French Equity Release - Releasing the Equity Capital in your French Home using a French Viager Sale

If you need to augment your retirement income but can't or don't want to sell up and leave France just yet, a Viager sale may be the perfect solution for you. Under the French Viager scheme you can sell your French property to realise the capital you have tied up in it, receive a monthly income and still live in the property rent free.

Before you get carried away with the possibilities of a Viager Sale please read through this page fully. The Viager scheme can't be used by everyone and there are some very specific tax and legal provisions that need to be considered. This is not something you can arrange without good legal advice covering the law of France and your country of origin. So, with that warning, read on to find out what a Viager Sale is all about.

A Simple Explanation of a Viager Sale

The French regulations governing Viager Sales were designed to enable elderly property owners with no valid inheritors recognised under the provisions of the French inheritance laws, the Code Napoleon, to benefit from the value locked in their property so that they could enhance their income in retirement without having to give up their property.

The buyer and seller agree to the purchase/sale of the property for money paid today though the property won't actually pass to the buyer until later, for example on the seller's death. Until then, the seller can continue to live in the property rent free whilst receiving a monthly income from the buyer.

Essentially the buyer and seller are betting against each other, with the seller betting that they will live longer than the forecast and the buyer betting that they won't. It's easy to understand this with a worked example so try to work through the following example using simplified numbers.

A Simple Example of a Viager sale

• The open market value of an example property is €100,000 and the age of the owner occupier, who is in poor health. is say 80 years
• Using actuarial tables it is predicted that the owner occupier only has a 0% chance of living beyond 90 years.
• The current open market value of the property is thus reduced to say €60,000 as the buyer won't be able to take possession for 10 years.
• If the seller dies early, say tomorrow, then the buyer takes over the property immediately and makes a profit of €40,000 as they won't have to wait 10 years before taking control of the property.
• If the seller lives to be 100 and outlives the buyer then the buyer never receives the property and looses €60,000.
• The seller is free to use the €60,000 they receive as income to support their retirement because it never has to be paid back.

Please be aware that this is only a very simple example to give you an overall idea of how a viager sale works and you should not base your expectations on it.

The process for concluding a Viager Sale

1. Having first established that there can be no legal claim from an inheritor recognised by the French Code Napoleon the property owner occupier(s) puts the property up for sale as a Viager.
2. The sale offer specifies the current open market value of the property and the age and health of the owner occupier(s).
3. Using actuarial tables, the notaire will calculate a fair sale discount for the property making due allowance for the expected life span of the owner occupier(s).
4. The property is then put on the market at the current open market value less the discount applied from the actuarial tables to give an asking price.
5. A buyer, who is interested in buying the property, then uses actuarial tables to attempt to calculate the point at which the discounted open market value converges on the forecast future open market value at the forecast date of death of the owner occupier and will offer price no higher than the calculated time discounted price. Essentially, for you ex accountants, this is a discounted NPV (Net Present Value) price.
6. Assuming both buyer and seller agree on a price, a sale contract will be drawn up specifying at least the following elements:
   • The Bouquet - The initial up front payment the seller will receive from the buyer.
   • The Rente - The amount of the regular payment the seller will receive from the buyer for the rest of the life of the seller. (This may be zero if the seller has taken the full agreed value as an increased Bouquet).
   • The Usufruit - The date or conditions on which the use of the property passes from the seller to the buyer.
7. The contract will be signed and both the buyer and seller wait to see whether the seller outlives the buyer!

Is a Viager Sale right for Me?

The first thing to understand about a Viager Sale is that such a sale is not possible for everyone, requires good legal advice and cannot be concluded "overnight". However, in the right circumstances, it can be a wonderful way of augmenting your retirement income and being able to stay in your French house for as long as you wish.

Though this page attempts to give some very basic understanding as to what a Viager Sale entails you should definately take professional advice to ensure you achieve exactly what you are setting out to achieve.

How we can help

Because we understand the Viager Sale process we can help you as follows:

1. Discuss with you whether or not your personal circumstances are appropriate for a Viager Sale. (There is no charge for this).
2. If we together conclude that you might be eligible for a Viager Sale Equity Release we will manage the process for you. (We will charge an agreed fee for this work).
3. For our fee will do the following:
   • Discuss the details of your case with an English speaking French registered and qualified notaire. If the notaire believes he can help he will contact you directly to begin the legal process. (We receive no commission or other payment from any notaire for this).
   • When the legal work is sufficiently completed we will put you in direct contact with specialist French estate agencies that specialises in Viager Sales and, if necessary handle any French / English translation that may be required. (We receive no commission or other payment from any estate agency for this).
   • Notify the notaire of the estate agency details so that the notaire may manage the Viager Sale process for you. (We receive no commission or other payment from the estate agency and or the notaire in respect of the sale of your property).
4. We will stay at your disposal for any miscellaneous help you may need until your Viager Sale is concluded successfully.

For a free no nonsense discussion as to how our services can help you Release the Equity Capital in your French Home using a French Viager Sale contact us here or give us a call on +44 (0)20 7193 7843.