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3rd September 2010
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 Retiring to France still makes financial sense
Record numbers of Brits moved permanently overseas last year, and if popular surveys are to be believed there is little sign of that abating. One of the most popular destinations, particularly for those who are retiring, is France, and it comes as no surprise when earlier this year it was ranked third in a study of the best countries in the world to retire to. The study took into account not only climate, lifestyle and of course France’s much envied healthcare system but also taxes and costs of living. Contrary to popular belief, taxes are lower for the majority of people retiring to France. So what makes retiring to France such sound financial sense? Houses in France, especially in the south west still represent very good value. On average, prices are still around 50% of those in the UK, and whilst France has seen a slowdown in property sales, values are holding up very well. Overall cost of living as a comparison to the UK is still approximately 30% lower and of course the health care system is un-paralleled. Here is a breakdown of typical costs of living: Fuel: i.e. petrol and diesel is about on a par with the UK; in some places it is a little more expensive, but there is no road tax. Food: the strong Euro means food is about the same price in the supermarkets, but most French towns and even fairly small ones have a fresh produce market, which is good value. France seems also to be less vulnerable to the ravages of food inflation as people tend to consume more seasonal, local food rather than imports - where many of the big price hikes have been seen. Utility bills, local government taxes, etc: (Figures are based on a house in a village 50 kms south east of Toulouse with two occupants) France
Let us compare that with a similar house in a similar situation 50 kms from a major conglomeration. UK
Total: France: €147.86 per month = €1774.32 per annum UK: £379.87/ €474.84 per month = €5698.08 per annum On home charges alone the difference is €326.98 per month, which is €3923.76 over a year, i.e. over 3 times cheaper in France. Insurance Property insurance for the minimum of “third party” risks and fire is compulsory in France but is not expensive. Many notaires will ask for proof of insurance at the time of the ”acte de vent” (completion). Home and contents insurance: This is much cheaper in France, at about two thirds of the cost of in the UK. However, you have to be careful with this as French home insurance is not the same as the UK so what looks initially cheaper is not comparing like for like. For example: The cost of rebuilding your property is governed, as with many things in France, by the state and is based on the per sq. meter cost of building in your “département” - though this may not be what the builder actually charges! Also, the expression “tout risques”, literally translated as “all risks” does not mean the same as in the UK. Contents insurance ONLY covers items stolen from or damaged when in the home. It does NOT cover accidental damage as in the UK, so if you drop a tin of paint on your brand new carpet, it’s your problem. The insurance company will assume you were foolish enough to be carrying a tin of paint through your home. You must remember no personal possessions are covered outside your home. You can get this kind of protection but it is extremely expensive. Car insurance: Car insurance is however, very good value. Fully comprehensive includes the following: Third party cover Theft Fire Breakdown Any driver (sometimes age related) Personal possessions left in the car Automatic Green Card for travel outside of France Emergency insurance i.e. repatriation in case of accident or illness on holiday whether or not you took the car. Health Insurance: If you’re in the French Health care system, the “mutuelle” or “top-up” insurance is not as expensive in comparison with the UK BUPA type of cover. For a couple in their mid 60’s, the mid-range level of cover, which is more than adequate protection, is only about €120 per month for both of them and will include dental and eye cover, prescriptions, private hospital rooms etc. Beware, when the policy says e.g. 120% of cover, this means 120% of what the state will pay, not what the hospital or specialist will charge! Looking at costs overall, although the pound has fallen 15% against the euro, housing costs are only 31% of those in the UK, and with lower insurance and property costs, your money still goes a lot further. Another surprise for many moving to France is how much less they pay in income tax. Whilst the common perception is that France is a country with high taxation, the majority of expats pay less tax. In addition, if you plan before you move to France it is possible to shelter all of your investments from tax – even Inheritance Tax! Richard Bayle, European Development Director at Siddalls, says: “Our clients are always pleasantly surprised when they realise, with the right advice and planning, how much better off they will be when they move abroad.” And Richard can also speak from personal experience, having lived and worked in both the UK and France. Taking on the role at Siddalls meant a move back to the UK and even with the strong Euro, Richard and his wife have been taken aback at just how much more expensive living here is. “The big shock was how expensive general household costs such as utilities and council tax are, 3 times higher than in France, and of course when it comes to buying a house, even with the attractive exchange rate our money buys a lot less here in the UK.” Although property prices in France have gone up significantly in the past decade they are still on average around 50% cheaper than in the UK - except of course in and around Paris and some of the larger cities such as Bordeaux, Toulouse and Lyons, where you can expect to pay considerably more. Nevertheless, they are still cheaper than the UK and come with a better climate and a swimming pool! For those considering making the move to France, now is probably an excellent time to do so. The UK housing market is slowing but for those who have owned property for many years, they are still sitting on significant profits and now could be a good time to realise them. Another option is renting your British property out, which is a popular choice amongst many of our clients now living in France. Just because the economic outlook is a bit gloomy, it does not mean you should postpone plans to retire to the sun. Who knows how things will be in a couple of years? All we can be sure of is right now France offers a better and more affordable quality of life. Richard Bayle European Development Director Siddalls Email: enquiries@siddalls.net Tel: +44 (0)1329 288641 Visit: www.siddalls.net Authorised and Regulated by the Financial Services Authority. Siddalls is a trading name of John Siddall Financial Services Ltd. Independent Financial Advisers, John Siddall Financial Services is a wholly-owned subsidiary of the IFG Group Plc.  Wealth Tax – Not Just For The Wealthy? Will your British pension be taxed in France? What happens to your UK investments if you move to France? Is your French home subject to Capital Gains Tax? Retiring to France Home Page 
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