Equity release in France

 

With problems related to pensions and retirements increasing rapidly people are becoming more and more aware of options available to them regarding equity release. Equity release plans are a way of releasing cash that you can then use to make your retirement life easier and more satisfying.

With a range of different schemes available it is quite a task deciding which scheme will benefit your particular situation the best. Every scheme runs on the same basic principle which involves lending you a part of your home’s value in return for a share of the sale proceedings after you die.

Viager process

Whilst people in the UK are quite familiar with equity release schemes, a similar process runs in France as well – and many people in the UK will have holiday homes there which they might be looking to release capital from.

Equity release in France operates either through a lifetime loan against the property or through the process of actually selling the property. This particular process is called ‘viager’.

Equity release in France has seen the introduction of lifetime loans only fairly recently and they aren’t offered by many companies. Viager is seen as the only cost-effective way to release equity in the property.

Rewards and risks

Viager sales involve the sellers continuing to live in their homes until their death - or for a specific number of years. The seller benefits from the released capital, whereas the buyer hopes that the property value will increase enough for them to make a profit. However, increased lifespans have increased the risk to buyers engaging in the viager process.

In fact, the oldest person who ever lived sold her home to a lawyer in order to benefit from its value. She went on to live for another sixty years, outliving the person who bought her home!

Consequently, properties are usually sold on a discounted basis, meaning that some of their equity is lost. The seller receives a capital along with annuity payable until death. The higher the capital sum the lower annuity will be and vice versa.

As with any cross-border dealings, if you are considering releasing the equity you hold in a French property, you should seek legal advice from a specialist. Even if you are familiar with the language and legal system of France, obtaining representation early can help avoid costly mistakes.

If you would like to obtain legal advice on equity release in France then Contact Law can put you in touch with a local property / equity solicitor free of charge. So, if you have any questions or would like our help in finding local property / equity solicitors please call us on 0800 1777 162 or complete the web-form above.

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