Vic, it must have been that crystal ball you bought your OH last birthday ;-)
Yes, my OH has had several of her properties snatched from under her feet when the owners were dispossessed, sadly after reducing the house to a price that would not even have paid off part of their debts in desperation. One example that broke her heart was a woman whose husband died suddenly but with no insurance although he had assured there was for years. In fact they had a mortgage she knew nothing about. Whilst they lived in a small house, they had a barn converted into three gîtes that had not done well for a couple of years that was by then worth less than the debt. Somehow he had concealed the fact they were about to be repossessed and had the barn on the market for roughly six weeks before he popped off. So nobody even had any kind of warning. The bank had the people go in and the woman had to go to live with one of her children. Because of the value of the property being below the debt all but basic needs furniture and household items were forfeit. These stories are heartbreaking. The sooner she is out of the immoblier business and back to what we normally do properly the happier she will be especially, but I will not need to hear these awful stories.
"it's free money, get out and borrow." Right O yer kenship. I'll leave, untouched, the shed load of dosh I've got in AV's & other legit. investments, ignore the rental income on my commercial property portfolio, refuse the monthly income on my pensions & get out & borrow. Always good to get the benefit of an experts opinion. This household looks forward to your ' Blimpisms' as they've come to be called. Keep up the good work, your pearls of wisdom are always welcome here. Dunno how we managed before you came on the scene.
What we've had in the UK, which is the point I was trying to make before, is a prolonged and artificially inflated boom - or artifically inflated prices.
You buy in 2004 which may or may not have been the first plateau of the original boom. Then it levels off for a short while, then off it goes again. Rinse and repeat.
What appears to be happening now is that prices are returning to what they should be had the market not been artificially inflated in the first place. What that level is, I don't know. I know I was talking to friends in 2002 and we were saying how the rising prices could not go on!!!
You can see when you look at the French property market how prices 'rise' or increase in value when a market does not have any artificial inflationary factors.
I think, prior to recent history, 'normal' interest rates are around 4.5%. When were they last that in the UK?
Your situation is not helped by you not being certain, or torn, between where you want to be. I could make a definite decision on that matter if I were in your shoes - you don't have that advantage.
I've heard the mutterings about interest rate rises. Depending on what the mortgage is etc etc, that would be the worrying factor for me, but possibly only because in the early 90s that was what forced us to sell our home. We hadn't overstretched ourselves when we bought, but we simply couldn't keep up with the interest rate rises.
Debra, there's a difference between a boom, a bust and stagnation. I can't say I know what's happening in different areas of the UK now - haven't got a clue. But you saying that the market value of your house is back to what you paid for it 10 years ago makes me think you bought it just after prices had topped out for that area? ie you bought at a high.
Reading between the lines I think there is a split decision as to where you really want to be. I could be wrong. Plus the mortgage issue is tugging at your worry strings.
The LSE are recommending holding on to property until recovery from the crash that is inevitable given the present rate of mortgage defaults and potential interest rise that the BoE are saying may be necessary very soon.
As for the 2009-10 crash, internationally it is being said that it may never end but simply knock on in waves. There appears to be only one man disagreeing with that anywhere in the world. His name is Osborne. I don't regret having sold up and got out at the right time I have never had a mortgage because I inherited a bit more than I paid for my first place and have been ahead of the game. Now I am too old to bother, would be well out of the market anyway and even if I could, would I walk into a potential crash with my eyes open? A Scot married to a Swiss, too tight and too careful...
Brian, the reply button has disappeared so I can't reply to you directly!
You actually make a good point - that is the second time I've heard of people in France looking for land outside of France to farm and then to ship the produce back into France.
I see Ken's point in that land is always going to have value but then I think also that value can get overinflated like anything else.
Another point to note though (which Ken won't like) is that horse people are notorious for somehow wanting to pay more for land. A case in point - I lived opposite a paddock that had been rented out during the summer months (April to Sept) for his ewes. He paid £47 per year. It was only a couple of acres. Then along came someone with a shetland pony and offered the owner £400 per year for it. Two years later the owner put the rental up still further (I don't know to what) but by that time the Shetland pony owner had got bored and sold the pony to a guy who lived opposite. Both the farmer and land owner couldn't stop laughing.
Karen, a lot of it around here is pretty big. This is three things here: Cash crops, dairy farming and forestry. Prime dairy pastures, big areas of land sometimes, are going for a 'song' as the farmers go broke because they cannot afford to modernise even with EU subvention. One here is buying land in Poland at present, moving his entire dairy production there in a couple of years and wants rid of the whole lot here. He has no chance financially here but there he has cheaper land, labour and already has far more modern processing plant on order. He will employ a farm manager and commute back and forth because his family are here and has a bought a house in a nearby town already.
I think we heard all of that type of thing when prices began to be too high in the UK, especially whilst I was still there in a farming community during the 1990s crash that turned the value of land round for a while.
