The Brits are Back

The Brits are Back

A change in circumstances appears to be underway: the acquisitions of property by the English appear to be gaining momentum once again… The convergence of several factors is strongly encouraging the English to invest in French property once again. Indeed, whether for economic or legal reasons, we have observed a slight decline in the acquisition rate of French property by British nationals over recent years.

What reversal of circumstances are we talking about?

• Economic aspects: the exchange rate

British nationals pay particular attention to the exchange rate. The evolution of the exchange rate €/£ goes hand in hand with the willingness to invest or not in French property. However, with the economic and financial crisis that occurred in 2008, exchange rates fell to stabilise for several years at a historically low rate. It was in January 2009 that the exchange rate reached its lowest level: £1 = €0.40. It then stabilised to varying degrees between £1 = €1.10 and £1 = €1.26 (with the exception of a “peak” in July 2012). However, since February 2014, there has been a significant and above all constant rise in the exchange rate, to the point that we can now say we are back at the 2008 rate, i.e. the pre-crisis rate. This is good news for the English! As well as for French property owners looking to sell their property…

• Legal aspects

– Non-resident owners, CSG and CRDS

Since the law passed on 16 August 2012, non-residents owning property in France are affected by the généralised social contribution (CSG) and social debt repayment contribution (CRDS) deductions on their rental income and property capital gains. The level of these charges amounts to 15.5%. Furthermore, these deductions do not confer any entitlement to French social benefits. It goes without saying that this measure has been widely criticised, all the more so as it appears to be contrary to European law, which states that in matters of social security, persons “are subject to the legislation of only one Member State”. In order to clarify the question and put an end to a possible illegality on the part of France, the Court of Justice of the European Union has been referred to by the Council of State. A decision is expected by the second half of 2015: it is therefore highly probable that the English will no longer have to pay these social charges and may even be reimbursed for them. If this tax is no longer required from non-residents, then the costs associated with investing in French property will decrease considerably (on a base of 100: 100 today against 75 in 2015).

Furthermore, in April 2015, the conditions relating to pensions in England will be profoundly changed. It will now be possible to withdraw money from their pension fund before the age of 55. The English can carry out any operations they wish, including withdrawing their entire pension! They can withdraw 25% of their “pot” tax-free. Beyond that, any withdrawal will be subject to the highest marginal rate.

Thus, the possibility of obtaining 25% of their pension fund without any tax enables them to generate additional purchasing power, notably to finance the deposit on French property.

In conclusion, the acquisition of French property by a European and more specifically British clientele has a bright future ahead! The French regions preferred by the English include Aquitaine, Brittany and Normandy… So expect the return of the Brits!