Whilst the concept
of equity release is fairly new in France and the option is only just
becoming more widely available, property
owners here have always been able to sell ‘en
viager’
Selling a property ‘en
viager‘ basically means that you
transfer ownership of your property to a buyer (like an ordinary sale and
purchase) but instead of paying the full price, the buyer simply pays an agreed
annual rent to the seller while they remain in the property for the remainder
of their life. On the death of the seller
the buyer takes posession of the property and of course benefits from its
increased value.
In much the same
way as an equity release scheme in the UK ‘en
viager’ allows people, usually elderly to enjoy an additional income at a
time when they may need it most.
Of course being
France the process is highly contractual and the calculation of the agreed rent
(in its most basic form - value of house divided by average life expectancy of
the seller less any upfront capital payment agreed) is overseen by an appointed
notaire and involves the obligatory forest of trees in terms of paperwork.
Of course for the
buyer this scheme is primarily an investment
gamble and in the case of a premature death could turn out to be an
incredible bargain.
But of course the
premis ‘buyer beware’ must be at its most relevant here ably demonstrated by
the much publicised case of Jeanne Calment.
Mme Calment was a French woman credited with the longest recorded life
span dying at the ripe old age of 122.
Of course such longevity is usually a cause for great celebration but
not perhaps for the notaire who bought her appartment ‘en viager’ in 1965. Sadly he died two years before Mme Calment and
ended up paying nearly twice the value of the property in the contracted agreed
annual rent.
Some
you win and some you lose!!!
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