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French reversionary property investments / French Viagers.
Property investments based on life expectancy of the vendor
Brief Overview
Purchase of a property from a retired homeowner (over 60 years old) at a highly discounted price
- Vendors release equity from their properties without selling or moving out
- Vendors willing to receive additional income to supplement their pensions
- Vendors granted a lifetime annuity
Variable discount, according to
- The age of the vendor
- The characteristics of the property
- The location
When the vendor passes away, the property reverts to the buyer
Context
The French social and economic environment is strongly favouring reversionary property market
- People live longer due to progress in medicine (In 2020, people aged 60+ will represent 25% of the French population, vs. 20% today)
- Pensioner can no longer live on their pensions and require an additional source of income
10,000 reversionary transactions in France each year
- Types of properties: studio flats, apartments, villas and commercial properties
- Located in attractive areas: Paris and close suburbs, the French Riviera, the Atlantic coast
Types of Reversionary Properties
Tenanted VS Vacant
- Tenanted: Vendor lives in the premises.
- Vacant: Vendor lives outside the property. Buyers can use the property or rent it out.
Types of payment structure:
- Lump sum plus monthly annuity.
- Lump sum, no future annuity to be paid.
- Monthly annuity only (no lump-sum payment).
Rights and Obligations
Rights and Obligations of the Buyer
- Becomes owner on the day of the exchange of the title deeds
- Pays for any major works done as well as for the land tax
- Can sell the property whenever, without the approval of the vendor
- Can use the premises if the vendor decides to leave the property
- Can take insurance policies to limit excess of life expectancy
Rights and Obligations of the Vendor
- Vendor has the use of the property, but he cannot rent it
- The vendor will pay for the service charge, council tax and maintenance
- Contract can be called off in the following situations:
The vendor dies within the following 20 days after the exchange
Low selling price (i.e. to avoid inheritance tax)
If the buyer knew that the vendor had an incurable disease when he bought the property
Investment Opportunity
Excellent opportunity
- Medium to long-term horizon
- Possibility to buy properties at a huge discount
- Most properties located in prime areas
- Portfolio diversification
- No capital gain tax (when property reverts to buyer)
- Reduced notary fees
Target investors
- Institutional investors
- Affluent individuals planning for their retirement
- Foreign investors who want a holiday home in France in the medium to long-term horizon
Information supplied by
This information was provided by EU Property Portfolio (EUPP), the specialist for French viagers (French Reversionary property investments) and adviser to UK private and institutional investors.
Contact: Farida Vidal
EU Property Portfolio (EUPP)
2 Heath street
Hampstead
NW3 6TE London
Tel + 44 (0)845 2265093
