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Articles updated 4th of September 2009. Information should not be seen as adviceA place in the sun has never sounded so appealing after what can only be described as an unpredictable but miserable summer here in the UK.
For those of us who have always dreamed of owning a foreign holiday home in an accessible country now is probably a good time to think about buying a property in France.The FNAIM (Fédération Nationale des Agences Immobilières) national average house price index dropped by around 10% during the second half of 2008, with greater price falls in the South-East and Alps. This downward trend slowed during the first quarter of 2009 before flattening out. July even saw a month on month rise of 1.3%.
Looking forward, whilst there remain a number of structural economic uncertainties, on balance it is more likely that, for the time being at least, we have seen the last of the recent correction in house prices, even if conditions are not conducive to another unsustainable price bubble.
Reasons given in the FNAIM July 2009 housing market report include:
The French mortgage market has become less constrained than has traditionally been the case. Once it was nigh impossible to capital raise against the French property at competitive interest rates; today this is no longer the case, fewer property owners are therefore being forced to sell.
Property demand is recovering: transactions increased by 30% relative to the same time last year.
Household debt burdens have improved: reduced European interest rates, mirroring those in the UK, have resulted in the lowest mortgage rates for many years.
The French mortgage market has become less constrained than has traditionally been the case. Once it was nigh impossible to capital raise against the French property at competitive interest rates; today this is no longer the case, fewer property owners are therefore being forced to sell.Meanwhile from the perspective of a UK purchaser, exchange rates are also an important factor. So what of the £:€ relationship?
The flight of £ that we saw in the last quarter of 2007 and through 2008, has not continued during 2009. Instead, the first half of this year saw £ recover by about 10% against the € from its December 28th low of 1.02 €. Again, the last couple of months has seen a levelling off at around 1.15€ to £1 with no evidence to suggest that £ will regain further lost ground in the near future. In any event, by raising a mortgage on the French property in €, as against remortgaging in £ in the UK, any exposure to currency loss if £ enjoys a second wind against the € would be limited to the cash deposit – offset by savings in monthly mortgage payments.
Overall then, for those readers intending to purchase but waiting for markets to hit bottom or reach equilibrium after the 2008 financial crisis, the evidence suggests that we might have already reached it.
Charles Hamer Financial Services are Independent Financial Advisers, specialists in Anglo-French financial planning. With over 21 years of experience in the French mortgage market, we have established contacts with banks offering exclusive products, otherwise unavailable to the borrower directly.
Jon Pawsey
Advising Partner
Charles Hamer Financial Services
The above article represents an opinion of the author only and does not constitute financial advice Charles Hamer Financial Services is authorised and regulated by the Financial Services authority French mortgages are not regulated by the Financial Services Authority The sterling value of your French property and French mortgage will fluctuate with exchange rate movement Your French home is at risk if you do not keep up payments on a mortgage secured on it.
French bank Credit Agricole under fire over bonuses
Credit Agricole, which received state aid in December, is handing out EUR 51 million in bonuses while laying off 31 employees.PARIS – French bank Credit Agricole came under fire Wednesday over plans to pay bonuses to senior staff while laying off 31 employees at the bailed-out group. One of France's leading banks, Credit Agricole received EUR 3 billion in state aid in December to help it weather the global financial crisis. The uproar came one day after President Nicolas Sarkozy made clear that banks that have received state funds should not pay bonuses, hand out stock options or roll out golden parachutes to executives while firing staff.
President Sarkozy reforms agenda may benefit British buyers
Proposed new tax reliefs to come in to force within the next three months if passed by law, will mean those looking to buy for residency or retirement in France will benefit by taking out a French mortgage when purchasing the French property. Interest in the first 5 years of a mortgage used to purchase a French main residence will be offset against any income tax incurred, As a resident of France an individual must complete an income tax declaration for both income generated in France and the UK. The relief will be paid as a tax credit if there is no tax to be paid.Provisional data suggests : For a couple 20% of the interest paid up to a limit of 7500 Euros of interest will be available (3750 for an individual purchaser as a tax credit with a further 500 Euros per dependant. Charles Hamer France offers a wide range tax related services contact the team for more details.
To receive maximum tax relief we calculate a mortgage liability of about 150,000 Euros would be required.
NEW PRODUCT: Available up to 90% of the property purchase price tracking EURIBOR with a margin of less than 0.6% also capped at 1% above initial offer rate
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Other news....
Bank Swindle: Beware of your savings with Crédit Agricole Sud Mediterranée. Basil Howitt reports on a swindle whereby Crédit Agricole customers with deposit accounts in his area (near Perpignan) have been conned into converting them into shares portfolios.LINK
Declared your rental income generated from your French property in France?
Beat the bill: A number of existing French property owners have contacted Charles Hamer regarding tax demands received from the local French tax authority.Any income generated in France is subject to taxation first and foremostly in France, this taxation is then counted as a credit against further taxation that may be payable in the UK. Even if you are not generating a rental income you may have had a letter we can assist resolve this matter.
Received a letter ? Contact one of our advisers today by email or telephone.
Our mortgage service not only compares the interest rates of national based lenders we broker at a regional level to ensure the most competitive rates are sourced.
- Use the calculator for a working example based on your own budget
- Services provided during the mortgage process
- As brokers, we are not dependent on one French lender. As part of our service we always submit an application to another of our French lending contacts to act as a “back-up”.
- We can offer a French financial planning service to cover issues of ownership, letting and residency planning.
- We mediate with the French notaire throughout the mortgage process.
- French mortgages are not regulated by a)Consumer Credit Act 1974 b) The Mortgage Code Compliance Board or c) The Financial Services Authority.