Coast and Country in France

Are property prices overvalued? What is the right price for a property?

A newspaper article last week claims from an “expert” that property is overvalued both in France and the UK. I am not sure what that means, I always believe that something is only worth what someone is prepared to pay. What I am seeing this week already is a large number of owners asking me to reduce the prices of their properties as they need to sell.

I am also seeing the prices now asked for many houses on other agency lists are being reduced, in some cases by up to 60 percent, but overall about 15 to 20 percent.

This seems to be inline with the figures from the Notaires records of actual sales (not asking prices) over the last three to six months. These Notaire figures have to be studied very carefully in country areas (Languedoc villages for example) as one large sale in a small village can completely slew the figures up or down - they are much more relevant in a big city and in Paris you could almost paint the price on the rooftops.

August is always a silly month, but I can see that property prices in France are “stabilising” (realtors word for “not going up”) and in many cases are “negotiable” (realtors word for “nobody is interested”), some are even “exceptional value” (means - “we are getting desperate”)

There is a very big demand for property in France, but, at present, there is a larger supply of property for sale than people buying. The effect is for prices to adjust to the level of demand - so I expect advertised prices to fall about 25 percent on average over the next few weeks.

A few will go up, some will not change, many will drop their prices - I can only suggest a “right price” based on what properties are selling for - not what other people are asking.

Here is a mail I had today…

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Hi,
I recently read in Daily Mail (31/07) that UK is second only to France in terms of overvalued property prices. This came from “respected Fitch credit rating company”.

I want to buy in France but can’t understand why Fitch have reached this conclusion, as prices there seem a lot less than UK.

I am definitely going to Brittany,I will rent for 6 months, probably in Vannes and then buy.

I am not quite sure what to buy because I keep hearing stories about horrendous convertions costing a fortune and just going wrong.

Vannes however, and indeed anywhere near the coast, seems to be quite a bit dearer than inland and I have been looking at the Pontivy region.

If you have any advice I would be grateful.

Regards
Sean

Any comments

Regards
Sean

===

Hello Sean,

Yes, I read that article and was also puzzled by his “conclusion” which is not based on any supportive material.

My observations about France are based on the actual recorded selling prices and these are stabilised at present and not increasing overall - I am seeing the asking prices being reduced from 10 percent up to 30 percent - but asking prices are not relevant - the value of a property is what the market is content to pay for a property and there is currently a good demand for the right property at a fair price.

Popular, coastal areas are always more expensive than places where people don’t go much - remote is always much cheaper than communities with shops and services - remote is also harder to sell, great for a visit or holiday but a couple of weeks is enough for most people, which is why it is cheaper. France is a big place, much bigger than the UK.

In my opinion, inland Brittany (inland anywhere - more than 50 km from the cost) is best left to postcards and travel brochures.

Unless you are able and experienced in property renovation, just don’t do it - too many people have lost their shirts and their spirits renovating old property in France - I have written a lot about this in my blogs and newsletters at http://www.twiku.com/ and http://www.fruk.eu/

Property in France costs about the same as property in the UK, except you get slightly more for your money - living in France costs about the same as the UK except you get better quality - you cannot put a price on the quality of life and happiness is in your own head.

What I am trying to say is - whatever you have at present in the UK, if you are realistic and take care, you can find a better lifestyle in France for the same resources and assets. But don’t jump blindly and take on something you would not do at home.

Hope this helps

Bonne Chance

Tony

best wishes

Tony

coast and country, Diary

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We have just come back from looking at a home for sale in our own town of Montblanc in the South of France. A traditional wine growers home in the center of town, detached with a large garage and workshop space. It has an excellent terrace.

Like most town properties there is no garden, but this home has the front entrance from a private, gated, courtyard and the south facing terrace is perfect for eating out.

Carole has just loaded this property offered for sale at only 222,000 euro which is a very low price for this style and quality of property.

http://www.coast-country-france.com/french-property/3060.html

buying a house, coast and country, Diary, french property, languedoc, old houses, property, Property for sale, property in the south of france

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Go to Twiku for opinion and Fruk for my diary.

It was a hot and humid day in the south of France - one day I promise I will start a note with “It was a dark and stormy night” - but not today, it was too humid.

