PDFinvest.com

Tuesday 15 September 2009
Sales of new properties in France grew by 29% in the second quarter of 2009, and there was also a modest rise in prices.

According to figures released this month from the French government, developers sold nearly 28,000 new housing units in the second quarter of 2009, an increase of nearly a third over the same period in 2008.

Most of this increase can be attributed to the upturn in the sale of apartments, where sales grew by 33% (24,800 against 18,700) in the quarter over the same period in 2008.

By contrast the sale of new houses grew by a more modest 7% (3,000 against 2,800), with the main growth occurring for three bed-roomed houses. The sale of larger four to five bed-roomed homes dropped by 28%.

The increase in sales appears to have been fairly widespread across the country, with sales up in 17 out of the 22 regions in France. The increase was greatest in Paris/Ile de France, Champagne-Ardenne, Centre, Bourgogne, Nord-Pas-de-Calais, and Franche-Comté, where sales were up over 50% on the same period in 2008. Sales were stable in Haute-Normandie, and down in Picardy, Brittany, Poitou-Charentes and Auvergne.

So it is an encouraging if slightly mixed picture, with most commentators of the view that much of the rise can be attributed to the fiscal incentives that the government has put in place to stimulate the market.

These incentives include mortgage tax relief*** on the purchase of the main home. For French residents; loans at zero rate of interest for first time buyers, and tax relief through the Loi Scellier for those prepared to invest in new build private sector properties for rent.

The Loi Scellier appears to have been particularly successful in shifting a large number of properties that have been standing empty.

There was also some signs of an increase in prices. The prices of apartments increased from an average of €3268m² to €3369 m², while the average price of houses increased from €234,000 to €247,000, compared to the first quarter of 2009.

Nevertheless, prices remained down on the comparative period in 2008. Apartment prices were down an average of 1.9% on the same period in 2008, while house prices were down an average of 5.5% over the same period – except for Paris/Ile-de-France and the main Metro areas.

***In the first place, mortgage tax relief is available on the purchase or construction of a main home, for the first 5 years of the loan. The relief is granted at the rate of 40% of interest incurred in the first year, followed by 20% of interest paid for the remaining four years.

Mortgage Interest Rates in France The level of interest rates in France has historically been well below rates in the UK. The significance of this difference should not be underestimated.

On a loan of €100,000, with an interest rate gap of 2%, you might expect to pay around £1000-€1500 a year less with a French mortgage. Over 20 years, therefore, you are going to be paying a lot more in interest payments through remortgaging than would be the case if you took out a mortgage on your French property. Most mortgages in France are granted on a fixed rate basis.

Wednesday 15 July 2009
France remains a fiscally attractive relocation destination for many, and getting French health insurance is not difficult. The most fortunate ones are early retirees on government service pensions*, and those who are of retirement age.

Although government service pensions are taxed in the UK, recipients are entitled to the tax allowances and reliefs that are available to UK taxpayers. These include the personal tax allowance, which for the tax year 2009/10 is £6,475, an allowance that rises to £9,490 for those 65+.

Early retirees on a government service pension are not liable for the French social charges in their pension, unlike those who have a private pension. Neither do those of the age of retirement pay the social charges on their state retirement pension.

Those of pensionable age in France also benefit from more generous tax treatment, with a basic 10% allowance before the pension becomes liable to tax. Accordingly, if you happen to be on a government service pension, and of the age of retirement, you get the best of both worlds!

This is because you get the personal allowances due to you in the UK and in France, and you are not liable for the French social charges on either of your pensions.

If you are of retirement age and in receipt of a state retirement pension, neither do you pay compulsory health insurance contributions, as your basic health costs are covered through the E121 exemption certificate.

Early retirees are liable for the health insurance contributions, but you should be able to obtain around two years' free cover through an E106, after which you will need to start a business to get access to the health system, or pay private insurance contributions until you reach the age of retirement, or obtain five years' residence.

Starting a business as an ‘auto-entrepreneur’ is a very cost effective way of getting into the health system at little cost. This is because you only pay health and other social security contributions on your turnover; if your sales are low, that will be mirrored in the level of your social security contributions.

There is no minimum turnover requirement to be an auto-entrepreneur, although if you do not have any turnover at all in a single tax year, you cease to be eligible for this business status.

If you happen to be liable to French income tax, then a couple would need to have a taxable income of at least €18,000 before they paid any French income tax, whilst a couple with two children would need to earn circa €30,000. Remember also that expats relocating to France are also now exempt from French wealth tax on assets held outside of France, for the first five years residence in France.

As far as French inheritance tax is concerned, married couples and those in a civil partnership are exempt between them, and there are generous allowances for children.

*A 'government service pension' is paid to former members of HM Forces, ex Civil Service and Foreign and Commonwealth Office employees, as well as ex local authority employees, police and teachers. National Health service pensions are not considered to be a government service pension.

