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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

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