The British love affair with French property is still going strong. There had been predictions of a downturn in Brits buying in France in 2004 as a consequence of a faltering British market and a strengthening euro.
British homeowners, their wallets fattened by years of rising house prices and driven by a desire to secure a slice of the Gallic good life, are snapping up pigeonnières, farmhouses, villas, slices of chateaux and — increasingly — new developments across France.
Abbey National France reported one of its busiest periods ever over last spring and summer, with mortgage applications between March and August rising by 17% compared with the same period in 2003. Brits now represent 40% of international buyers in the French market — a figure that has doubled since 2000 — and the average purchase price is £98,000 (€142,000).
People are still drawn to the charm and character of older properties, which accounted for 81% of the properties bought in 2003, but according to Abbey National France, the number of Brits buying new-build properties has increased by 143% in the past three years, with 82% of new-builds being bought in the Riviera and French Alps.
The property market may be holding up, but the lettings market is suffering. In 10 years the number of properties in the holiday rental market has quadrupled, according to Nicholas Openshaw, a lettings agent in the south of France.
“Ten years ago, I expected to get a booking from every 2.5 inquiries,” he says. “Now it is down to about one in 10 and we are getting fewer inquiries. What has changed is the number of new places in the market, and I estimate that as many as 4,000 new gite owners will come into the market over the next 15 years.”
This may help to explain why Brits, who have previously turned their back on new-build properties, are increasingly investing in a purpose-built flat, which they can finance through the French “leaseback” system (see box below), thereby avoiding the trouble of letting in the competitive market for gites.
Charles Weston-Baker, of Savills’ international residential department, says 60% of Britons inquiring about France are now looking for a flat — up from 20% in five years. “Hassle-free is the buzz word right now,” he says. “People don’t want building work to do or a garden to look after. And it’s more affordable.”
Buying a new apartment has many advantages. They tend to be cheaper, especially if you buy off-plan. They are easier to maintain and, if you opt for new-build, carry a 10-year building guarantee. Conveyancing fees on properties less than five years old are 3%, compared with 7% on older buildings, and usually require a deposit of 5% rather than 10%. But you have to pay 19.6% Vat on the price and, if you sell within five years, Vat as well as capital gains tax is payable on the profit.
Pierre & Vacances, France’s largest leaseback specialist, manages more than 59,000 apartments in 100 resorts. When it opened a London office in 2002 British buyers made up 5% of its non-French sales. That figure has jumped to almost 20%, representing sales of €70m (£48m).
“French leaseback is the hot property of the moment — last year it was Bulgaria,” says Nick Leach, head of business development for Pierre & Vacances in the UK and Ireland. “About €90,000 (£62,000) will get you a studio in the Alps or the Atlantic coast, €150,000 a one-bed apartment in Provence and up to €300,000 a three-bed flat there.”
www.savills.co.uk, 020 7824 9030; www.pierre-vacances.com, 020 7368 1633; www.purslows-gascony.com, 00 33 5 6267 6150