Today my delight was showing a couple from Ireland some houses in Herault - we looked at some yesterday and this their second day of searching for a home in Languedoc - my aim is to try to show the variety of both homes and towns. Every place has a unique “signature” a personal identity which can take time to find - my job, or part of my job, is to reveal these differences yet not to let my personal preferences and biases interfere.

OK, I admit, this is impossible - I cannot help exposing my personal likes and dislikes for villages and towns - I need to sell houses to feed my family, but cannot tell honest people that overpriced rubbish, is a dream home.

Perhaps we will starve, but I believe not.

It is clear in my head my duty is to the person looking for a home - the person selling is not my client. The problem is that the agreement I have is with the owner of the property, the person selling, and they are asking me to sell their home, they are not my client, but they are relying on me to sell their home.

I get a commission if I sell, but the buyer eventually pays this - so my logic is that my responsibility is to the person who stomps up the readies - that is, the buyer.

Yet - the person selling is sometimes desperate to sell - needs to sell - prices have been rising - dreams of capital and investments are in every scrap of media.

The first need of humans (of all animals) is not water, food or sex - it is shelter.

I know what I like and believe in our local region - I have contact and empathy with the local owners and suppliers - I try to help my clients (the people buying) and the people selling.

Thank goodness the sun shines in Languedoc an average of 300 days a year.

buying a house, coast and country, dark and stormy night, Diary, french property, french estate agents, french lifestyle, french property, herault, languedoc, languedoc roussillon, living in france, property, property in the south of france, south of france

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My day usually starts with coffee and dog food - well not exactly for me, I put on the kettle to make coffee while our bouncing dogs are in their feeding frenzy - this is usually around 8:30 - at the same time a couple of computers are grunting into life as emails are crumpshing into my mailboxes.

Telephones seem such iron-age technology I tend to ignore them, but this morning I found myself answering the horrible things (actually Carole did) and agreeing to see a couple of houses, one in Fouzilhon and one in St Thibery , these towns are near our home and as I had a headache I went out to see them

I am glad I did - both are among the best I have seen this year - the Maison Vigneron in St Thibery is absolutely “nickel” a great word meaning ” of the highest standard” - and I am not talking French sweaty armpit standards, but something better. It is not a grand maison - but nor is the price - aircon, double glazing, a small courtyard/garden/ private terrace and in a classic street in a traditional town - this is what it is all about, living in France.

The other is a modern villa in a wondrous village in Languedoc, Fouzilhon, ask me for the map reference it is too late to loook it up now, there are not many modern villas left like this, because as soon as they are built a veritable acne of other munchin horrors infest the adjacent building plots - but not in this case - this is the “light at the end of the world” and no more infestations will blight this villa or the views.

I am happy to be enthusiastic for a change over a simple thing like a lump of tile, stone and concrete on a corner of mud.

buying a house, coast and country, Diary, french property, french estate agents, french lifestyle, french property, land in france, languedoc roussillon, living in france, new villas, old houses, property, property in the south of france, twiku

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It is difficult to sell homes to people because you are trading in dreams and aspirations. The buyer looks for a time in a future which is often impossible - the seller has hopes for a future dependent on impossibilities.

I look on and know that both cannot be right and often believe that both may be wrong - but I cannot judge or comment (but of course I do).

Today I showed a young couple a home near Pezenas which I “feel” is perfect for them - all I could do is to let them look and hope they could see it would be right for their home - perhaps tomorrow when they go back they will “see”.

My problem is that the owners of homes like this one can already see that houses of this quality are so rare now, plenty of new villas are springing up like mushrooms - colonies of tuppaware cloches surround every town and village, the pattern of houses in Southern France is under going the most radical change since the Romans set out the planning patterns in the first century AD - so why would anyone sell a unique home of this quality on what is clearly a “rising” market.

Why indeed - so we all sat supping local wine and eating a barbecue this evening in the garden of this home - perhaps tomorrow the “battle will be lost and won” ?

coast and country, Diary, french property, new villas, southern france

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This email exchange was published in my blog on Coast and Country, but I am posting it here because it raises a lot of important points about sales and leasebacks in France.

