Logan

[quote user="Clair"]Rent out a UK property, keep the proceeds in the UK and fail to declare it in France? [/quote] A few years ago I was approached by the head of my Maison de Impot informally, during a period I was under an unpleasant control for business reasons. He asked me if I would be interested in a position investigating British people living in France and carrying on 'illegal' financial activities in UK. In other words undeclared income and capital gains stashed in Britain. I was offered civil service status, with good salary, expenses and pension benefits. I declined politely citing business commitments. However I have always assumed that the Impot have many such people still beavering away.

[quote user="Sprogster"] Logan, If you buy a property in Florida make sure you acquire it in the name of a non US Company, to avoid horrendous Federal Inheritance Tax/Death Duty liabilities. [/quote] Thank you Sprogster for your post. I knew about the need for an off shore company. I also agree some of the costs you mention are quite high. The worst of these personally is medical insurance. However you need to assess the likely capital gain in the future and the winter benefits which may make it justifiable. I am not so bothered about the quality or otherwise of the landscape. I simply seek a warm dry winter climate on the coast, principally for heath reasons. How did you find the rental market worked with your property? WJT. Interest rates effect the way currency is traded internationally. The euro is high right now because Trichet continually states he will not reduce eurozone rates whilst there is an inflation risk. Since that risk is increasing, investors in euros can be sure the value will keep up in the medium term. The UK central bank on the other hand sends messages they need to cut rates because of market conditions and the credit crunch.

[quote user="cooperlola"]Florida!  Bloomin' eck, I'd rather live in a hut over here.  Sorry Floridians but having been there for the first time last year, I was singularly unimpressed - not by the people, but by the landscape. [/quote] I don't want to live there Coops. I want to find somewhere new for 3 months in the winter. I usually go to Spain but it's getting a bit clapped out. Florida's investment potential right now looks very positive.  

[quote user="Alan Zoff"] I guess the same holds good today so, unless you can afford to gamble, before you commit yourself to a substantial euro liability (e.g. sign the contract on your French house purchase), make sure you are holding the required sum in euros. Don't defer conversion until you have to make the payment. [/quote] French property bought in Sterling right now is not a wise move. Far better buy yourself a nice house in Florida. I have been searching the market there and there are some great buys with Euros against the Dollar. The sub-prime chaos is causing a distressed sale sell off. I am waiting for the Euro to hit 1.50 to the dollar. Then it's Florida for me for my future winters. [:)]

Read more here:- http://en.wikipedia.org/wiki/Icarus_(mythology)

[quote user="TWINKLE"] The man is obsessed with his image - he loves the limelight and I'm often reminded of Icare.  He could end up getting his wings burned too if he gets too close to the flashbulbs. [/quote] I think you mean Icarus Twinkle. Its a great comparison and yes, pretty inevitable. Crash and burn sums him up I regret to say. Still he still has 4 and a bit years to prove himself  yet and then what? As I cast my eye around I don't see inspiring replacements in the wings. Doh[:(]

There is a complete dearth of leadership in the western democratic world at the moment. Bush is a lame duck and has lost all moral authority. Brown hasn't a clue, Sarko is consumed by love and seems unable to push through much needed reforms. Italy is bankrupt and Germany thinks only of itself. China is taking over the world economically and Russia is getting increasingly verbose. I am really concerned the world will drift into conflict with Iran by default. Then there is the ever present danger that Pakistan will be sized by militants. This is an opportunity for Sarkozy to show true statesmanship on the world stage. Unfortunately he has yet to shown he has the ability to do anything much but appear in the gossip columns.  

He is fast becoming a comic figure. I really believed he might actually do something in office. More fool me.[:(]

I think you will need to head for the highest peaks of the Pyrenees to guarantee snow or of course the Alps. The Auvergne does get snow in the winter but not guranteed below 1500 meters or so.

You are right WB. Modern life is unfortunately like that. If you live in France you should assume that all your personal activities are monitored. telephone, web mail, snooping neighbours, postmen, shopping behaviour, vehicle ownership, kids in school, et al. Its not a subject that is often discussed. I personally hate it and as a concequence try to limit the amount of my personal information in the public domain. In the end you have to either accept it or move to an atol in the South Pacific and live on coconuts.[:)] Even this forum will be monitored by someone[6]

Not sure I understand your point WB. Do you mean policing in Britain has become similar to that of France? i.e.: Under the control of the Ministry of Defence with police officers required to live in compounds, separated from the communities they serve and dependant on paid informers. Or do schoolteachers who read the Guardian act as informers for the government? I am confused as well as quite possibly naïve.

