Buying in France Pro's & Con's

[BobJ1973]

Hello All,

We're about to retire and fancy spending a few years in France, but are concerned by the high levels of Agency and Notaire fees, which could make a real hole in our finances, were we to return to the UK in say 5 years.

With the UK housing market showing signs of continued growth recently and the sluggish French housing market, our £250K budget could become a problem in being able to afford a similar 4 Bed property if we return. I'm considering whether renting as appose to buying might be a better option in view of the relatively short period we might want to be abroad.

I'm looking for any advice on the pro's and con's of Renting v Buying given our thoughts that we may return to the UK in say 5 years approximately.

Thanks in anticipation

Bob J

[idun]

The buyer usually pays the notaires fees and agency fees (if there are any). So that makes a hole in their spending power not the seller.

Five years, I'd go for rental. The other thing is that if you don't like where you are, you can move on, or move back.

[NormanH]

In the case you describe renting is by far the most sensible option.

You have good security, you are free to move if you want to try a different area, and you will not be wasting money on legal  fees.

Property taxes are cheaper, since you only pay the taxe d'habitation, the other slightly larger part being the responsibility of the landlord.

Plus you don't have to sell your present home.

[mint]

Apart from anything else, it might take you all of 5 years to sell your French house when you are ready to move back.

We know people who are now on their 6th year trying to sell, one German friend who needs to sell (her house is by no means over the top pricewise) and has waited over 3 years for a couple of viewings and another couple who wants to move back in about 3 years and wondering whether to put their house on the market straightaway.

Renting, on the face of it, would be the MUCH better option.

[Pickles]

Rent. There are a lot of properties to choose from, and if you get tired of an area you can move on, and you can move out to France as quickly as you want, rather than slogging round trying to make the "right" purchase. At the end, you can choose when to come back, and you don't have to worry about whether the French house will sell on your timescale. Depending on where it is, a French house might not go up in value during the next 5 years. Don't even think about it.

[Sprogster]

According to a book recently published in France written by two French economists that has got a lot of people talking, French property prices will continue to gradually fall for the next ten years and rural property will suffer the most. This tallies with an OECD report that says French property is still overvalued.

Also you are quite right in identifying the high purchase costs associated with French property, so I think if you just bought for a five year stay you would run a considerable risk of making a loss and not be able to afford to get back on the UK housing ladder.

Another consideration is the exchange rate risk if the £ continues to strengthen against the Euro.

I think you probably answered your own question in that the sensible answer is rent!

http://www.french-property.com/news/french_property_market/house_prices_fall_10_years/

[YCCMB]

And I understand why nobody has mentioned this, given current trends, but if you want to sell after 5 years and the value of your property has increased, then you will have CGT to pay on the "profit" so that will wipe most of it out!

I don't know where you live in the UK, but if the bubble doesn't burst and the "London effect" ripples ever outwards, you will have more to worry about than sellers fees and CGT. I've seen various reports suggesting that in the capital, average prices are increasing by £4k a week. Yes, that says week. And it also says average.

[nectarine]

I'd say rent out your UK home and use the money to rent somewhere in France. You're in a win-win situation ... if you don't like it you can easily move back and your UK home remains yours.

[Beckett]

If you're already contemplating your return in 5 years, and would be selling your UK house to buy a French one, then renting is clearly the sensible option. UK house prices will probably continue to rise whereas French seem to have stagnated, so you'll be left behind if you sell up here and buy there.

And, as others have said, you may well be left with a property that's hard to sell when you want to move back.

Do I sense that one of you is keener on making the move to France than the other? If so, that again is an argument for renting.

Depending on your finances, I think you have two options:

1. let your UK house and rent in France, which will give you time to decide whether you want to make a permanent move and sell up

2. let your UK house (unless you live in an area where prices are dropping, letting is the only sensible option) and buy a cheap house in France to do up.

[BobJ1973]

Thanks for the replies. It would seem Rental is the recommended option, and I've had a look at the Immobilier | Annonces immobilières | Achat, vente immobilier avec Logic-immo.com website which has many properties for rent. This one is typical of the type of property we'd be considering http://www.logic-immo.com/detail-loc...1c8fd7ad97.htm

Can't see with my very limited French from the ad, whether this property

is unfurnish and if so would this normally be available for a minimum

of upto 3 Years?

I'm assuming the properties under the Tabs marked "Louer" and then

select "Location" are for longterm rental and if so, is the quoted

figure the rental price for a month, which I'm assuming is the case and

what does the (1) next to the price signify.

We will have a reasonable income from pensions, so I'm assuming that can

be used rather than salary to meet any income requirements.