The announcement that the French economy grew by 0.14% in the third quarter of 2008 has baffled the pundits and delighted the government. While Germany, Italy, Britain and the United States have moved clearly into recession, France has managed to grow its economy, albeit by a small amount.

With a huge smile on her face, Christine Lagarde told F2 TV viewers that the figures would not be as bad as predicted. The key to this relative success would appear to be the French government's determined measures to encourage spending by France’s thrifty consumers.

While the level of British savings, at zero per cent, are the lowest they have ever been since figures were first collected, the French have continued with their traditional tendency to make sure that there is always a cushion between them and financial disaster. The average French savings rate is more than 10% of Gross Domestic Product. While in recent years the rest of the world spent its savings with consequent growth, French consumers kept their money in the bank.

Compared with Germany, France also has the new-found advantage of not being the biggest exporter in the world. At the moment, it is exports which are suffering worldwide more than internal consumption.

It remains to be seen whether this good quarterly figure has merely postponed the recession for six months or whether the governments pro-active measures will defy the international trend
altogether. International forecasts are not encouraging but then a panel of 24 economists predicted that France would fall into recession this quarter and they were wrong.

FRENCH ARE LESS PESSIMISTIC!

Tuesday, 02 December 2008
According to the monthly opinion poll BVA the economic confidence index among French people has increased for the second month running. Last month it was up 12 points.

This month it has increased by a further 4 points. The pollsters stress that this does not mean that the French are victims to the old Rudyard Kipling joke “if you can keep your head when all about you are losing theirs – you don’t know what is going on”. The overall outlook is pessimistic and one employee in two expects redundancies in the coming months. The French are however a lot less pessimistic than in previous months.

It may be that the relatively high level of savings held by French households and their very low level of investment in the stock market are related to the present improvement in sentiment. French private savings are 14% of gross domestic product, according to the European Central Bank – seven times higher than in Britain and the United States.

SATURDAY, 29 NOVEMBER 2008

The French government is preparing an economic support plan to rescue the country's Real Estate industry from crisis.

President Nicolas Sarkozy said he planned to introduce interest-free loans to finance energy-saving improvements to homes and that the government would buy up to 30,000 new homes to support the construction industry.

Sarkozy said that the government would also raise the threshold of income that would allow home-buyers to qualify for state guarantees for their mortgages. The aim is to have 60% of people taking out mortgages eligible for the guarantees compared with 30% currently. 'This will avoid excluding households with modest income from the property ladder,' he said.

However, Sarkozy warned that house prices must become 'attractive' for the Real Estate market to recover and that a situation where property prices have soared well above pay levels is unsustainable. 'A sector in which prices have doubled in 10 years is a sector that was preparing a crisis for itself,' Sarkozy said. 'When there's a total disconnection between the evolution of buyers' revenues and property prices, we were preparing for ourselves a latent crisis,' he added.

Part of the plan means that from 2009 France will offer homeowners zero-interest loans of up to €30,000, a measure that will help the construction sector, while boosting energy efficiency.

The part of the rescue package to buy up to 30,000 new homes is aimed at the construction sector to keep people at work. Sarkozy said it not intended to sustain high real-estate prices in France and he stressed that the government would only buy at reasonable prices.

The president also said that he supports broader home ownership in France. The full details of the rescue package will be announced on December 4.

Overseas property buyers continue to outstrip supply

26.11.2008 11:58:23 It has been revealed that the overseas property hotspots in Southern France are seeing demand from overseas property buyers continue to outstrip supply.

(live-PR.com) – The French National Estate Agents Federation (FNEAF) reports that French property prices overall rose by 7.1% in 2006, 3.8% in 2007 and 1.7% in the 12 months up to July 2008 – making it one of the few places in the world that has seen continual price rises throughout the credit-crunch.

Liam Bailey, chief market analyst for upcoming property portal Property Abroad had this to say of the revelation:
“France has seen such continued – if steady – increases in property values, mainly because it never really became swept up in the overseas investment boom. In the last 2-3 years thousands of savvy people with a pound to spare decided to put their money into overseas property, but did so, mainly in off-plan properties in emerging markets where prices were incredibly low, and the opportunity presented itself for immediate high-level gains and incredible rental yields. France never exactly offered an abundance of these properties, and so has and will remain to be one of the favorite places for people [especially Brits] buying a resale property as a holiday home.”

The locations noted as being continually successful in terms of overseas purchasers by the FNEAF were, particularly Cannes joined by its Southern France neighbors: Cap Ferrat, Mougins and St Tropez.

Property Abroad have some excellent properties in Southern France, including fantastic one and two bedroom apartments in central Cannes, just a short walk from the area’s best known Palm Beach. The apartments, over five floors start at just (euro) 282,000 and have terraces overlooking the beach.

By: Mark Russell

There are three good reasons (Particularly if your base currency is £ sterling) why, if you are considering buying property in France, you should act now.

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