France tops list of overseas property hot spots as pound reaches seven-year high against euro

Ideal buying conditions are drawing British investors back to the French property market. Mortgage rates are at their lowest in more than 60 years and the housing market is sluggish, with prices back at the levels they were in 2007.

It’s perhaps no surprise, therefore, that France has accounted for almost half (46 per cent) of Conti’s mortgage enquiries over the last four months, reclaiming the top spot back from Spain. And ski properties are proving most popular, with the RhôneAlpes region pulling in the most buyers.

The biggest boon for buyers, however, has been the steadily increasing value of the pound against the euro, which reached a seven-year high of €1.34 last week. This is effectively shedding tens of thousands of pounds off buyers’ budgets.

With the pound currently hovering around €1.33, a €200,000 home in France now costs £150,376 compared with £175,439 back in the summer of 2013 when the pound was worth just €1.14. That’s a saving of more than £25,000. Investors, full of fresh optimism, are bringing their plans forward and snapping up bargains while they can.

Clare Nessling, director at Conti, says: “Over the last three years, but during 2014 in particular, RhôneAlpes has been growing in popularity, with more than four in ten (44 per cent) French mortgages being taken out to purchase a ski property in this region.  And the department of Haute-Savoie, where popular resorts such as Chamonix, Morzine and Les Gets are located, is top of buyers’ lists.

“The French ski market is popular with the British but is also extremely well supported by the domestic market, making rental opportunities good. It’s also very accessible, by air, train and car, and the culture is familiar, which British buyers like. When you combine these things with the current mix of ideal buying conditions, including the favourable exchange rate, it’s basically a great time to buy a French ski property.”

French mortgage rates are still at their lowest in decades, with deals starting at just 2.2 per cent for a variable mortgage over 10 years, and 3.25 per cent for a 25-year fixed-rate mortgage. And unlike many countries where the best rates are limited to those with the biggest deposits, both of these deals, and many others, are available for mortgages of up to 80 per cent loan-to-value.

As always, Conti says that it’s vitally important for buyers to seek the right advice. Bitter experience has taught many overseas property buyers that scrimping on independent legal advice can effectively cost them their holiday home. Buyers should always go through the same process that they would follow if they were buying a property in the UK. There’s nothing to be gained, and everything to lose by cutting corners and failing to carry out due diligence.

 Conti’s top tips for buying French property

Seek professional advice

Take independent advice from an English-speaking lawyer who is not connected to your seller, estate agent or property developer.

 Obtain an Approval in Principle

If you intend to take out a mortgage, an AIP will confirm that you can obtain the necessary funds before signing any dotted line and prove to sellers that you’re a serious buyer.

Never sign a contract that you don’t understand

If two versions are provided, i.e. English and French, ask your solicitor to confirm the English version is a true translation, as you need to ensure it doesn’t contain errors, omissions or extras.

Consider exchange rate fluctuations

We generally recommend that an overseas mortgage and the income used to service the mortgage repayments are in the same currency, thus avoiding exchange rate issues.

Factor in additional costs

Bear in mind that bills don’t end at the asking price. Lawyer’s fees, local and national taxes, insurance, and so on, can often add at least a further 10 per cent to the cost of your acquisition.

French mortgage best buys available through Conti

 Interest rate  Product type  Max LTV Repayment/Int-only  Minimum loan
2.20% Variable -10 yrs 80% Repayment €100,000
2.60% Variable – 25 yrs 80% Repayment €100,000
 2.75% Capped 85% Repayment  €100,000
3.25% Fixed – 25 yrs 80% Repayment €100,000

Rates correct as at 02/02/15. All product specifications will depend on individual circumstances. The table shows a small selection of the deals currently available and should be used as a guide.

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