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

It's an unusual type of property transaction, but the French system of 'viager' has benefits for both sellers, who are usually elderly, and for buyers who can snap up a bargain. Geneviève Mansfield explains more.

Viager: The French property system that can lead to a bargain
Photo by PHILIPPE HUGUEN / AFP

Viager is a type of real estate transaction in France, in which you buy a property, but can only move in once the vendor has died.

Though seemingly a bit morbid, it is quite popular in France, and has great potential benefits for both the buyer and the seller – as well as some pitfalls. 

In 1997, Jeanne Calment made headlines across the world for breaking records by living until the age of 122. But it was not just her impressively long lifespan that got people talking about her: she also outlived the man who bought her home. 

In 1965, at the age of 90, Calment sold her home en viager to then 47-year-old André-François Raffray. From then on, Raffray would pay her 2,500 francs a month, expecting to move in once the elderly woman inevitably passed away. But he never got the chance to live in the home he bought. He died two years before Calment, having paid over double the house’s value over a thirty year period.  

Calmet is obviously an exceptional case, but the story illustrates that buying en viager can be a gamble, despite its other benefits.

What is Viager?

A viager agreement involves an elderly person selling their property for a bouquet (down payment) which is usually discounted from its original price.

In most viager arrangements, in return for a cheaper-than-usual price, the buyer agrees to pay a monthly annuity to the seller for the rest of their life. Once the seller (credirentier) dies, the buyer (debirentier) can then take possession of the property.  

How does it work? 

There are few different types of viager agreement: 

Viager Occupé – The Occupied Lifetime Annuity

This is the typical viager scenario – the buyer benefits from a discount on the price of the property and pays a lump-sum (usually 15-30 percent of the property value) for the down-payment.

Then, the buyer will agree upon an indexed monthly rent to be paid for the remainder of the seller’s life. In this scenario, it is also the buyer must pay the property tax and insurance on the property, as well as assume responsibility for any major repairs.

Should the seller take up residence in a retirement home, the buyer will still be required to pay annuity to the seller, but they would be able to occupy or rent out the property.

Viager Sans Rente – The Without Rent Option

This scenario is almost exactly the same as the first, excluding the monthly annuity payment. The buyer simply pays a full lump sum at the beginning of the agreement, and is able to possess the property upon the death of the seller.

Le Viager Libre –  The Unoccupied Option

For this scenario, the property is likely unoccupied.

The buyer, therefore, retains the right to live in or rent out the property. Similar to the first arrangement, the buyer must pay both the initial down payment and then an indexed monthly annuity to the seller. Due to free access to the property, the buyer is also required to pay all taxes and charges associated with the property.

La Vente à Terme – The Fixed-Time Sale

Like the occupied lifetime annuity, the buyer pays the initial down payment and a monthly rent. However, the duration of the rent is fixed in advance.

Monthly payments are due until the agreed-upon date, even in the event that the seller dies. This arrangement can go along with both an unoccupied or an occupied property. If the property is occupied, the buyer gains possession after the owner’s death.

La Nue-Propriété – The Bare Property

In this scenario, the buyer still owes a down-payment, but there is also a limit on the amount of time that the buyer owes the monthly rent. The ownership of the property is also split in two: half being the buyer, half being the seller (who retains an usufruct, lifetime use rights, on the property). 

So is it a good idea?

There are advantages and drawbacks.

For the buyer, the primary benefit is that the property is reduced in price, which might be especially tempting if it is in an expensive area.

Buying en viager might be a great way to invest, particularly if you are not expecting to live in or make use of the property for an extended period of time. Additionally, notaire fees are typically reduced to only three percent. 

The obvious risk is that you don’t know how long the seller will live and are therefore unable to plan when you can move into your property.

As with all legal matters, it is crucial to understand the terms of the agreement, as well as the specific real-estate vocabulary that goes along with it.

For this reason, if you are less confident in French, it may be worth going through an English-speaking agency or notaire. You can search for “expert en viager” online, or you can check notaires.fr for English-speaking notaries

For the seller, the main benefit is being able to stay in your home, while supplementing your income.

The seller is also protected from the risk of the buyer failing to pay their monthly annuity – in the event of non-payment, the seller is able to regain his/her property due to a privilège du vendeur clause.

A key drawback for the seller is that his/her heirs will not be able to benefit should the property increase in value. 

Where can you find a viager property?

If you like the idea, there are several ways to find properties for sale in this way.

If you are looking for an English-language website, CapiFrance” has a dedicated page for Viager purchases.

There are also several French real estate websites that specialise in viager sales, like Costes Viager or Paru Vendu. Otherwise, if you go to most real estate agents’ websites, you can look up viager in their search bar to see if they have any listings.

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PROPERTY

Courtier: Should you hire a broker when buying property in France?

If you're researching the French property market, you might have come across mentions of 'courtiers' - here's what they do and whether they are necessary.

Courtier: Should you hire a broker when buying property in France?

The French ‘courtier‘ is usually translated as a broker, and the Notaires Association describes their role like this: “the broker is a true intermediary in banking operations. His/her role is to negotiate the best rates for you, but not only that: they will also find the most advantageous financing conditions for the realisation of your project.”

Essentially they act as an intermediary between you and the banks, so they’re only required if you need a mortgage or a loan in order to buy your French property. 

Their job is to research the best deals for you and then to help you put together your application and ensure that all your paperwork is correct – unlike the notaire, instructing a courtier is not a required part of the process, so the decision on whether to instruct one is up to you. 

So is it worth it?

Among French buyers, around 30 percent of mortgages are obtained using the services of a courtier, and this rises to 60 percent among young, first-time buyers, who generally find it harder to access credit.

Some of things to consider are your level of French and confidence in negotiating French bureaucracy, your financial situation (since French mortgage lenders tend to be stricter than those in the UK or US) and whether you currently live in France or not (since there are extra hoops to jump through for overseas buyers).

READ ALSO Is now a good time to buy a home in France?

“Things have changed,” Trevor Leggett, group president of Leggett International estate agents, told The Local. “It’s now more important than ever to work closely with a reputable broker.

“In France it is all paper-based, very old-school and extremely bureaucratic, a different world entirely to the UK. Preparing the client “dossier” so that it will be accepted is an art form.”

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

He advised non-resident international clients, particularly, who may not be au fait with the French system to seek the help of a broker who knows the ropes.

“The question is no longer really about savings,” he said. “It is about finding a bank that can actually lend to the client profile, interests rate are secondary. 

“It occasionally happens that one bank can be played off against another, or to shop around, but it’s a rare event nowadays.”

READ ALSO Revealed: The ‘hidden’ extra costs when buying property in France

And he had no hesitation in recommending that prospective buyers find a broker to sort out the financing.

“The lending market has tightened for international buyers and a good one is worth their weight in gold,” he said.

READ ALSO EXPLAINED: Time-frame for buying and selling property in France

In France, you make an offer on a property and then you begin the mortgage process (while in the UK it’s the other way round) so problems in getting your mortgage approved could lead to you losing your dream property.

“[Using a courtier] can be the difference between buying and not,” added Trevor.

“It’s not just any possible language barrier – but understanding the process and the different players in the market.”

How much?

The cost of hiring a courtier is borne by the buyer – but how much do they charge?

The courtier usually charges a percentage of the total mortgage amount – fees must be fixed in advance and are only payable once your mortgage application has been approved. 

Fees vary between different areas and different businesses, but the average fee is €2,000, which amounts to around one percent of the purchase price.

Many brokers set a minimum amount – around €1,500 – for smaller loans, and take a percentage of larger loans, so how much you pay depends on your property budget. 

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