Mixed news following Budget

The Budget impact assessed

In drawing up a ’Budget for growth’, UK Chancellor George Osborne has devised a raft of measures to encourage business in Britain. Among the other headlines is a Government-backed shared equity scheme to give 10,000 first-time buyers a leg-up onto the property ladder.But what about those who already own properties in France, or are planning to buy there? Richard Hatt, of overseas financial experts, Siddalls, says: “In terms of currency and equity markets the Budget impact has been essentially neutral. This is largely due to the fact that Budget announcements now contain few surprise’ elements as key measures were trailed in the draft Finance Bill last December and in other previous government announcements.  “The main impact for UK expats in France is for those who have income still taxed in the UK, such as government pensions and UK rental income. These individuals will see a welcome increase in their post-tax income from the UK due to the increase in UK personal allowances for 2011/12 and the promise of further increases in 2012/13.”For Simon Smallwood, of International Private Finance, time is the key: “Weakening of sterling could put people off buying in France. But we are still seeing a lot of interest in buying in France. People who were going to buy in cash are now looking to take out a euro mortgage on 80% of the value of the property, with a 20% deposit in sterling. This will reduce the sterling cost of the purchase, which they can look to pay off at a later date when sterling improves.“We do expect sterling to improve. The difficult decisions the Government is making now, in terms of spending and taxes, mean that while things will be painful in the short term, we believe they will recover more quickly and robustly in the medium term, with the pound recovering as a result.“So for people already living in France, if their pension is in sterling, then when they transfer this across they will be getting fewer euros for now, but this should improve in the near future.”David Kerns, private client dealing manager at Moneycorp believes that the exchange rate will make things rather tight for expats living in France over the coming months, but goes on to point out that France remains a good place to put your money, saying: “The French property market remains stable. With no runaway inflation in France, French property can be seen as a safer investment than, say, property in Spain.”