Economy living

[glenton]

Excuse me if this has been covered before.

I am British and living in the UK, 42 and have a bungalow that I would like to sell and live in a less expensive way in France.

I have been looking at websites selling used static homes for between 7000 and 18000 Euros, site fees from 1500 to 4000 Euros a year.

Had email exchanges with a couple who allow living there for 12 months of the year.

The plan being that I could sell my UK property, buy a home in France and live off the remainder hopefully.

I am looking to live there 12 months of the year and will have no other property in the UK or France.

I am wondering what the legal implications are as I do not want to do anything illegal.

I just want to release the capital in my property allowing me a better life.

[AnOther]

Hi and welcome to the forum.

The first thing to say I think is that 23 years is a long time, and remember the state retirement age could well be 70 by then so best call it 28 years.

Unless you have a very large amount of capital left over from the sale of a UK property with no other income I cannot see how you will manage to eke out your resources for such a long time.

Although it is a matter of debate and some claim to be able to live on 2 basic UK state pensions (approx £10k/PA) very broadly speaking if you reckon the overall cost of living in France to be on par with UK you'll have some idea of what to expect. Similarly it is near impossible to find a home for savings which will out pace inflation.

Lets say for the sake of argument that you can live on £10k, and that you can inflation proof your savings, 28 years x £10k = £280k, will you have that sort of money ?

Also, whilst a static caravan might seem a good idea at the outset in the longer term I wonder if it would really fulfill you desire for a 'better life'

[glenton]

Thanks for the welcome and reply.

I appreciate your detailed answer.

After estate agent and solicitor fees I would have 200K left.

I am single, no pension or other income, no debts.

I would of course still have to pay the same bills that I do here in my property like water, gas, electric, TV license, Telephone, home insurance, buy a car, run the car, health insurance which I beleive can be 2000 Euros a year. Site fees and buy the mobile home.

I do see your point about the reality of long term living in a mobile home being a better life after being used to bricks and mortar.

[Albert the InfoGipsy]

Glenton,

Sorry to add to the doom & gloom, but how many years of UK NI contributions do you have? AnOther's assumption that you'll have enough to live on from a UK state pension in your old age may be optimistic. That means that your 200K would have to last until you pop your clogs.

On the bright side, if you look at long term bonds you can get some very good returns. Have a look at this, for example.

http://www.rockinghamretirement.co.uk/index.php?option=com_content&task=view&id=52&Itemid=50

[parsnips]

[quote user="glenton"]Thanks for the welcome and reply.

I appreciate your detailed answer.

After estate agent and solicitor fees I would have 200K left.

I am single, no pension or other income, no debts.

I would of course still have to pay the same bills that I do here in my property like water, gas, electric, TV license, Telephone, home insurance, buy a car, run the car, health insurance which I beleive can be 2000 Euros a year. Site fees and buy the mobile home.

I do see your point about the reality of long term living in a mobile home being a better life after being used to bricks and mortar.[/quote]

Hi,

       Sorry to be pessimistic, but to last out till pension age you would have to live purely on interest on your capital ,and NEVER touch the capital itself.  At present you could hope to get about 4% which gives 8000 pa. (you don't specify € or £ -but that is immaterial).  The problem is that if you took all 8000 then your capital would not increase, and you would gradually fall into the "inflation trap". Each year the cost of living rises by about 2%, but your income ,already at the low end for a comfortable life, would stay the same . There might be small increases in the rate of interest, but over 25+ years your purchasing power would inevitably be eroded by a large percentage. Unless you are prepared to live like a hermit, I don't think you can do it, without finding a way of earning a substantial supplementary income.

[Gardengirl]

Sorry, more gloom; some sites don't allow mobile homes after they reach a certain age. That would mean buying at least one replacement.  [:(]

[NormanH]

I think that  your aim 'I just

want to release the capital in my property allowing me a better life.

' would be shared with a large majority of people here.

The fact is that you have to look very carefully at what is important to you, and your lifestyle.

I know that my specific way of life, in a small  town  centre flat in large town with a much higher proportion of my budget than average  going on eating in simple restaurants, but with no car to run and only myself to consider works out cheaper in France(or did when I first came here)

Other lifestyles might be more expensive in one country or the other, but it is certainly not true to generalise by saying that life in one country is cheaper.

It depends on you.

At the same time I cant remember anybody who has enjoyed France without a steady and reliable income, either from a pension, a good job  or from a mixture of things such as some rental income, a small business or part-time job etc.

In other words cost your personal life style very carefully, and find at least two sources of income.

