Marion Sauvebois speaks to property and finance experts to offer some positive advice for French house hunters…
Ah Brexit… these days you can’t take one step without catching an earful of shudder-inducing news bulletins, a glimpse of an apocalyptic headline, or a jagged graph nosediving into (presumably) post-Brexit oblivion. Those of you who responded to FrenchEntrée’s Brexit Survey did not hold back about your concerns. From the fall of the pound to pension funds, it’s true we’ve been plunged into the great unknown in the wake of the referendum.
As the powers that be debate, squabble and nitpick about the future economic and social implications of leaving the EU, and what negotiations may entail for the British public, it’s easy to understand why some would feel adrift.
Many have chosen to ward off any rash decisions or delay their impending move to La Belle France indefinitely. No fewer than 41% of those polled admitted that the vote to defect from the European Union had impacted their plans to buy a property in France.
While playing the waiting game may seem sensible, the pre-Brexit lull could be a golden opportunity to get your eggs in a row, take the plunge and seal the deal on you dream home in the Hexagon. All you require is careful planning, and a little creative thinking.
Refocus Your Priorities
“Now may be the time to think about your French property as an investment.” says Nadia Jordan, bespoke buyer’s agent at Foothills of France. “Buying property outside of the UK allows you to spread your investment load in another currency as well as to keep capital in a country which is still part of the EU. Hence, if the UK economy struggles in the wake of Brexit, you will have spread your risk and returns. The Eurozone might be the future and France has always been a secure investment for bricks and mortar but it could also prove to be a very canny one in the next few years. The type of French property to consider since the Brexit vote, however, may be different to the traditional British property dream of the last few decades with more focus now on income potential so as to hedge against any currency fluctuations and economic uncertainty.”
“I’m certainly seeing a spike in interest in so-called buy-to-let properties, whether that be for holiday rentals or longer-term lets,” continues Nadia. “Equally, for those people looking to move to France permanently, there has been an increased interest in properties which have the potential to also work as a business along with providing a certain lifestyle. This means that buyers are looking for large properties with flexible layouts for a variety of purposes, whether for a touristic project, outbuildings for a studio, numerous rooms for bed and breakfast/hotel accommodation, an attached gîte or workshops.”
“There is, however, no doubt that Brexit is going to create more paperwork for British buyers in France,” adds Nadia. “And there will likely be more hoops to jump through. Hence, if you’re seriously thinking about buying in France, don’t delay because nothing is going to change immediately but that may not be the case longer term, and it’s likely to get more complicated. British buyers might also find it harder to get a property loan in in France, or at least it may mean paying higher mortgage rates than EU members. Banks in EU countries view non-members differently and Americans or Australians are typically unable to borrow as much as Europeans, and often at a higher interest rate. The minimum deposit required for a mortgage in France is usually around 20% for European buyers whereas it can be as much as 50% for non-EU citizens.”
Don’t Play the Waiting Game
“If your started budgeting pre-Brexit, you’ll effectively have less money to spend on your dream property; but France is a large country with huge variation in property prices,” says Annick Dauchy, FrenchEntrée property business development manager. “So why not expand your search or look at a more affordable area? Driving less than an hour can often mean a big difference in price”
“There are still some very attractive deals in Limousin, for instance, and with Limoges airport offering flights from Stansted, Liverpool, Nottingham, Manchester and Southampton, it’s an easy trip. Brittany also has some very interesting offers if you move away from the coast, and is easily accessible with ferry crossings to Saint-Malo and Roscoff. You can treat yourself to a house in Cotes-d’Amor, in northern Brittany, with a plot of land for less than €70,000. Dordogne is still very attractive too and with regular flights from five British airports to Bergerac it’s ideal to get away for a short break.
“When thinking about buying, make sure to narrow down your list of wants and needs, to avoid time-wasting, stress or disappointment. How far from the airport do you wand to be situated? What sort of lifestyle are you looking for? Do you want to settle in a strong British or Anglophile community? The answers to these questions together with your budget will determine where you should be looking. Finally, if you like a property, don’t be afraid to make an offer. The French legal system protects potential buyers well and, in any case, you have a cooling-off period of 10 days. Brexit or not, France will always be a good place to invest in property. If you decide to sell down the line you will no doubt find a buyer after a slice of French paradise. If you like it, buy it!”
Don’t Keep Your Eggs in One Basket
“There are steps you can take to protect your finances from the uncertainty surrounding the UK’s exit from the EU,” says Carrie Richardson, marketing coordinator & administrator at Blevins Franks. “We’re finding that many UK residents who had been thinking of moving to France are acting now, so that they are resident in France before Brexit is implemented. Sterling may continue to be affected as Brexit negotiations unfold, but we cannot know to what degree or when the exchange rate will start to improve. So you need to consider what currency to hold your investment assets in. Ideally you should receive some income in euros so that you’re not making a currency conversion every time you take income in France – though you may want to wait for a better rate until you switch assets to euros. What you need is an investment structure that has a multi-currency facility. This would allow you, for example to invest in sterling now and switch to euros (if you with) at a later date. It should also give you flexibility in how you take withdrawals.”
“For many people, Brexit will have no impact on how they’re taxed in France, or taxed in the UK on French assets,” explains Carrie. “If you live in France, the same tax rates apply to all residents, regardless of nationality. If you receive income from the UK, tax treatment is determined by the UK/France double taxation treaty. The same applies if you are a UK resident and have French source income. Such double tax treaties are agreements reached between to countries, they are independent of the EU and so are unaffected by Brexit. If you’re moving to France to work, you may e able to take advantage of Article 155B of the French tax code, which provides special tax incentives for individuals coming from overseas to work in France. Following Brexit, the French government said that it wanted to make France Europe’s ‘most favourable’ fiscal regime for returning expatriates and foreign executives. The tax benefits of this special impatriates regime have been extended to eight years from January 2017.”
Always be One Step Ahead
“Sterling has taken a significant hit since the UK voted to quit the EU last June,” says Mar Bonnin-Palmer, senior key account manager at moneycorp. “Since then, it’s remained incredibly volatile. Once Article 50 was triggered, a period of two years opened to negotiate the terms of Brexit with EU states. And during this process we are likely to see more volatility. However this shouldn’t ruin your dreams of buying a property in France. While it’s difficult to foresee the exact trend of a currency, there are things you can do to minimise the impact that currency movements can have on your transaction. By opening an account with a foreign exchange specialist – such as moneycorp – you’ll be able to get some guidance on the market enabling you to plan your payments.”
“There are many currency tools you can use. A market order allows you to target a specific rate of exchange that’s not currently available in the market. A forward contract can lock the exchange rate for up to two years in advance of a payment. It’s a good idea for those who want the peace of mind of knowing the exact price they will pay for the property. Alternatively, it’s also a good tool for those who want to take advantage of a positive movement on the exchange rate before the payment is due – even when funds aren’t available. There’s also the Track a Rate option/ we’ll watch the market, on your behalf and you’ll be notified by email or SMS when a currency reaches your desired rate.”
.Originally published in issue 120of the FrenchEntrée Magazine
If you’d like any advice on purchasing property in France, or to get started with your property search in France, please do not hesitate to contact the FrenchEntrée Property Team call + 44 (0)1225 463 752 or email: [email protected]