Many thousands of people have been sold a leaseback property in France thinking that they can take over the property themselves at the end of the lease. In most cases this is certainly not possible.

Importantly, in French law a person or company who is leasing a property is entitled to compensation for loss of business and profits if the lease is terminated by the owner (you the person who has purchased the leaseback property) or not renewed. This is inherent in French law and does not have to be stated on any agreement or lease (and never is, I have not seen any leaseback agreement where this is explained).

So many thousands of people who have bought a property through a leaseback scheme are very likely to be disappointed when the lease comes to an end and they hoped to be able to use the property for retirement - also the lease option will blight the reseale value and therefore the capital gains which may have been hoped for.

Leasebacks are designed for French taxpayers who will gain tax benefits for investing in properties designated for specific commercial areas such as tourism or low-cost housing.

Leaseback sales can be a good investment as they can give guaranteed returns and are (in France) tax deductable. They should be considered as a bond, giving a fixed return and tax benefits, not a super wheeze to get a free house (there aint no such thing).

==

Hello Tony,

I am thinking of buying a property in the south of France as I have a son who studies in Sophia Antipolis and I think he may want to stay there longer than after finishing business school.

I would like to purchase the property initially as a investment and later on to give to my son ­ for him to keep, sell, upgrade or whatever he deems fit. Would it be better to get a leaseback property or an apartment and then have it rented out? I don’t live anywhere near France or Europe so looking after the property would be difficult for me.

What would you suggest?

Regards, MCL

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Hi MCL

This seems a simple question, but in fact it opens a lot of very important points and needs several answers. I will try to outline some of these but if you would like to email me to give me more details I can tailor a more personal response.

A leaseback is not really something you should buy if you are planning to use it yourself - I know a lot are sold as a good way to have a self financing holiday home - but this is not what the plans are designed for and many people have bought leasebacks unaware of severe limitations there may be in French law which are not shown on the agreements and leases.

Buying investment property in France is certainly a good idea, but like all investments, you need knowledge or expert guidance.

Inheritance laws in France are precise and cannot be overruled by a will.

It may be wise to buy a property in a company specially designed for this, a SCI, and give you son shares, you can transfer more shares over time without incurring any (or much) tax. There are annual options for donations like this free of tax in France - if you simply give your son a property there will be tax due.

Buying an apartment and then renting it needs local management. Depending on where you are buying we may be able to help and advise. We have a lot of expertise around Cannes and Sophia Antipolis.

Do get in touch with me directly, with more information, budget, timing etc and I can give more relevant advice

Tony

buying investment property, coast and country, Diary, french law, inheritance laws in france, laws in france, Leasebacks, leasebacks in france, leaseback property, local management, property in the south of france, south of france

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I believe that the blending of video, email and Interent sites is slowly happening - Google has just announced their move to a video “adsense” service and the growth of sites like youtube is fantastic.

I did a small experimental video a few months ago and it is still getting a few visitors although I have not linked it anywhere (except here) www.Nizas.com/video

My plans are to make a lot more use of all video techniques and to present short informative clips of all places and properties.

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If you are purchasing a property in France with a hectare or more of land, then the purchase will be brought to the the attention of  SAFER http://www.safer.fr/ (The Société d’Amenagément Foncier et d’Establissement Rural) by the Notaire.

This can cause problems you did not expect and you must get all matters clearly sorted,  (by your honest and clever estate-agent) in writing, before you sign.

He is an email I received today.

===

Hello ,
 
I own a property in the Languedoc Roussillon area which I bought 6 years ago. I bought some agricultural land around it 3 years later on the understanding that it was deemed “extension of garden” and that I could, within reason, do what I liked with it. This was reflected in the the fact that the land was being parcelled off by the environmental agency  “SAFER” at a cost to me of  twice as much per hectare as the cost to my farmer neighbour.
 
I have recently been trying, with the help of my avocat, who says I am completely in the right, to get my neighbour to stop tresspassing on my land so that I can put up a fence and gate on the edge of the property. He crosses my land with his farming equipment and lorries at the point of entrance on my property due to a ‘right of way’ clause that was added to my land purchase contract at the last moment. However, as soon as it was known that I was willing to go to a tribunal to make everything official I was contacted by SAFER who basically threatened to make my life ‘extremely difficult’ if I pursue the case.
 
