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Everything you always wanted to know about France |
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France Voila - a great day to be alive.
For me this is the most exciting newsletter I have ever written. Three weeks ago I had a series of heart attacks - ten minutes later I was in intensive care, was treated quickly, had springs and pipes put into me and repaired, I got back home on Thursday. I doubt I would be writing any more newsletters if we still lived in Britain. Last year my Mother last year suffered painfully for months due to the inefficiency and indifference of the UK health service - so although France is riddled with bureaucrats, knows very little about hard work or customer service and is heavily regulated and taxed - it works - and I owe my life to the efficiency, dedication and common sense of the French medical system - two years ago this August the same service in France saved my son Jack's life. Why does a private scan cost £1,100 in the UK and exactly the same thing cost £25 in France - my Mother waited nine months, in acute pain, for a scan that never happened in the UK. She then came to France to live with us, as she could no longer walk - within three months she had an operation and last week could walk for the first time in years without even a stick and went swimming. Total cost to her - zero - as she has paid (into the UK health service) all her life. It is Fathers day here today and my kids still have a Father and have gained a Grandmother - bright sunshine - Mediterranean diet - it is good to be alive. ======= In this newsletter 1. En Gard - the Book I Wish I had Written 2. Rental Standards in France 3. Buying to Invest, using a syndicate - be careful 4. Property Investment Through a Company 5. Car Seats for a baby in France 6. Property for Investment, overheating and a Major Issue for Pensions. ======= 1. En Gard - the Book I Wish I had Written. This book is a must-read for anyone thinking of selling up and moving to France. This is exactly what Alistair Scott and Sandy Thompson did in 2002, they sold their home in Brighton and moved into a traditional stone village house in Languedoc, no drains, no water but plenty of dreams. Their story of the first two years is a hot-pot of Yorkshire improvisation and local Gypsy culture marinaded in plenty of Pastis. This is an honest and amusing book about the reality of finding a home and living in a village in the South of France. Sandy Thompson writes: Moving from an English city to a French village is like moving to Pluto En Gard Reflections of rural France Written by Alistair Scott and Sandy Thompson ISBN: 1 901253 47 3 Published by Leonie Press, March 2004. Price: £ 9.99 Postage and Packing: £ 1.24 ======= 2. Rental Standards in France Tony I am currently buying furnishings for an apartment that I am going to rent out and need some advice on the regulations linked with renting out a property in France i.e. furniture/electrical regulations, etc Would you be able to help with this please? Kind regards Marie === Hello marie Strangely there are few (none we have found) regulations specifically relating to rented accommodation, other then the pool regulations which will apply to all pools from next January anyway. You must have third party liability insurance and you must inform your insurance company that you are renting, there is usually no extra charge for this and you have to have this insurance anyway. All work in a property should be done by registered builders, plumbers and electricians and they are responsible for their insurance and standards of work. However, if you do some work yourself and it is faulty, this does not invalidate insurances. It is illegal to use unregistered builders etc. We have tried to find out about fire and safety regulations, there are no fire safety officers and when we asked we were suspected of being potential arsonists. We asked the quasi-official body Gites de France about safety - the only recommendations were aesthetic ones relating to matching curtains etc, although they did say lampshades should not just hang from a wire as this did not look nice. It is hard to buy a smoke alarm in France, and certainly nothing like a carbon Monoxide or Dioxide sensor. Fire extinguishers and fire blankets are not required - we had to bring these from the UK. The regulations in the UK are very strong - fire doors, door seals, escapes, special foams for furnishings etc. I recommend you comply with the UK regulations and make this a selling point in your advertising - you will be miles ahead of the competition. Hopefully some sensible standards will be introduced, but this is France ! Best wishes Tony ======= 3. Buying to Invest, using a syndicate - be careful Hi I've been receiving your brilliant info mails for a while now and am sure I've missed the one article that would answer this question (or questions) but I really need some advice. Some friends and I are looking to set up a syndicate to purchase a property in the south of France. We have basic info gleaned from various magazine articles and Internet info but what we really need is more in depth info on group property purchases/capital gains tax/mortgage restrictions either UK based or France based...any suggestions would be most gratefully received. For background info we are looking to purchase a 4/5 bed villa in the areas of Grasse/Mougins/Nice/Cannes and plan to rent it out for approx 4/5 months of the year - the rest of the time it would be used as a holiday home for ourselves. Our budget is quite flexible depending on area but anything up to £1m could be considered. (although in reality we would prefer to be more comfortable with a property around the £500k mark.) Any pointers would be most gratefully received. Kind Regards Julie === Hello Julie You can create a company specifically for real estate in France called a SCI. here is some more information from a Notaire: "The purpose of a property investment partnership (societe civile immobiliere, or SCI) is to acquire or, in some cases, provide for the construction of buildings (houses, flats or entire buildings) to be rented to third parties or provided free of charge to the partners. An SCI must consist of at least two partners. A written contract, known as the by-laws, is required of every SCI. These by-laws must contain information on the firm and its partners (including its name, headquarters, total assets, method of operation, etc.). Once the by-laws have been signed by the founding partners, the partnership is registered with the local trade and companies register. The partners in a partnership are liable for the firm's debts in proportion to their share in its capital. For example, in a partnership consisting of two partners who each hold one half of the firm's assets, each partner will be liable for one half the liabilities. Therefore, there must be complete trust