Blimey Debra. At least two houses & loads of land in France plus a house in England as far as I can count. Seems like you buy property like most women buy shoes :-)
I'm not quite sure who I'm responding to, but:
Surely land prices in France are like land prices in the UK - it depends on the type of land, what it can be utilised for, and where it is.
Okay, you might get a standard average for good quality agri land with productive capacity in the south, but you aren't going to get the same average for scrub land up a hillside in Weardale!
Also in many cases it depends on the acreage involved. Larger farmers aren't going to be interested in a couple of hectares that are hard to access - but they are going to be interested in 100 hectares that are adjacent(ish) to their own farm.
Land price averages in the UK are quite high - but they aren't reflective of all land all over the UK - even agri land comparative to agri land.
Thanks Debra, and there is no shortage of it. Some around here has been on sale since we have been here and does not shift. It is not you €2.4k per hectare yet but who knows in a while.
Economic reports actually show France's economy has turned round. That was published on Thursday. Germany and France are the top European economies now, the UK is flagging. So much for predictions about five years from now since by then the lot may be in the gutter, including the centre of the universe across the pond and its annexe across the ditch. Nobody knows, not even the sagest economists...
Found this link that gives a bit more info on the viager v vente a terme situation. I think there are some tax advantages to the vente a terme but not viager re the rent.
http://www.french-mortgage.com/index.html?http://www.french-mortgag...
Right. Got it. A bit.
So there are some benefits to the seller/landlord depending on which method they use as a rent to buy?
Maybe would be more suited though to properties which are a bit down at heel and the owners don't want to/or can't afford to, do them up and get them in a condition fit to rent under normal conditions?
That's basically what I meant: the boom lasted a short period, the bust went on longer. Still relative to this time, 6 years is short. Same in middle England, just a year or so out - boom 88 then bust then didn't pick up till about 94. We sold in 93 but we were lucky!
This time round the boom went (and is still on-going?) for longer. Buoyed up by the interest rates and relatively easy lending. I know they restricted it for a short while but not long enough to let the market find its own level. What's going to happen when it really busts?
Like you say the French property market is a different animal. It's not buoyed up for one thing. But many, many Brits who come here didn't realise that.
Would renting under the terms suggested by the first guy (I'm only using him as a broad example) mean that you were under less obligation than if you rented under normal circumstances?
It's a genuine question.
I was thinking that if,for example, you as a landlord weren't responsible for major repairs, or replacing central heating boilers - or even if you could 'rent' it out under less stringent guidelines than would be required under a standard rental agreement?
It depends on where you lived when you experienced the boom and relative bust.
Booms usually start in the south, pick up Wales quite early though and then start their move north. It never even reached Scotland last time.
We bought in 88. There was no boom. We bought 'normally' and the boom came about 9 months later (late 88). We paid 30k at the beginning of 88 and 9 months later were offered 65k 'blind' by a surveyor who seemed to be taking full advantage of the situation. We declined.
We then had to renovate and in 90 put it up for sale due to the interest rate rises. We sold in 93 for 65k - fully renovated.
So really the boom to bust I'm talking about was 87-90 depending on where you lived. It busted longer than it boomed and then normalised for about 5 years till the whole thing started again down south, went to Wales, travelled up north and this time hit Scotland.
I'm not quite sure where they are now, but UK properties are still stupid money for what you actually get.
Yes, that is right Anne. When I asked why, it was something along the lines of "would rather be a big fish in their own pond...." Not sure if it is a pity or not, they must be doing something right otherwise we wouldn't all be coming to France en masse. Although I hear some people saying it is France they love, not necessarily the people ;-) If we try to change or influence their quaint esprit too much maybe it wouldn't be the same?
And, yes correct about the new legislation, it is going to be very costly to convert potential public buildings to European Standards.
I kept coming up with the viager stuff. It seems the term vente a terme covers lots of different things. It's very complicated to get your head round!
Someone here -- sorry, I cannot find the post -- said I should not go to the bank manager. Well, my policy in this is to leave no stone unturned, so I did go and asked for any suggestions. She pointed me to the agents of commercial property who advertise on the local departmental chamber de commerce site. It is a totally different list from the agents I have seen before, therefore, perhaps a totally different market of buyers to reach. As my house once held two businesses simultaneously (it really is quite big and in the middle of town) it qualifies. The first agent I contacted has agreed to list it. It may lead nowhere, but at least it is another opportunity.
So...the bank manager was really very helpful.
Rachael - Et voilà! I think it is the fear of trying anything new, or the fear of failure, perhaps, which is a great pity.
Victoria - sadly, in modern times with modern legislation, "just a roof" will no longer do if the public are invited. There are safety and handicapped access requirements which my building does not currently satisfy. As the building is in the centre of town, the mairie would not really be able to look the other way.