England - summer 2011

This picture says it all.

The recent rioting in England has made us appreciate just how lucky we are living here in France.

The images of vandalism and youths looting shops has not been a great advert for the UK, especially with 2012 being Olympic year.

No wonder the kids of today don't respect other citizens and their property, they clearly don't have any respect for themselves.

Rural France seems an awful long way away from what is going on back in England at the moment.

Many tax changes

2011 is proving to be a good year for those people living in France as far as taxes are concerned, with significant changes already made or planned.

The latest changes are concerning UK expatriates who have been affected by the UK's 90 day residence rule. With effect from 6th April 2012, most expats will now be able to spend up to 119 days in the UK, and still remaon a non resident in most cases.

French Wealth Tax has also seen significant changes, with the threshold increased from 800,000 Euros to 1.3 million € (effective 2011), and coming soon, just 2 bands of tax 0.25% between 1.3 and 3 m €, and 0.5% for above 3 m €, (effective 2012).

Succession & Gift Taxes have also changed.

Coming to France offers many financial planning opportunities, especially via QROPS & QNUPS arrangements. The benefits include examption from all UK taxes on death if you have been non UK resident for 5 consecutive years, (a potential saving of 55%). These plans also avoid French succession law and offer other additional benefits.

As usual, new tax laws bring with them new opportunities to plan your finances, (different and better). We are able to offer the best quality Independent Financial Advice via our dedicated contacts, (for whom we are registered introducers).

Peter Elias (Agent Commercial) http://www.allez-francais.com/

Exclusive mandats

One of my pet hates is French agencies using “sole agency” on their properties without explaining the potential outcome to their clients, (the vendors).

In the Poitou Charentes, there is one well-known agency who is particularly active in this respect. There is also one Notaire who is also into the exclusive agency business.

What does it offer for the vendor – well, not a lot apart from a number of promises by the agent, which they will struggle to keep. Normally this is based on increased advertising and internet presence. In practice, it means that the agency can sit back a bit in the knowledge that they have blocked the sale of the property by any other agencies for a period of at least ¼ of the year, sometimes even longer.

The agent that I have in mind, currently has 34 properties advertised as sole agent, even though I have seen a registered mandat with another agency, created before their exclusive mandat, that is still valid. So that could prove interesting !

This agency takes out a small 2 property advert in the French Property press, so over the period of a quarter only 6 out of those 34 properties will benefit from this “high profile” marketing.

In the Dordogne valley, if we enter into an exclusive agreement, it is very much on a “gentleman’s agreement”, and the vendor only signs a non-exclusive mandat, there being trust between both parties that the deal will be honoured. In return we are able to arrange floor-plans and elevated photography to make the property really stand out in the market place. We think this added-value is much better than an empty promise.

Rarely to vendors know how to get out of these exclusive mandates, which normally requires a registered letter (AR), towards the end of the 3 month exclusive period as a minimum, to renounce the contract. Mandates for the purchase of French property are often signed in haste by keen sellers and buyers and repented on at leisure. They are a fruitful source of work for litigation lawyers in France and regularly keep the French Appeal Courts and Supreme Court occupied. UK buyers and sellers are at a big disadvantage as the system in England is not the same and they do not understand what they are signing. So, you have been warned.

Negotiations

OK, the market is pretty static, both in the UK and here in France, but recently I have encountered clients (buyers), who have been advised by an agent not too far from where we operate, that buyers should negotiate hard, typically 20% below the asking price.

It may well be that in certain circumstances, when someone is desperate to go back to the UK for example, that the vendor may listen to such an optimistic offer. After all, the vendor may have purchased their property when the £ / Euro value was around 1.50 against the present 1.12. The currency movement covers a 25% gain during this period, giving some vendors a lot of flexibility.

You have to question the professionalism of an agent advising clients in this way. They are opening the door for wild offers on any properties that they have for sale, something their owners will not thank them for. Unless of course, that as part of their strategy they over optimistically inflated the asking price by 20% in the first place.