not only among the partners but also between the partners and the firm's manager(s), who must be chosen wisely. The advantage is that when several partners join forces, they are able to undertake projects that would have been impossible for one person acting alone. By purchasing a building as an SCI made up of numerous partners, buyers can avoid the instability inherent in simple joint ownership. However, bear in mind that the building belongs to the partnership and not to its partners, who merely own shares in the partnership. There is consequently less freedom in decision-making. The partners must be able to reach consensus in order to make decisions; indeed, the most important decisions will require unanimity. Lasting disagreements among the partners may paralyse the firm's operations and prove detrimental to the interests of all parties. So long as these constraints are borne in mind, partnerships can be an effective tool for asset management. Children and parents can be included in a real estate acquisition (such as the purchase of a second home or vacation home). Later on, the parents' share of the property can be gradually transferred to children or grandchildren in small increments, with a tax burden that is spread out over time. Some tax advisors suggest that an SCI is an effective way to reduce your tax liability. That isn't entirely accurate, although in certain circumstances the acquisition, construction or sale of a building can be conducted more efficiently by an SCI from a legal, financial and tax standpoint. Tell your Notaire about your plans. Only a comprehensive analysis of your specific circumstances can determine whether a partnership is appropriate for you. You should never enter into a partnership without taking certain precautions, nor establish one without knowing how to extricate yourself later on. Moreover, under some circumstances the by-laws should be prepared as a notarial deed in order to avoid having them challenged in the future, especially if spouses or eventual heirs are involved, and in this case a meeting with your Notaire will prove essential." Regarding capital gains, here is a recent ruling... "Inland Revenue v Allen This recent House of Lords (England and Wales) decision relates to the calculation of capital gains tax upon the sale of property held by an SCI (societe civile immobiliere or special French property holding company). A potential individual capital gains tax liability may arise upon the sale of French property that it owns when the shareholders are resident in England and Wales. This decision emphasises once more the fact that the use of companies to purchase French property can raise taxation issues both in France and abroad and requires careful consideration on the basis of the individual situation. Companies can be a Trojan horse: look wonderful but can bring all kinds of difficulties! 05/12/2002 - Legal Update" Regarding your plan to rent - 22 to 25 weeks for any villa is very optimistic. July and August can usually be let if the property is competitively priced, but recent years have seen a big drop in demand due to over supply - any other time of the year is very difficult to let. Marketing costs, taxation and management will absorb any profit. A 5 bed villa with letting potential will certainly cost nearer 1 million pounds - Hope this helps - don't believe a word any estate agent tells you. Tony ======= 4. Property Investment Through a Company Tony I perused your web sites and there was a lot of helpful info on them. My wife and I are real estate investors in the U.S. (she will soon have her French citizenship papers) and I am trying to understand the cash-flow involved in investing in French property. Specifically, we were thinking about buying something suitable to be rented as one or two Gites, and having local managers for rental and maintenance. I need better info on rental/vacancy rates and need to understand my expenses better. Sorry for the general question, but where would you suggest I look? Noah === Hello Noah It is not a simple question, there is a large surplus of vacation rental property at present and property prices are at record high levels. Returns therefore are low, under 5% before tax and management costs. There are opportunities, but a lot of local and specialist knowledge is needed. As in many "investments" - if someone is prepared to advise you how to spend your money with them, either they are giving dangerous advice, or they have a hidden agenda of what they will be doing with your money. Which regions were you considering investing and what amount of money? Tony ======= 5. Car Seats for a baby in France Is a car seat for baby under 2 years old in the vehicle compulsory in France? === Hello Frances Yes, all passengers must be secured - a child under two must be in an approved seat which faces towards the main seat, not just a raised seat. Older children must be in an approved seat. All seat belts must be worn at all times. Tony ======= 6. Property for Investment, overheating and a Major Issue for Pensions. It seems there are already more estate agents in France than propeties for sale so for Tour Operators (who now call themseves Travel Organisers) to jump onto the band wagon because their bookings are crashing through the floor looks like desparation to me. Next they will be selling used cars and double glazing perhaps. For over a century French farmers in the South of France have been keen to unload their surplus property as it was a liability. When we moved here in 1991 we knew of farmers who had craftily added 50 acres of land and buildings to the deeds and "tricked" unsuspecting foreign buyers into owning more than they thought they had paid for. Ah, those were the days! Supply and demand ultimately can be the only criteria for property investment. France seems unique in "Western countries" in having an increase in the birthrate, so real population growth (not just the British Barbeque Brigade) means more real demand for services and property. Now all the French have to do is to learn how to work and to encourage business. Here are a couple of articles I picked up from the UK press this week. Should Tour operators be selling real-estate? New tax concessions for second homes may lead to problems with Sipps. ======= Buy in Haste at Your Peril Brits purchasing holiday homes abroad should beware. Tom Chesshyre reports, copyright Times newspapers TOourists are being warned by property experts not to make hasty decisions to buy overseas apartments and villas from the growing group of tour operators offering estate agency services on the side. Thomson Holidays, Britain's biggest operator, Erna Low (a ski specialist), Bowhills (which offers places in France) and Tapestry (the leading holiday company for Turkey) have all started selling property to a British public increasingly hungry for second homes abroad. Operators regard estate agency as a |