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France: A property hotspot again?

  • 24 August 2011

However, new findings from property finder, My-French-House.com, show a growing number of British homeowners are now looking to permanently relocate across the Channel.

"In the past, the focus was on finding second homes and renovation opportunities for investors looking for property in popular holiday destinations that would provide a good rental income over the summer months," says Patrick Joseph from My-French-House.com.

"But in recent years, there has been a definite shift, with France's reputation as a safe haven contributing to the rising trend of Britons relocating."

Crucially, while many countries such as Greece, Portugal, Spain and Italy have been hit hard by the escalating European debt crisis, the property market in France has not been as badly affected – making this an increasingly attractive bet.

House prices dropped by around 10 per cent in 2008-09, but the market started to pick up again last year, and prices are now beginning to creep up again in many areas.

French estate agent trade body, the French National Association of Immobiliers (FNAIM), forecast an increase of 6 per cent across France throughout 2011 and 2012, with the most popular areas, such as Paris and the French Riviera, being forecast to raise as much as 15 per cent.

"Prices have risen across much of France in the past year," says Melanie Bien from broker Private Finance. "By contrast, both Spain and Portugal  have seen price falls."

While an increase in demand for French property is likely to help drive prices back up, the knock-on effects of the global financial crisis are still being felt.

"We are by no means through the worldwide crisis," says Tim Swannie from French property specialist, Ellisium Partners.

"There are still many property-owners who have been badly affected over the past couple of years, and who now need to sell their holiday homes as it's no longer financially viable – so there are some good deals to be had."

But for those looking to invest across the Channel, just how easy is it to get funding?

"There are still a significant number of international lenders and private banks lending in France," says Miranda John, international manager at Savills.

"There is a competitive market with many French banks happy to lend to non-residents with a good range of products at a high loan-to-value (LTV) up to an average of 80 per cent – although up to 100 per cent is available. That said, lending criteria has been tighter over the past year."

Interest rates are low too, with some lenders now offering ultra-cheap 25-year fixed-rate deals at just over 4 per cent, according to Ellisium Partners.

"In our opinion, now is a good time to borrow," says Swannie. "As long as buyers are careful when it comes to exchanging their money, and time it well, they can take advantage of some great deals in France."

Mark Bodega from currency specialist, HiFX, says Brits are slowly returning to France.

"French property buyers tend to be more affluent, older buyers who, having held off for the past few years, are now dipping a cautious toe back into the water," he says.

Those looking to move across the Channel may well be attracted by the appeal of an eco-friendly, rural life.

"An increasing number of our enquiries are for small country houses with several acres of land," says Joseph. "Buyers are discovering they can achieve this far more cheaply across the Channel. In some parts of France, such as Poitou Charente and the north Dordogne, homes can be picked up for as little as €150,000-  €200,000."

He adds that the Languedoc and Limousin regions are currently attracting greater interest than usual from buyers looking to benefit from a laid-back French lifestyle without having to pay the price tag of Provence, along with the Green Perigord region, to the north of the Dordogne.

In her blog, Alexis Goldberg, author of The France Buying Guide, tells her own tale of the trials and tribulations of renovating a property in Languedoc-Roussillon.

But while all this may sound very tempting, there are a lot of things to think about before taking the plunge.

It's vital to understand exactly how your mortgage works, and to be aware of any legal responsibilities, local taxes and fees associated with the purchase.

Legal advice is a must, and this may mean taking advice from a trusted legal expert in France, and potentially also a tax specialist who knows both UK and local tax laws.

Always obtain legal and financial advice from English-speaking professionals, or you could fall foul of local property development rules and taxes, and remember that a specialist foreign currency broker could make a big difference,

Finally, think about your language skills, as the locals don't tend to take too kindly to those who can't speak a word of French.

More:

Are the days of couples buying their first home in their early 20s all but over?

Property: Should you invest in student digs?

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