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French bank lays out tougher mortgage requirements for Brits buying second homes

For British citizens wanting to buy a house in France, Brexit has brought in extra complications around visas and length of stay, but getting a mortgage to buy your dream home might also be getting tougher, as France-based mortgage broker Eddie Sammon explains.

French bank lays out tougher mortgage requirements for Brits buying second homes
Photo: AFP

For many people, buying a property in France to enjoy long holidays in is a long-nurtured dream and thousands do so every year.

For British buyers, Brexit has added a few complications – with the 90-day rule now meaning that second home owners must either limit the length of their visits or apply for a visa.

READ ALSO EXPLAINED: How to get a visitor visa for France

Despite this, plenty of people are still going ahead with purchases, looking ahead to a post-vaccine future when travel will again be possible.

But it seems that there may also be financial issues for Brits looking to buy second homes in France in the future.

We asked Eddie Sammon, a British mortgage broker living in France who specialises in the English-speaking market.

Have you noticed any changes in the market due to Brexit? 

Yes, firstly, there was a rush of Britons seeking mortgages in order to move to France before the end of the Brexit transition period (January 1st 2021). It is not necessary to own a house in order to establish residency in France, but many prefer to do so.

House purchase in France often takes approximately three months and I saw panic starting to creep in from Britons around September time, worried that their purchase would not complete before the January 1st.

By November, demand from UK citizens seemed to have reduced significantly as people realised that any new property purchases would be unlikely to complete before the end of the transition period, even though some managed to succeed in a two-month timeframe.

What about the start of 2021?

Now in January 2021, one of the main French banks for non-residents has contacted us with new, tougher post-Brexit criteria for UK residents.

What are the requirements?

For the bank in question, UK residents wishing to obtain a mortgage for a second home in France will have to be able to demonstrate that they satisfy the conditions to be classed as a high net-worth or high-income individual, unless they are purchasing their primary residence or a property which will be mostly rented out. UK citizens who are tax resident in France will not be affected.

To be classed as a high net-worth or high-income individual, you will need to earn at least £150,000 per year or have £500,000 in net-assets. For couples, this is required for each borrower.

If both potential borrowers do not meet the criteria then the only possibilities will be a mortgage for a primary residence or for a property which will be mostly rented out.

The bank has stated that they have introduced this criteria “in order to comply with new regulatory requirements in force in the United Kingdom”.

Is it just one bank that has said this?

So far, yes.

So will this affect the housing market in France?

From a business point of view, Brexit strengthens the need for our business to have a diverse client-base due to the drop in demand from Britons and the new tougher mortgage criteria.

UK residents currently make up a minority of our new mortgage enquiries and whilst we will always do our best for our UK resident clients, we are rapidly increasing our French mortgage offer to residents in France and across the world.

Eddie Sammon is a mortgage broker for Harrison Brook Mortgages (www.hbmortgages.fr). He moved to France from the UK three years ago and is regulated under HB Property SAS by the Autorité de Contrôle Prudentiel et de Résolution, part of the Banque de France.
 

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MAP: Where in France can you buy property for less than €100k?

While French cities such as Paris are notoriously expensive, there are many areas outside the cities where it is still possible to buy spacious homes for less than €100,000 - particularly if you don't mind a bit of renovation.

MAP: Where in France can you buy property for less than €100k?

We decided to look at where in France you could afford a property on a budget of €100,000, and it turns out there are some bargains to be had.

There are a lot of caveats while searching for property, and many local variables in place, but our search does show some of the areas to concentrate on if you have a limited budget.

We used the Notaires de France immobilier website in August 2022, and we specified that the property should have at least five rooms (including kitchen and bathroom) and a floor space of at least 100 square metres.

We also discounted any property that was for sale under the viager system – a complicated purchase method which allows the resident to release equity on their property gradually, as the buyer puts down a lump sum in advance and then pays what is effectively a rent for the rest of the seller’s lifetime, while allowing them to remain in the property.

READ ALSO Viager: The French property system that can lead to a bargain

For a five-room, 100 square metre property at under €100,000, you won’t find anywhere in the Île-de-France region, where the proximity of Paris pushes up property prices. The city itself is famously expensive, but much of the greater Paris region is within commuting distance, which means pricier property. 

Equally the island of Corsica – where prices are pushed up by its popularity as a tourist destination – showed no properties for sale while the region of Provence-Alpes-Côte d’Azur – which includes the French Riviera – showed only 1 property under €100,000.

The very presence of Bordeaux, meanwhile, takes the entire département of Gironde out of this equation – but that doesn’t mean that the southwest is completely out of the running. A total of 25 properties came up in the Nouvelle Aquitaine region. One property was on the market for a mere €20,000 – but it was, as the Notaires’ brochure noted, in need of “complete renovation”.

Neighbouring Occitanie, meanwhile, showed 12 further properties in the bracket.

By far the most properties on the day of our search – 67 – were to be found in the Grand Est region of eastern France. The eastern part of France overall comes out best for property bargains, with the north-east region of Hauts-de-France showing 38 properties and and Bourgogne-Franche-Comté displaying 25.

Further south, however, the presence of the Alps – another popular tourist destination – pushed up prices in the Auvergne-Rhône-Alpes region which showed just three results.

The below map shows our search results, with darker colours indicating more cheap properties.

Property buying tips 

In order to make a comparison, we focused our search on properties advertised online, but if you have a specific area in mind it's well worth making friends with a few local real estate agents and perhaps also the mayor, since it's common for properties not to be advertised online.

Most of the truly 'bargain' properties are described as being "in need of renovation" - which is real estate speak for a complete wreck.

If you don't mind doing a bit of work you can often pick up property for low prices, but you need to do a clear-eyed assessment of exactly how much work you are willing and able to do, and what the cost is likely to be - there's no point getting a "cheap" house and then spending three times the purchase price on renovations.

READ ALSO 'Double your budget and make friends with the mayor' - tips for French property renovation

That said, there were plenty of properties at or near the €100,000 mark that were perfectly liveable or needed only relatively minor renovations.

You also need to pay attention to the location, as the sub-€100,000 properties are often in remote areas or very small villages with limited access to amenities. While this lifestyle suits many people, bear in mind that owning a car is a requirement and you may end up paying extra for certain services.

Finally remember that government help, in the form of loans and grants, is available for environmentally friendly improvements, such as insulation or glazing.

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