better they are starting to but again,” said Cate Carnduff from Hermann de Graff estate agents told The Local.

“People are coming back to the Dordogne with prices having gone down. There are some good deals out there, because there’s a big backlog of property. Those people who really want to sell have got to make their prices really attractive,” said Carnduff.

Although she warned that some expats who bought properties in parts of central France had run into trouble due to the slump in the market.

“Some people bought cheap properties and put a lot of money into them, but there’s no market to resell them,” she said.

The French property market is not proving enticing once again just for international buyers. In France the current lay of the land means it’s seen as an opportune moment to buy a property.

A recent front page headline in the Parisien newspaper simply said: “Now is the moment to buy”.

In the article French mortgage brokers Empruntis gave a clear message: Anyone hoping to buy should not wait.

The reason why potential buyers should not wait is the current low interest rates making it a good time to ask a French bank to stump up some money. But Empruntis’s Maël Bernier says that things will not remain like that throughout the whole of 2014.

Any gains made by a drop in house prices will soon be lost when interest rates rise, Bernier says. For example a 0.5 percent rise in interest rates will cancel out a 4 percent drop in house prices.

So whether you are in France already or you are watching on from abroad, waiting for an opportunity to settle in in "La Belle France", now appears to be as good a time as any to buy.  

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

PROPERTY

French property: What is buying ‘en tontine’?

If you're buying property in France, you might be thinking about buying 'en tontine' - this has advantages especially when it comes to France's strict inheritance laws, but can also have tax implications.

Published: 25 March 2024 11:17 CET
French property: What is buying 'en tontine'?

What is it?

The ‘clause de tontine’ sometimes also known as a ‘clause d’accroissement’ is a clause that is inserted into the property deeds when you are buying a house or apartment.

It can only be inserted during the purchase, and cannot be added later.

It’s basically a ‘group purchase’. It’s most commonly used by unmarried couples who are buying together but it can be used by larger groups too – for example a group of friends buying a holiday home together.

You will have to ask a notaire to draw up the tontine clause during the property purchase and it can only be used if 

  • the parties are equally involved in the financing of the purchase
  • the parties involved have a roughly equal life expectancy (for this reason tontine clauses may be rejected if there is a significant difference in age between the purchasers)

What’s the point of it?

The main reason that people use it is to sidestep France’s strict inheritance laws, which assign that a certain portion of every estate must go to children, at the expense of a partner. 

READ ALSO How France’s strict inheritance laws work

For this reason it is particularly used by couples who have children from previous relationships.

On a property with a tontine clause in effect, when one owner dies their share of the property passes in its entirely to the other member/members of the tontine.

This cuts out children from inheritance, but means that a surviving partner is not evicted from their home in favour of the children of the deceased. 

It also has the advantage of making the intentions of the deceased clear, to avoid arguments among heirs after their death.

It should be noted, however, that the tontine clause only takes in the property that it covers – other assets may be subject to French inheritance law so it’s therefore probably wise to arrange a will, to ensure your wishes for your estate are met.

The surviving party can ask a notaire to update the property deeds to show that they are the sole owner, if they want. Be aware there will be a fee, which could reach four figures for the privilege – and it doesn’t actually involve any change to the property title.

Drawbacks

The advantages of the system are clear, especially for blended families, but there are some potential drawbacks too, which mean that anyone considering buying in this way would be well advised to take proper legal advice before they start.

Inheritance tax – while a tontine will help you to avoid restrictions on inheritance, it does not exempt you from inheritance tax. French inheritance tax is structured according to your relationship to the deceased, and people who are neither married nor related to the deceased pay an eye-watering inheritance tax rate of 60 percent.

The only exception to this top rate of inheritance tax is if the property is your main residence and it is valued at under €76,000 – in that case, tax is paid at a rate of 5.8 percent.

Married couples and family members pay a much lower rate or not tax, but if you’re not married to your tontine co-purchaser, be careful that you’re not lining yourself up for a massive tax bill in future years.

Wealth tax – depending on the value of the property, it could tip you over into the ‘wealth tax’ category when you inherit. France’s wealth tax is a real estate based tax and is levied on anyone who has real estate assets (property and land) worth €1.3 million or more.

The calculation includes property held en tontine.

Tax savings – you might hear tontines being advised as a way to limit your French tax liability.

While this used to be true, changes to tax laws means there are no no significant tax advantages to buying this way – the same is true for buying a property via an SCI, which used to represent a tax saving until the law was tightened up.

Disinheriting family members – One side effect of the tontine clause on mixed families is to effectively disinherit any children of the first person to die.

Because the property passed to the survivor, under French law, only their direct descendants – rather than any family by marriage – are entitled to automatic inheritance.

That means that the children of the surviving partner will be entitled to the statutory share of the entire asset (between 25 and 30 percent depending on the number of children), but the children of the first person to die will be entitled to nothing. Obviously you can choose to leave them something in your will, but you can only leave them some or all of the estate which is not automatically given to the children on the survivor.

Divorce/dispute – if the members of the tontine split up or (in the case of friends) fall out, then they can either sell the whole property or agree to buy each other out.

However, if one party refuses to sell, then you have very limited legal options – unlike a standard property purchase a tontine is not regarded as joint ownership, so one partner cannot be forced to sell as part of a divorce procedings, for example.

Basically the tontine can only be ended or changed with the agreement of all parties – so if you can’t agree between yourselves then you may be stuck with it.

SHOW COMMENTS