In the smallprint of my sale document, SAFER have stipulated that in order to qualify to keep the ‘garden extension’ (as it was described verbally) I would need to register as a full time farmer and pay the annual ‘cotisation’ as a farmer. At the time of purchase my french partner was planning to plant cranberries so this wouldn’t have been a problem, but he subsequently left me with this legal connundrum whereby I face a heavy fine if I do not register as a farmer and start farming full time (I am an artist in reality with two children to look after), or face possibly losing the land.

According to my Avocat I would be hard pressed to prove any scullduggery but although I would be entitled to pursue an action through a tribunal to get my neighbour off my land, in his opinion I would be risking nasty retribution on the party of la SAFER, including compulsory purchase of my land.
 
The case IS complicated and I have tried to give you the briefest of details here.
 
Can you help or advise? Red tape and sheer fear seem to be the order of the day here.
 
If nothing else perhaps some of your readers could learn from my experience.
 
With very best wishes,
 
Amanda

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Hello Amanda,

The main function of SAFER (The Société d’Amenagément Foncier et d’Establissement Rural) is to consolidate the fragmented structure of farming land in France and they do have a lot of special powers to force sales, access and overrule rights which could obstruct efficient farming.

The job of this agency is to decide whether agricultural land should remain in agricultural use. In practice, it rarely exercises this right, but the notaire (a French lawyer who will hand the conveyancing of the property sale) is under an obligation to notify SAFER to give it the opportunity to object to any sale of substantial agricultural property.

SAFER has up to two months following completion of the contract to announce if it wishes to exercise its right. It it does so, then any agreement is null and void.

http://www.safer.fr/ SAFER in France

http://www.saferlr.com/ SAFER in Languedoc Roussillon

The main function of the Notaire is to ensure that taxes are paid on property transactions and that what is presented to them is correct, strictly speaking they do not act in any one persons interest.

The main function of Mayors and officials is to get re-elected and safeguard their powers and pensions.

Add to this the facts that you are in a predominately farming community/region/country, that all power corrupts and that we are “strangers in a strange land”.

Thank you for the suggestion that this could be a warning to others. I would add to this that buying property in France is very much a case of “Caveat Emptor” - you must scrutinise and understand all implications in all documents before you sign them and you must understand all the implied legal obligations and rights.

There is no legal tradition of precedent in France - only of deposition. This means that if it ain’t written down, it don’t exist - unless of course it does (is written down) somewhere else and it is then your problem to find this out first and get the answer written down.

My gut reaction is to fight the rascals, go to the tribunal and then demand arbitration - experience tells me to roll over and die.

Life gets tedious, don’t it?

Bonne Chance

Tony

coast and country, Diary, french property, land in france, property, twiku

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I just wrote a post on my blog at New Bricks and Pantiles giving some idea about the cost of renovating old stone properties in the South of France.

This reply to another mail today about doing the work and living here I hope answers a few more questions about problems and pitfalls of renovations to old properties.

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Tony

Seeking to move to Languedoc - Orientales/Aude preferences. I have successfully developed my own properties here in the UK and would like to do the same there.

I am something of a mixed bag with professional experience in law and management consultancy/venture capital and had a career also in sales/marketing/advertising, I have written and recorded an album but can lay bricks, plaster, 1st and 2nd fix carpentry, roofing, some plumbing and wire a house.

No French initially so thinking about doing week on/week off in the UK to keep money coming and not depleting capital except for buying/renovating property (mortgages in principal offered), but my wife is a little concerned to be left in the on weeks with 4 children and no French initially. Are there possbilities to assist english speakers/ex pats with my skill set to avoid the week on/off scenario?

Once fluent hopefully many more opportunities will open up in say 18 months to 2 years.

Ideally would look to rent to live in for at least first year + and buy to do up.

Is this a realistic plan and what pitfalls do you see. Would CGT be punitive in non-resident developed properties or can this be avoided by moving into for say a fiscal year and then selling on?

Regards

Martin

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Hello Martin,

Many thanks for an interesting letter.