Yes we would consider letting our property as one alternative, although as we are in the Northwest, rental income isn't that great and management fees and income tax will reduce this further. We've also considered a french new build as another option as I understand Agent and Notaire fees are lower, and I'd assumed the built house would have a higher value as in the Uk, but my assumptions maybe wrong on this. Any experience of buying Off-Plan.

Thanks Bob

[Pickles]

[quote user="BobJ1973"]

Can't see with my very limited French from the ad, whether this property

is unfurnish and if so would this normally be available for a minimum

of upto 3 Years?[/quote]

The standard unfurnished rental is for 3 years. BUT the tenant can give the requisite notice AT ANY TIME.

[Quillan]

When renting unfurnished it can often mean exactly that. There will be no curtains etc and you may find the kitchen has just a sink although all the power points for cooker etc will be there as will any plumbing for washing machine etc. You literally get just a kitchen sink and a bathroom. I think renting is the right option as well.

The other point is nobody really can tell the future. Some people think Hollande is a one term President and will be out on his ear next time round and it will depend on who gets in next time round as to how the economy will perform which in turn effects house prices just like in the UK. For people to say house prices will continue to fall for the next 10 years is rather stupid because nobody knows. I can however say that a house I know was bought for 230,000 Euros six years ago was advertised for 200,000 Euros for three years and sold for 180,000 Euros this year and it was a nice house.

[NormanH]

The advertisement you show is unfurnished but in the kitchen there is a hotplate and extractor.

In the garage there is a laundry area.

unfurnished lettings are for 3 years normally with the possibility to extend 3 years then  another 3 years.

The landlord has to respect this, but the tenant can give notice at any time with a notice of 3 months by registered letter.

At the beginning you usually have to pay a month's rent in advance, plus a month's rent as a refundable deposit.

If you go through an agent they will also take a commission of about a month's rent payable once.

The one possible problem will be that you have to show that you have sufficient income and not all French agents understand UK sourced income such as pensions and rental.

[suein56]

[quote user="BobJ1973"]... is the quoted

figure the rental price for a month, which I'm assuming is the case and

what does the (1) next to the price signify.

[/quote]

The (1) is explained at the very bottom of the advert and it does indeed mean that the sum mentioned is the monthly rent.

As I know the area and that particular estate agent quite well please send me a pm if I can be of any help.

Sue

[Sprogster]

Bob, although with buying a new build agency and notaire fees are usually lower, that in part is to defray the VAT(TVA) cost added to new build prices of 20%. So when buying new build the price is inflated by 20% and in a stagnant French property market you may not recover that when you re-sell. 

[BobJ1973]

Thanks Sue for the info, it was just a sample property, as we are still a little way off the move, but it's one of the areas we particularly like having spent some time in Locmariaquer just a few years ago.

Regards

Bob & Aileen J

[BobJ1973]

Thanks everyone for all the helpfull advice. Its prompted a conversation with my

local estate agent this afternoon on the subject of letting my property

in the foreseeable future. My son is in the RAF and has just spent

almost 3 years in Gibraltar enjoying the sun, but whilst overseas, he

was renting out his own property in the UK. Sadly he experienced some

problems with tenants, which had slightly put us off the idea of doing

something similar ourselves.

Obviously like so many other people, we were also attracted by the far

better value for money for property in France in the areas which we were

attracted to, so hence the thought we would purchase.

It was only when I started to investigate the Agency & Notaire fees

that I realised the massive difference to the UK system. 3% total in the

UK for Solicitors & Estate agents fees can quickly be covered, but

anything upto 15-20% in France for what would be at best a short sojourn

was not realistic.

Thanks again for all the replies, I'm sure I'll be calling on your collective wisdom in the coming months.

Regards

Bob & Aileen J

[BobJ1973]

Thanks for that input Sprogster, that has just about confirm my thought over the last 24 Hours. Renting it will be !!! 

[suein56]

[quote user="BobJ1973"] Renting it will be !!!  [/quote]This site is very useful : http://www.leboncoin.fr/locations/offres/bretagne/?f=a&th=1&ret=1&ret=2&location=56370.

You just input the post code of your choice and nearly all private rentals and most rentals through agents appear.

Before buying we rented privately a house for almost 7 years as we did not fulfill the necessary criteria at the time for renting through an agency. The rules and regulations for which can be quite stifling. Hopefully in this economic climate some leniency might have crept into the situation.

Sue

[Judith]

Late coming to this, but, if your stay is not likely to be permanent, do not consider buying ... rental is the best ... houses are NOT selling fast here ... we've had one for sale now for coming up to 4 years ... it is much harder to sell than to buy.  And your projected 5 years may be shorter than you think (you may not like living here !), and you may never get your money back on such a short timescale .......

Other than that, I can only agree with most of the comments already on here.