France has a culture that policies itself. Gendarmes are not really pro-active. It was the same in Spain during the Franco period. Denunciation is also a common form of both revenge and ingratiation. The Gendarmerie relies on information from locals since they do not fraternise themselves and are very separate from communities by design. It is not policing as you know it in the UK. They are part of the military complex and are not a civil service. Neither do they bare any relationship to your average community bobby in Britain. The French don’t really understand our Anglo-Saxon wish for personal privacy with our own affairs. They would likely suspect you have something to hide. Passing on information to the ‘authorities’ is common practice. The postmen are the worst offenders.

I have been around this problem of fluctuating exchange rates for long time. Sterling has the ability to recover quite quickly. However it depends on how the UK economy is managed. The present UK government has a good track record in that respect. I expect Sterling to come back to near previous levels in the third quarter of 2008. What will prevent that is a serious global recession particularly in the USA. I repeat my advice. Wait a while; it could save you between 5% to 8% of your purchase. You also can also be sure others will also do the same. This will result in a slowdown of property sales and prices levelling off slightly.   

Apologises, I was side tracked by another thread debating currency. I did indeed mean investing in Sterling and the yields that produces over time. If you have an income in Sterling tot up the annual yield and the value it was exchanged into Euros. Then calculate the average monthly income for that period. I find consistently that over a period of 5-7 years although exchange rates vary enormously the average income continues to maintain value. Currently Sterling looks a bargain for investment especially bought with Euros. Over the long term yields should remain constant and continue to increase. However Sterling may well fall even further this year as the UK economy struggles. Of course if you buy a French property now, effectively you are buying Euros at a very low rate. Since property values in France are unlikely to rise much above the rate of inflation over the medium term the investment is poor. Its a life syle decision not investment, although your capital is perfectly secure.

When you evaluate your loss if any due to the Sterling/Euro exchange rate you should calculate values annually or even over the economic cyclical cycle. By that I mean 7 years. You will probably find that actually Sterling and therefore in essence your income holds its value internationally very well. Although currently Sterling is historically quite low against the Euro so is the Dollar and most other currencies. I advise investors/pensioners to hold their nerve and remain in Sterling if you can or even buy. You will be sitting well when the wind of change blows in the other direction. It always does eventually. Think medium to long term not short.  

When you evaluate your loss if any due to the Sterling/Euro exchange rate you should calculate values annually or even over the economic cyclical cycle. By that I mean 5 to 7 years. You will probably find that actually Sterling and therefore in essence your income holds its value internationally very well. Although currently Sterling is historically quite low against the Euro so is the Dollar and most other currencies. I advise investors/pensioners to hold their nerve and remain in Sterling if you can or even buy. You will be sitting well when the wind of change blows in the other direction. It always does eventually. Think medium to long term not short.

[quote user="Grecian"]  but if the credit crunch starts to bite in euroland, then I think they will have to cut interest rates, and hopefully this will then weaken the value of the euro. [/quote] In Euroland the worst aspects of the credit crunch have been avoided. By that I mean EU financial institutions who have not bought derivative instruments from the US. However there will be a knock on effect from elsewhere as consumers rail back investment.  I do agree there is more to life than money but wise investments make for a more comfortable one.

The Sterling value against the Euro is related to UK/EU interest rates. Most forecasters see interest rates in 2008 falling by 1% in 4 x 0.25% cuts spread over the year. Hence the recent falls because the EU central bank has stated they will not reduce theirs. However the UK economy is still performing well and inflation remains a problem. So the question is can the UK central bank keep cutting rates in the teeth of rising inflation? I don't think so since their mandate from government is to keep inflation at 2% of RPI. The only real tool in their armoury is interest rates. Put them up to choke off demand or lower them to stimulate growth? My bet is they will do a bit of both. So my prediction is for Sterling to rise against the Euro in the third quarter of 2008. We shall see. 