The first handicap to developing property for resale is that there is a 7 percent tax and legal fee on top of the purchase price paid by the buyer. The purchase price usually includes the selling agency commission this is from 6 percent upwards (including tax) so the base property value is already elevated.

Unless you are a resident French tax payer there is 16 percent value added tax on the sale of the property if you resell within 5 years (this reduces thereafter to zero after 16 years). You are correct in that if it is your Maison Principal then you do not pay Value Added Tax (TVA) but you should consider that this is the main family home and you have to be French tax registered for at least two years to avoid this. You may not have a problem renovating and moving one, possibly twice, in a relatively short period, but after that it would be looked at carefully by the Notaire and possibly considered that you were trying to evade taxes.

The 16 percent tax will be based on the difference between your purchase price (including tax) and your selling price - the only building costs allowable can be from correctly certified invoices from a registered builder in France. If you do the work yourself, unless you are a registered builder, the time and materials cannot be offset for tax.

Personally I believe working one week on one week off would put a huge strain on you and your family - you lose two days a week simply traveling and the disruption and cost does not seem comfortable or viable to me.

Renovation costs for older stone built properties are much higher than every person I have met who has done this (including me) ever calculated. The cost of renovation per square meter of old stone built properties is from five to fifteen (the sky’s the limit) times the cost of building new. Very careful calculations need to be made with a lot of local and professional knowledge.

There are far too many stories of people buying houses and asking local builders to “quote” and then finding the cost is many times higher than “quoted” - these quotes (devis) are always estimates and not fixed quotations - the same logic applies if you are planning the work yourself - there is no similarity in working with the average British property. For example, stone walls in Languedoc are from 65 cm to 3 meters thick - one small window I put in my old home here took over 12 tonnes of rock to be removed and 2 weeks hard work.

A large number of English speakers are moving to Languedoc, most towns and villages have some English speaking community activities, book fairs, social stuff etc.

In Languedoc making a living is very hard - there are few jobs and your chances of getting employment are, to be blunt, zero. To get any casual work, legally, you have to register and get full social security approval - this will immediately cost you about 500 euro a month in social charges - you cannot claim any security benefits.

These are some of the pitfalls - we did it nearly 20 years ago, have survived and do not regret a moment.

Best wishes

Tony

Building in France, Business in France, buying a property, Discover France, French life, French Property, french tax, french tax authorities, immobilier, Languedoc, Languedoc housing, languedoc region, life in france, living in france, Personal, properties in the south of france, Property in France, property in languedoc, Real Estate, stone properties

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I was going to title this “are property prices in France falling” and I left off the question mark as it messes up technical things. I changed the title to Languedoc because France has so many regional variations I would need a huge spreadsheet to show the results - also I live and work in Languedoc.

My personal observations on sales made last month in Languedoc are that prices are not rising, although a lot of properties which have sold have been bought at the asking price.

The market is bouyant and there are a lot of buyers here at the moment, but ther eare a lot more properties on offer and a huge volume of new building.

Looking at some figures from the Noataires sites and guidelines of average sales across most regions indicates that prices are falling in most places over the last three months, although the trend has been for an overall increase of around ten percent over the last twelve months.

Interestingly, in most areas of Languedoc, higher priced properties have had stronger growth than the average.

My theory is that in Languedoc there is a big investment and a lot of incentives to build new housing estates, land has been released on an unprecedented scale and tens of thousands of villa/bungalow type homes are being built at the moment.

Every village seems to have fresh fields of homes growing as fast as the grapes are on the vines this year. This is making the classic landowners 19th century houses in town centers a scarcer commodity and may be one reason for the disparity in price levels.

What I am seeing is a lot of overpriced property on the estate-agents books, owners are very optimistic about what their property will sell for and seem to pluck numbers out of the air, agents then put their commission on top of this and end up with a fat portfolio of overpriced offers.

It is very tempting for owners to do this as prices have been steadily increasing for over ten years and with that sort of track record it is too tempting to think it will go on for ever - but - average sales prices for most properties have dropped over the last three months so a property put onto the market with an optimistic price tag is unlikely to shift.

Building in France, buying a property, coast country france, French life, French Property, Languedoc housing, life in france, living in france, Personal, property in france, property in languedoc, Real Estate

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