Onus On French Property Owners To Keep Up To Date
Anyone thinking of settling permanently across the Channel is being urged to ensure that they are up to date on recent changes to French property and social security laws. With 6 out of every 10 foreign buyers in the country being British, it will hit Brits the hardest. The ongoing changes, affecting mortgages, inheritance tax, purchasing legalities and healthcare will have a direct impact on all non-nationals whose primary residence is in France, thought to be up to as many as 100,000 Brits alone.
The big shake up is in the introduction of new rules governing state health cover for non-nationals 
below retirement age living in France. From now on, so-called ‘inactive’ people, that is, those retired or unemployed, below state retirement age will no longer be eligible to receive state health coverage, certainly something to be aware of if you are under the threshold age and have a long term health problem. The new regulation has been met with accusations of being in breach of EU law but new French President, Nicholas Sarkozy, is determined to revamp the French social security system. Hitting the ex-pats, who have little or no voice in the country, is thought to be his idea of a good way to initiate his long term plan. Although it won’t necessarily significantly affect a great proportion of non-residents, those it does affect will be dealt a harsh blow.
The new introduction of mortgage interest tax relief sounds great but is subject to immense amounts of terms and conditions, primarily, that it only applies to purchases made since mid-May of this year and only for the first five years of the loan. The amount of interest to benefit from the relief is strictly capped at €1,500 p.a. for couples and €750 for single people and seems to be designed to most assist those at the lower end of the property ladder, giving the most benefit to purchasers buying properties at around the €126,000 mark, a typical spend for France’s typical ex-pat.
Inheritance tax laws are looking more encouraging, the threshold having been raised from €50,000 to €150,000 and property passing to spouses will now receive the same (exempt) treatment as it would in the UK. The allowances for each child also rise from €50,000 to €150,000. A new regulation for anyone keen to turn a ruin into a castle is the introduction of compulsory renovation insurance. All completed renovation work must now be accompanied by a ten-year, insurance backed defects guarantee. Purchasers may do the work themselves but, if the work is not carried out by a recognised professional, the insurance document will not be given and may adversely affect the sale price of the property at a later date.
The French property laws also get a green injection, thanks to the introduction of an obligatory energy diagnosis or ‘diagnostic de performance energetique’, an assessment which must be undertaken by a certified professional (for a non-refundable fee) in order to assess the likely energy usage of a property. Any presence of asbestos or lead must be noted and the document will also include technical recommendations for improving the property’s overall energy consumption. While the document is not legally binding and recommended changes do not have to be made, the diagnosis aims to serve as a point of reference and comparison for individuals looking to buy in the area.
This news comes as a timely reminder to all overseas property owners of the importance of keeping abreast of new property rules and regulations irrespective of whether they are resident or non-resident in their chosen country of ownership. Like a puppy at Christmas, a second home abroad is for life not just the summer and the onus is on international home owners to ensure they are fully compliant and up to date with all local real estate laws.