[woolybanana]

Well, it sticks in my throat, but I have to admit that I agree with Norman. However, he does have a second hand barrel for sale it seems, with all mod cons, including street begging rights, which migh provide a second income in the long term![6]

[Iceni]

[quote user="NormanH"]

I cant remember anybody who has enjoyed France without a steady and reliable income, either from a pension, a good job  or from a mixture of things such as some rental income, a small business or part-time job etc

[/quote]

I'm not sure that anyone enjoys anywhere without a steady and reliable income.

John

[Gluestick]

[quote user="gardengirl "]Sorry, more gloom; some sites don't allow mobile homes after they reach a certain age. That would mean buying at least one replacement.  [:(][/quote]

Absolutely correct. Furthermore, most statics do not last realistically much longer than 10 years from new: so since the OP is now just 42 and assuming average life expectancy, that mans at least three and probably four new static vans over expected lifetime.

Which means as they increase in acquisition cost, meanwhile the OP's capital resources are suffering from loss of purchasing power: and whilst a new static now represents circa 10% of capital (And could be 20% of capital), van num ber three may well be unaffordable: without considering van number four!

A major client operates a large touring and static van business throughout Europe: and did once manage a five star site in the South (med), where Mrs G and I stayed a couple of times 20 years ago: and the site owners were chucking off anyone with a van more than 8 years old then........

One Brit couple had a very dillapidated van: no capital and lived on minor pensions: very unpleasant scenario.

 

[glenton]

Thanks for all the replies.

I don't mind pessimism at all, I am a pessimist too. Well I like to hear both positives and negatives so I can make a realistic decision.

I have been working since 16 years of age and been working either 6 or 7 days a week up till now. Not taken a week off for a holiday in 4 years.

It has enabled me to pay the mortgage off but I now want a different way of life.

I have been paying my NI contributions all this time but have not been paying into another pension scheme.

The property I have is in the UK so it's £'s.

What would you guys and gals do if you were single, no ties and wanted a more relaxing way of life, trying to make £200k last. It does not have to be France.

[Gluestick]

France, dependant on region, offers a much better quality of life IMHO, than does the UK now.

If were in your position, then firstly I would evaluate what you can do, in terms of work skills and what you might like to do: and investigate work skills in short supply wherever you might target.

If France, then a first priority is language skills! Not just conversational tourist level but comprehension of written word, good everyday conversation and the ability to write.

Britanny, for example, is still groaning with Brits who sold up and migrated, kids and all, only really because property was extremely cheap: many have scuttled back, tails between their legs, as once they had renovated their dillapidated property and spent most of their capital on this and living, found they were unable to find any work: other than perhaps plucking chickens in an abatoire for minimum wage.

What I would do, probably, is firstly to hone those language skills and then rent out your UK property and travel around France for a bit until you decided which region and areas you prefer: and whether you can actually find some work in the area you would like.

Unfortunately, at your age, in France, you would suffer an instant problem with health cover: if you were not working and paying (Via your employer and yourself) cotisations (Social Contributions).

Bonne Chance et Bonne Courage !

 

[misplacedperson]

With that sort of money you could easily buy a house/apartment rather than a caravan. You will need to work though, both from the financial point of view and because otherwise you'll be extremely isolated and will probably ditch the whole idea as a result. Doesn't have to be full time, especially if you own your house outright and assuming you're not addicted to consumer tat.

My advice:

- learn French. Makes me laugh the way people think they can just roll up and get a decent job (or any job) when they don't speak the language and don't appear to intend to either.

- pick a tourist area. Your English is then in demand and as a result employers are more willing to put up with you speaking French like a vache Espagnole. I even get paid a 50€ bonus just for speaking my own language, bargain.

- if you go for the tourist thing, get some relevant experience first. Bar work, catering, maintenance, whatever. Look at working a season or two for a UK company before you commit to the move. They pay peanuts, but it's a good way to suss out where you like/what you could do.

[NormanH]

I would consider Eastern Europe if I were starting again.

[cooperlola]

I think I'd buy a non-static van and travel Europe for a couple of years before making any decisions about what to do and where to live.   I'd budget a small chunk of my capital to do some real exploring before I decided to spend the rest of my life on a caravan park!

I wish I were your age again and footloose.  At a minimum I would go for it if I were you.  You can always return in a few years if things don't work out and find some other job to do - you might even miss working by then (although personally I couldn't imagine such a thing.)

[woolybanana]

How about a camping car? Or a VW combi? With a bicycle slung on the back. Europe is your oyster then.

[Chancer]

[quote user="glenton"]Thanks for all the replies. I don't mind pessimism at all, I am a pessimist too. Well I like to hear both positives and negatives so I can make a realistic decision. I have been working since 16 years of age and been working either 6 or 7 days a week up till now. Not taken a week off for a holiday in 4 years. It has enabled me to pay the mortgage off but I now want a different way of life. I have been paying my NI contributions all this time but have not been paying into another pension scheme. The property I have is in the UK so it's £'s. What would you guys and gals do if you were single, no ties and wanted a more relaxing way of life, trying to make £200k last. It does not have to be France.[/quote]

I guess that I am qualified to answer that as I was your age when I made the decision to quit England and had a similar amount of capital which will soon run out, does that give you a clue?

