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Brits question dream move to France over Brexit fears

Each year thousands of Brits, up sticks and move to France, but 2016 does not appear to be a good year to fulfill the lifelong dream.

Brits question dream move to France over Brexit fears

While many of the 300,000 or so British expats already in France fear being left in limbo in the event of Britain breaking off its ties with the EU, at least they are already here.

Spare a thought for those who were all set for the move before the announcement of the June referendum left their plans up in the air.

One of them is Jackie Cox from West Yorkshire, who says the fall in the pound against the euro has already impacted on their plans to move across the English Channel.

“We have already had to cancel an appointment to view one house in France, because the worsening exchange rate means it’s now out of our budget,” she told The Local.

“We had been hoping to move to France this Spring but now with the referendum, we just don’t know whether to put an offer in or not,” she said.

'If we'd known we'd have moved earlier'

Cox, her husband Darren and her 93-year-old mother have their sights set on a move to Poitou-Charente or Limousin but currency predictors say the pound will continue to fall against the euro as the referendum date of June 23rd approaches.

And two banks UBS and HSBC released studies this week predicting that there would be parity between the pound and the euro in the event that the British people vote to leave the Union.

The volatility of the British pound during the Brexit debate was made clear when London Mayor Boris Johnson’s announcement that he would back the leave “camp” prompted an immediate sharp fall in the value of sterling.

All in all it means bad news for those looking to sell up and buy a house in France.

Last year estate agents in France were eager to get the message across that there were bargains a plenty for house-hunters in France.

SEE ALSO: The areas of France the Brits do and don't go

But those moving to France this year are faced with a predicament of whether to buy now, before the pound tumbles further and a Brexit perhaps makes it unaffordable or wait a few months in the hope that a vote to remain will send the pound soaring again.

“If we’d realised the pound would be affected so much we would have brought the move forward,” said Cox.

But it’s not just the question of unpredictable exchange rates that is causing doubt to creep into the minds of those British expats hoping to move to France.

While many long term expats in France are confident their rights will not be affected by Britain pulling out of the EU, for future arrivals the issue is not so clear.

“The problem is no one really know what will happen,” said Cox. “People already in France might be protected but what about us? What happens if we buy a property and then we lose our freedom of movement or right to health care, which is a big issue for us?

“There would also be uncertainty around our business and our right to work in France.

“We were really looking forward to find the right house, but now there’s question marks all over it.”

London based lawyer, George Peretz QC who already owns a house in France but is also looking to retire in France has similar concerns.

'France could charge for access to health care'

Peretz, who specialises in EU law told The Local says that in an event of a Brexit: “UK citizens would lose their EU law rights to work, to set up a business, to buy property, to bring family to live with them, not to be deported for trivial offences and so on. France might let them do all those things. But that would be entirely up to France.

“Any protection under the Vienna Convention on the Law of Treaties certainly doesn't mean that France would be prevented from (for example) starting to charge UK citizens the full cost of use of its health service, or to require them to get a “green card” in order to take a job or start a new business.

“It also wouldn't stop France imposing new taxes that discriminated against Brits. In my view any UK citizen thinking of living in France has to vote – if they can – to stay in the EU. “

Estate Agents Leggett Immobilier however, say that even though potential buyers have raised concerns about the impact of a Brexit they haven’t noticed any slowdown in demand.

“Our personal view is that even if the vote was to leave the EU there would be little in the way of substantial change to UK citizens living in France,” said Trever Leggett.

“We're convinced that the Government will take every step possible to protect benefits in any withdrawal discussions, it's a financial & political minefield…..imagine all these (generally elderly) citizens coming back to the UK and the burden this would place on the NHS.”

Has your move to France been hit by Brexit fears? Let us know. Email the editor at [email protected]

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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.

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 membersOne 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.

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