Sarkozy takes the view that financial ambition,homeownership, consumer spending and employment are neatly tied. He wants to see the French work harder, produce and consume more, provide efficiently for their retirement, and to own their own homes – a philosophy which has strong implications for the French property market.
If you’re interested in buying property in France chances are, you’re principally 
interested in a holiday home which is also a prudent investment. With this in mind, European Business Express spoke with French Mortgage consultant, Michael Hackney. We began by asking Michael about his typical client profile.
“What the buyer wants…”
“Our clients cover literally the entire range of socio-economic groups,” said Michael Hackney, “investors who earn £20-25k per annum - they perhaps work in construction or local authority administration - they have sufficient means to buy in rural south west or north west France at a cost of about 30-50K Euros.”
“They can’t believe their luck their luck that they are actually able to do it. At the other end of the scale, we are helping clients from the Gulf States invest in Cannes with properties valued at 3.5m Euros, and in Monaco, with one investment worth over 11m Euro.”
“The allure, for investors, is really an agreeable lifestyle. The French tend to go on holiday mostly in France. They enjoy very good coastal resorts, ski resorts, lots and lots of countryside. France is a huge country with many metropolitan areas outside of Paris, Aix-en Provence, Nice, Toulouse and Montpellier, for example. Another reason is that properties are not too expensive. Perhaps not as cheap as Germany though.”
“investors who earn £20-25k per annum... they have sufficient means to buy in rural south west or north west France at a cost of about 30-50K Euros.”
“France is still attractive to clients for a family holiday home, for investment, or perhaps for skiing. Much of the current demand is investment related. At the retail level, lease-backs have been a real hit, and it may be surprising for some to know that the leaseback in France is probably stronger than it has been in Spain. Leaseback is actually more of a French than a Spanish phenomenon. In France, 100 resorts are actively marketed with leaseback specifications – normally there is a return of VAT on the property, so long it is leased for 9 years.”
Low-Middle Income
“Financing in France presents a wide range of opportunity. Small freeholds are available for someone earning about £25k a year. Properties in this price range are cheap, but usually agreeable. Often they are found in the Mayenne, South of Normandy, the Limousin, Haute Vienne, and the Creuse. For your money you’ll get a house with a barn, probably a former country dwelling.”
“Shrinkage of the rural population over the last 30 years has left a high volume of empty rural dwellings. A house may not have been lived in for some years, or it has come up for sale because, not unusually, an old inhabitant has died, and inheritors want to sell it off. If you can buy for 30-60k Euros this would add the Brittany region to the list of potential areas for consideration. Brittany is riddled with fine villages, many of which have fallen into disuse – it’s a bit rainy in the northern part of Brittany, but not in the southern part.”
Middle Income
“For someone earning £35-60k per annum, typically what they look for, is a second home, which in turn they might rent out. Languedoc Roussillon, though not as attractive as the Cote d’Azur is the region of choice, with many hill towns offering properties in the 75-150k Euro range.”
“Conversion and letting potential should be considered when looking in this vicinity. Languedoc Roussillon is in the rain shadow of the Pyrenees, so it’s quite dry - it gets 25-30 weeks letting a year. If an investor is going to convert the property, their budget should be around £50 - £60 a sq ft., which is quite low compared with Britain. This is achievable, so long as the conversion specification is not finished to a very high standard.”
Researching A Property
“It’s important to have some idea about the kind of area you are buying into. There are some excellent French property websites to begin a search. Then the extensive hubs of low-cost flying airports, means that some regions of France are minutes by air, and most of France only 2-3 hours from home; allowing you to enjoy your place for the weekend. It’s worth mentioning that motorways in France are excellent, and the TGV – France’s high speed rail network is extensive and relatively cheap.”
“I would advise potential buyers to go down and have a look, spend a couple of long weekends getting the feel for the place, and find local estate agents using the website connections. Most estate agents speak English.”
Fees and Tax
“French estate agents fees are quite high – sometimes 10% of the value of the property. This means they’ll be prepared to spend quite a bit of time working with you. The fees that will be most obvious will be notary fees, the notaire being the legal official representing the seller to the buyer. The notaire is a self-employed Government official with a monopoly on conveyancing; they are also responsible for collecting taxes. In fact, the notaire’s cost is about 7% of the value of the transaction, and the notaire’s actual fee is about one seventh of this amount, the rest is tax. Where you see ‘Agency Fee Included’ this will not mean notary fees.”
“Notaries fees are about 7% of an existing property, and about 2.5% of the cost of a new property. There is also a tax on the taking of a mortgage in France – this will increase the notarie’s fees by 0.5 – 1.5 %. The tax is about 1.5% on a new property, as compared with 2.5% for the notaire's fee. For an existing (i.e. more than 5 years old) property it amounts to 0.5% of the mortgage amount compared to 7% for the notary”
“I would advise potential buyers to go down and have a look, spend a couple of long weekends getting the feel for the place, and find local estate agents using the website connections. Most estate agents speak English.”
NEXT ISSUE:
Our article continues when Michael discusses When to Buy, Returns on Investment, Building on Land and Commercial Property.