I too had paid off my mortgage and had not had a holiday for the 12 years that I had been running my business apart from four weeks in Australia on my 40th when I cycled from Canberra to Sydney in the first week for 2 charities.

In your shoes, and I was! I would not even contemplate not working, your capital will soon evaporate and your mind will atrophie and probably your body as well, I have seen many people like this that either early retired from the armed services, or the police, ambulance or fire brigades for medical reasons, more often than not stress. 

When your money runs out and your home is in a country where you do not have family (and in France as a single you will be lucky to make real genuine friends) you will have a kind of stress that you have not experienced for many years if at all.

If you really want to change your life for the better then like me you need to think of some way that you can earn a living and avoid the kind of stress that you currently encounter, in your case (probably) an employer in my case customers. I decided to wing it and see what came up when I got to France after having first bought some land and built a house for myself, in the event it was good that my plan was flexible (read non existant!) as I was able to seize the opportunity of buying a property which I could extend and convert into 8 rental flats.

I also took the chance to take a year or two out and backpack around the world and it certainly gave me the time to reflect and see things more clearly.

As others have said the only true way to make £200k last is to not spend it at all and live on the income from it which at the moment is a cuppa tea and a bun per month, you need to find some way of earning money which can be topped up by the income from your savings whilst protecting the capital. Another way of looking at it is to say that you would probably spend an extra €4k per year if you didnt work with health insurance and the general cost of having leasure time, even with a low paid job or business you coud be bringing in €10K rather than spending €4k thus. I take this view with my UK rental property, it doesnt bring in a lot of rent although the return is now higher than savings but when it is untennated it costs me £300 per month.

It doesnt sound like you have enough to buy a rental property in England and also somewhere in France but you might be able to buy something in France that suits both purposes, I have a French friend who has been building houses for about 10 years, usually two semis on a single existing plot, he is starting to sell them off now as the defiscalisation has finished and there is no longer a question of assuranace decennelle, buyers are finding them quite attractive to buy as a pair with either a sitting tenant or their own choice of tenant next door, the income from the rented house. I think that the last pair sold for around €150000.

Editted.

As Cooperlola says go for it! You are young enough to start over again if it doesnt work out and dont have the responsibility of whether your decision affects the future of your family. I was 42 nine years ago when I made the decision and have no regrets even now when things are getting to a critical stage. 

[Panda]

Hello

I agree with Chancer, I bought a large house that had been split inpto appartments, I did them up and now have 4 rental units, one of which I love and would live in if I was still in France.  The other three bring in 900 euro per month, (1300 if all 4 are rented and living in one unit wasnt required).  The whole is worth about 160k euro so within your budget and you would then have an investment, an income and a job of sorts, people want something doing quite often!!

I lived in a static thorugh french winter once and it was hideous, dontg do that unless you are way south when summers will be hideous!

Panda

[Will]

That sounds like very good advice from both.

I don't know if any of those in search of a simpler life watched this programme. Although he obviously took it to an extreme, by trying to live without money altogether for a while, it demonstrated how difficult, if not impossible, it is to avoid all the necessities and obligations of a 21st century life (the sort of things that you will need in France, even more so than a rural vicar needs them in England). I can see that at a comparatively young age, simplicity might have real attractions at first but can easily develop into boredom and a desire for more fulfilment.

 

[Chancer]

[quote user="Panda"]

Hello

I agree with Chancer, I bought a large house that had been split inpto appartments, I did them up and now have 4 rental units, one of which I love and would live in if I was still in France.  The other three bring in 900 euro per month, (1300 if all 4 are rented and living in one unit wasnt required).  The whole is worth about 160k euro so within your budget and you would then have an investment, an income and a job of sorts, people want something doing quite often!!

I lived in a static thorugh french winter once and it was hideous, dontg do that unless you are way south when summers will be hideous!

Panda

[/quote]

Panda, thanks for posting your figures, I am really interested in them as I only had vague ideas in my head, your figures seem to bear out what I thought.

At the end I will have 6 or 7 rental flats, 8 or 9 if I choose to live elsewhere and whilst my capital investment might be lower (I hope) my rental return and what I think that the place will be worth correspond pro-rata with your figures.

French rental properties do seem undervalued to me, taking your example an investor who had to borrow the whole amount (I know you cant in France) would only be paying €600 per month interest and life insurance at current rates, OK I know I havnt included he capital repayment but lest not forget that this is a growing investment as well as rent free living and some money on top.

