Hold on to the dream

Global recession may have put paid to many people’s plans to move to France but there may still be a way, says Louis Mann

Hold on to the dream

Global recession may have put paid to many people’s plans to move to France but there may still be a way, says Louis Mann

Does it sometimes feel as though we will never climb out of the recession doldrums? And have those dreams you had of changing your lives faded into the distance as problems with the world economy have taken over? Many of us have found ourselves back on the daily grind of trying to make ends meet, watching our costs rise and our income, at best, remaining static; working long hours and living for the weekends. Perhaps it’s time for a fresh look at the plans you made; maybe there is a way to make a fresh start in France now.

Many people I speak to at the moment tell me that they are tired of waiting for things to improve. They are upset about the loss of the time they had planned to spend enjoying a new way of life in France. Into this category fall those people who were planning to retire to France, those who were hoping to start a whole new life there, often with young families, and those who were hoping to buy a French holiday home to offset the stresses of working life in the UK.

People planning to retire to France are often worried about the possible drop in value of their UK property combined with a potential reduction in pension. They wonder if they can ever afford to follow the dream of a French retirement. If you fall into this category but are determined not to give up your plans, there are possible solutions.

If you feel reluctant to sell your UK property in the current market then don’t! Keep it until the property market improves. Holding on to your UK home does not mean that you have to live in it or stay in the UK. If you apply for a French mortgage on your new home in France while you are still employed in the UK then, when you take retirement and move to France, you can substitute your current employment income for the rental income from letting your UK property. Once the property market in the UK improves, you can sell your UK house and use the funds to pay off the French mortgage. However, if you choose this route, it is vital to ensure that you take out a French mortgage with no penalties for early repayment.

When it comes to concerns about reduced pensions and the strength of the euro, do not forget that life in France is considerably less materialistic than life in the UK and the cost of living is generally cheaper. Remember the sunshine, the good life and the quality of healthcare plus the respect that the French show towards older people.

All this has presumably already tempted you to move to France. It’s not time to give up. All you have to do is be more creative in putting your plan into action. I have assisted many people approaching retirement who had thought they could not now follow their dream of living in France; together we have found a way to make that dream possible.

Young families

People with young families, who had been planning a move to France, are another group who have felt badly affected by the recession. Education and a better quality of life, with more time to spend together, are usually the driving forces that make families think about a move across the Channel. The sluggish UK property market has made many families believe that their plans are impossible at the moment. However, there are solutions. Life is too short to keep putting the future on hold!

Firstly, it is essential to check your borrowing capacity by speaking to a mortgage broker. If you find that your current income will support the UK mortgage as well as a mortgage on a French property then it is a matter of working out how to support the two mortgage repayments once you move to France and presumably lose your current income. The rental income produced by the house in the UK will probably have to be supplemented to pay the costs of both mortgages. The obvious way to do this is by purchasing a property in France that has income potential. Once you can produce enough income from both properties to meet your monthly outgoings, you can move the whole family to France and finally sell the UK property when the market improves.

Depending on your income requirements, you could buy a home that has potential to convert to a g�te or a bed and breakfast business. A bed and breakfast business is likely to make more money than a g�te. However, if you choose this route in the short term, someone will need to be running it while someone else continues to earn income in the UK. Once you know you have established a business that will cover the mortgage costs, the whole family can be together in France.

Borrowing capacity

If you do not have sufficient borrowing capacity to fund a mortgage on a French home then selling the UK property at today’s market price is the only option available. Some of my clients have sold their UK property and applied for a French mortgage on a home in France while living in rental accommodation in the UK and remaining in their current employment.

By doing this, and by buying a French property that could produce an income, they have been able to make the move to France once they have achieved sufficient income to meet the mortgage repayments. Good marketing and ensuring that the g�te is at a high standard will certainly increase the amount of annual bookings that you receive. One g�te alone may well not provide sufficient income. You might already have other ideas of ways to make a living in France or you might need to consider taking on a property with space that could be converted into more than one letting unit to maximise potential income.

I have also spoken to a lot of people who feel they have put their plans for buying a French holiday home on hold for too long. They are aware that property prices in France are beginning to rise again and they really want to be able to buy something this year. Many of these people were planning on releasing equity from their UK property or downsizing to provide the funds for this purchase but they have seen house values fall and their plans crash. If you are in this position and are prepared to be flexible, there are ways to get that French holiday home in time for the summer.

Often, holiday-homebuyers are fixed on their idea of where they want to be but, by looking at cheaper areas of France, your budget can go further. However, if you have definitely decided that your holiday home must be in a certain part of France with certain leisure activities available then there could be a way to get moving on your plans now.

If you have sufficient borrowing capacity, you could look at raising a French mortgage to buy a property and generate an income to cover the repayments by letting the holiday home when you are not using it. You will, however, need to speak to a broker to make sure that your present income will cover the additional mortgage repayments as French lenders are not likely to take projected income from informal property letting into account when assessing your borrowing capacity. Most owners of holiday properties work on a 12–16-week letting period; this leaves at least 32 weeks free for you to enjoy your holiday home as you wish.

Should you feel that you want your special holiday home but you also want exclusive possession of it, you could consider buying a house that is ready to move in to with outbuildings that have potential for development into a second property to rent out.

Good news

If you feel that now is the time to make a fresh start in France, the good news is that there are possible options:

• Keep your UK property and use the rental income to fund a mortgage on a French home until the UK market improves, then sell the UK property and pay off the French mortgage.

• Be flexible on the type of property you’re looking for and on location so that your money will go further.

• Consider buying a property that could produce an income for you to fund the French mortgage payments.

Finally, should you need any more encouragement then remember that house prices in France are increasing again.

With French mortgage rates currently at an all-time low, and likely increases on the horizon, never has there been a better time to take another look at your situation to see if there is any way of making that fresh start.

Louis Mann, director, Validus Financial Services Tel: 020 3142 6203www.validusfs.com