[quote user="DerekJ"]Sprogster. You've worded your reply much better than I did mine but basically we have expressed a similar view. It is this hope that we will be in a strong negotiating position that is still tempting us to make another house hunting foray in a few months time. If the negotiating strength doesn't materialise I guess we will be walking away from any French house purchase. We very much still want to buy a second home in France but we don't intend to throw money away either. [/quote] My advice to you Derek for what it's worth is do lots of research in your preferred region of France. Negotiate severely the price of a house you like and intend to keep for it's lifestyle benefits not investment. Think in terms of a minimum of 10 years ownership. You should then expect a modest capital gain of a minimum of 15%-20%. It could be more but don't expect it. Do not buy until Sterling comes back to 0.68-70 pence to the Euro. If you follow these rules your investment will be fine. Buying in France is not and never has been a way to make serious money.

[quote user="Frederick"]Sorry Logan     Should be "Fair Value "...Pound is 12% above Fair value ?[/quote] The concept of 'fair value' is explained here. http://emagazine.credit-suisse.com/app/article/index.cfm?aoid=178976&coid=90&fuseaction=OpenArticle&lang=EN The value of Sterling against the Euro currently is near or approaching its so called 'fair value'. Personally I dislike this term because it's always subjective how a countries economy is performing. What I do know is that political pressures often distort currency values. The Governor of the EU Central bank seeks to keep the Euro high. Most EU political leaders are desperate for a weakened Euro. This is all very similar to the currency exchange crisis of the early 1990's. The strong DM caused a major economic recession in the EU eventually. Investors in Sterling such as I caught a cold which lasted for some years. That’s one of the reasons why there has been a recent flight from Sterling internationally. The German Central Bank was wrong then to keep the DM high and today it’s also wrong for the Euro. Nothing new under the sun. [:D] PS: I think that 12% above fair value relates to the US Dollar not the Euro.

[quote user="ams"] In the region where we live 17, land for housing is in short supply to the extent that land for building has more than doubled over the past 18 months. Typical prices are in excess of 80€ per m2. In addition the cost of building basic houses has risen by more than 22% over the past two years. This is essentially due to the rising prices of basic commodities, cement, steel etc.   ams [/quote] That valuation seems excessive 'ams'. Although there are many factors in play, particulary in coastal regions such as Charente-Maritime (17). Property values in France are very regionalised. Factors such as availability of employment vary considerably. In essence if there is lots of work available and the local economy is doing well property values will reflect this. In rural Limousin where employment is hard to find you will find cheaper property especially building land. Property values also reflect incomes which in some parts of France are very low.

The housing market in France has become similar to that of Spain. i.e. an over supply of new property and relatively slack demand. It's slightly different in that Spain has built huge amounts of terraced houses and apartments in concentrated costal regions. Whereas in France little box type houses can be easily, cheaply and quickly built on masses of available land. That means old and resale properties have to compete in the same market place. Result.... the new properties sell first because developers discount to shift supply stocks. Anything else struggles to sell especially if asking prices are high. French people will generally not touch old properties because they see them as out of date money pits. That leaves only the romantic Brits and Dutch. That market is now drying up due to the credit crunch. So my prediction for the housing market in France for 2008 is stagnation generally with little or no capital appreciation. I do not anticipate falls in values in France unlike the UK and Spain where a market correction is long overdue. As for Sterling I think it will remain depressed against all currencies especially the Euro for most of 2008/9. The ECB intends to keep interest rates up to combat inflationary pressures in the EU zone economy. The UK Central bank will need to cut rates to stimulate a flagging economy. Hope this helps.  

Whilst we prepare for our Christmas spare a few thoughts for the homeless of France. Even here people slip through the social net. http://news.independent.co.uk/europe/article3276241.ece

It seems the speedcheckers do vary this last one got me almost up to 1 Mg my correct contracted speed. I think I will stick with my current provider for the time being. Thanks again for your help. 

I have tried that link ErnieY but my firewall will not allow the results! After doing some more research it seems fairly general that nobody actually receives their advertised speeds. That applies equally in France, UK and Europe generally. I cannot imagine any other product that can advertise one thing and provide another and get away with it. I think this is one for the ECM to look at since the ISP's plainly are operating a price cartel in France at least.