For an investor that would be putting in his own money, what is he likely to get net of taxes if he left the money in a French savings account? - 2% perhaps, say €266 per month, call this the opportunity cost, i.e. the return on his capital if he were to do nothing.

Compare that with the rental return of  €1300 per month, deduct the €266 and you are still over €1000 ahead and have an increasing asset.

I really cant understand why the French agents stick to their ridiculous ways of valuing e investment property, all the ones I know multiply one years rental income by 10 and your figures bear that out yet it yields a 10% return on investement plus capital growth.

By my reckoning in the current market with low interest rates your property would be a steal at 50% more and I reckon that is still far lower than what the equivalent buy to let property would be worth in the UK.

Does anyone else have any views/experience of this even from a UK perspective? Perhaps Peter Danton may ahve something to add.

[Panda]

I agree totally, it was valued recently and done on a square footage basis, apprently, as well as income.  The place is huge though, 2 x 40 sq meters, 1x 60 and 1 about 100 sq meteres, being 2 x 1 bed, 1 two and 1 three bed.

In the UK I'm currently looking at a 160k investment bringing in 750 pounds per month so not close but the capital gain potential is better (usually).

It's hard running the appartments remotely though so that's my choice at the moment.. 

[Gardengirl]

What a lot of good ideas! As a young single chap I think it sounds great to either rent out your house, have an income from it  or sell up and 'invest' and travel around to see what and where you'd like to live. I don't think the earlier advice was pessimistic, rather it was realistic.

If you fancy France, great, but as Norman suggests, eastern European countries seem to be good places to set up at lower prices. Many opportunities are in very rural parts, so a very different life would open up, as in some of the very rural areas of France.

I think your future's looking brighter already!  [:D]

[Gluestick]

Well JRC, our investment (Ha ha: Rire copiously) property in UK suffers from being located in the most desirable partsof town and in the South where prices are still silly.

Meanwhile rent rolls have fallen or stayed static: whilst all costs (Insurance, maintenance etc) have risen considerably.

Presently the yield (Gross) is circa 5.2%. The net yield is microscopic, when money cost (Whether it's yours or someone elses, doesn't matter) is extracted.

So it is only really the Capital Gain which is attractive for UK residential investment property.

Not too bad perhaps: but nice Mr Cameroon, now plans to hike Capital Gains Tax with no Taper Relief or Indexation.

Rent Rolls have been impacted in UK by get rich quick fools, trying to amass portfolios of Buy 2 Lets when money was easy; and paying top dollar (Or "Retail if you like) and much of this has been sold at fire sale prices or liquidated, causing asset values to fall and a glut of rentable property on the market, depressing rent rolls further.

Now, if I had my time again, I would have invested in Northern towns such as Liverpool, where two up two down terraces were selling at auction for £8K-12K and producing circa then £60/week. (needing pretty complete interior refurbs and windows).

However, I could have purchased roughly 5-6 units (including refurb)  for the same capital as one unit down here! And achieved much higher yields and capital appreciation.

That said, it's a long way from here and the M1 is my most hated motorway: long way to go to resolve typical tenant problems.

 

 

[velcorin]

French rental properties do seem undervalued to me, taking your example an investor who had to borrow the whole amount (I know you cant in France) would only be paying €600 per month interest and life insurance at current rates, OK I know I havnt included he capital repayment but lest not forget that this is a growing investment as well as rent free living and some money on top.

For an investor that would be putting in his own money, what is he likely to get net of taxes if he left the money in a French savings account? - 2% perhaps, say €266 per month, call this the opportunity cost, i.e. the return on his capital if he were to do nothing.

Compare that with the rental return of  €1300 per month, deduct the €266 and you are still over €1000 ahead and have an increasing asset.

 

I spotted this Chancer 15 years ago. We've a accumulated a quite a few properties over the years. Always in big towns, in Brittany. That's where my wife's family is from, so good contacts for tenents(no agent fees), and artisans. I've never taken the capital gains into consideration when working out investment criteria, it's unreliable, and heavily taxed. However, the rents are very high, compared to the capital investment. I normally expect a 7-8% return. (Milk the family for maintance work!)

3 things you have to consider. Ownership, Tax and Insurance. We don't insure the tenents any more for non-payment or damage, too expensive. And Tax. Phew, because we're both earning well, I think we're just about paying enough to cover Carla's flower bill. The missus is sole owner. This was a hedge against worst case scenario of insolvency. I couldn't be touched. Downside is, obviously she takes everything! Now that is trust.

[giteowner]

If you started working in UK at 16 and are now 42 then you are still short of the required 30 years of payments to get the UK full State pension.

And it would be taking a massive leap of faith to think that it will be possible to live in France on a UK state pension when you are 65.