My advice, would be to steer clear of such agents. By all means listen to what your agent has to say, and they will often know when a vendor is negotiable or desperate to sell, but the latter situation is the extreme rather than the rule.

For our part, we have successfully negotiated properties priced between 350,000 and 500,000 recently and the offers have all been around 5% below the full asking price. So the buyers have gone away happy, as have the vendors.

Peter Elias (Agent Commercial) http://www.allez-francais.com/

Good news on 3 fronts

The French Government has announced that access to the French Health service will now be available for "early" retirees – a reversal of the previous legislation that caused many people caught up in this trap a lot of problems. Thus the gap between the expiry of reciprocal health cover provided by the S1, (issued for up to 2 years based on N.I. contributions) and the S1 issued on reaching UK retirement age has been completed.
This reverses the decision made back in 2007. It means that, providing contributions are made to the French Health Service ex-pats will be entitled to exactly the same cover as French Nationals.
The French Government previously had announced the abandonment of the proposed new tax on foreign owned holiday homes – “maisons secondaires”. This U-turn came about when they realised that it impacted significantly upon the many French citizens working overseas and how they would be affected by such a tax. With an election scheduled for 2013 the Government cannot afford to risk upsetting these potential voters.
Special Offer – 300 Euros refund !
To qualify for this refund, you need to spend a day viewing with us (normally 4 or 5 properties), and then purchase via ourselves. Full details on request via our websitehttp://www.allez-francais.com/

Tax on holiday homes in France scrapped

News update - The proposed tax on holiday homes in France has been scrapped by the French government. The decision to scrap the tax was taken, we understand, over the weekend at a meeting between President Nicolas Sarkozy and his Minister, François Baroin.
The government had clearly not thought through very well. It certainly smacked of a last minute concept, thrown into the mix of the finance bill during its passage through parliament in order to help make the sums add up on the reduction in the wealth tax.
Many commentators were of the opinion that the new tax would have infringed EU regulations, and was also contrary to a number of taxation treaties France has in place with other countries.
According to the French government, 363,000 owners would have been liable for the tax, of which around half would have been UK citizens.
There was a huge misunderstanding about just how much it would cost. We received many enquiries ! In fact the impact was going to have been pretty small. For the vast majority of those affected by it, the tax was never going to cost more than a few hundred euros a year.

Reports, reports & more reports

Most readers will know that in France when you buy a property, you receive a dossier expertise made up of numerous reports carried out on the property. Very similar in fact to the HIP reports introduced in the UK.

I have never been a great fan of these for reasons I will outline below. But clients do sometimes misunderstand them and get very wound up about their contents.

A few examples :-

Energy reports (DPE) – whilst accepting the concept behind these reports, if you want character (such as exposed stone walls), you are never going to get a property featuring highly on the rankings of this report. You shouldn’t need a report of this detail to learn that by adding more layers of insulation and installing double glazing that you will improve the energy rating of the house !

Electrical reports – again, I am all for highlighting where there a safety issues, but the standards to which properties are now measured are for new-builds, not properties that were rewired 15-20 years ago with perfectly safe systems, that work.

Drainage reports – we believe that over 80% of rural properties don’t have a fully conforming fosse septique. The standards change on a regular basis, so one installed 5 years ago, may not meet today’s compliance standards. Often it is just a case of adding a new grease trap, or something else minor, but a “damning report” sets the alarm bells going for a potential buyer.

Woodwork reports – principally seeking termite activity, which is a real problem. We have just lost one sale where the report mentioned carpricornes, (a form of beetle), and the buyer got cold feet. We subsequently found out that the capricornes were not active (i.e. dead) and were actually old traces in old beams removed from the house and stored in an old barn away from the house on the floor. But the damage had been done, and the buyer had pulled out !

The reports are useful, if used correctly. They can be a good tool to negotiate a reduction in price for example. But I would hardly ever find these reports a good source upon which to base a decision to buy or not.

Bone weekend.