GONE are the days when you could snap up a small château for the price of a semi in Tooting — French property is not the bargain it was. Property prices have risen across France by about 8 per cent a year for the past decade, but in the regions most loved by the British — Provence, the Dordogne, Bordeaux and Brittany — house price inflation has been particularly strong. Homes remain affordable by UK standards, but finding the perfect bolt hole across the Channel now means a little more work.

One way of finding cheap property is to scour less fashionable destinations in the centre of the country where foreign buyers have not yet pushed prices out of reach. But if your heart is set on a chic little apartment in Cannes, then you may want to consider buying “en viager”.

Viagers or reversion schemes are common in France and allow you to buy property for as little as half its value. The principle is similar to a UK equity release scheme, except that in France the transaction takes place between two private individuals rather than between a homeowner and a bank. The buyer pays the seller a lump sum, and in most cases a monthly income for life. The seller can stay in the property until he or she dies, when the home becomes the property of the buyer.

The savings for the buyer can be considerable. For example, EU Property Portfolio (EUPP), which specialises in this type of scheme, is offering a four-bedroom apartment with sea views on the Promenade des Anglais in Nice for €491,000 (£332,000), €119,000 under its market valuation of €610,000. An apartment just off the Croisette in Cannes is selling for a lump sum of €55,000 plus a monthly annuity of €720 for the life of the seller, who is 74 years old. The market value is €215,000.

Farida Vidal, director of EUPP, says: “Reversions offer elderly people stability because they can carry on living in their own home and at the same time release some equity.”

The advantage for buyers is that they buy a property at below market value — as long as the deal is structured properly, and provided that the seller does not live for a long time.

Rupert Holderness, the general manager in France of Siddalls, a firm offering international financial advice, says: “For a purchaser, the interest lies in a very French idea of betting on the length of someone’s life. If the seller dies before the mortality tables say he should, then the purchaser has a very cheap property.”

However, if the seller proves to have above average longevity, the buyer loses out. Holderness says: “The most famous case was that of Jeanne Calmant, who sold her home en viager to her notaire (lawyer), only to live to 122. Moreover, she outlived the notaire, so it was his children who had to continue paying her the monthly sum agreed in the original deal.”

To buy a property from someone who ends up being the oldest woman in the world is particularly bad luck; and in most cases, as long as you ensure that your purchase is correctly structured, this way can be an attractive way of buying a home in France. “The price is fixed by using a combination of the market price of the property and mortality tables, and varies depending on whether the property will be empty or occupied,” Holderness says.

Generally speaking, the younger the vendor the larger the discount. EUPP says that if the seller is over 70 you could expect to receive a 50 per cent discount, but if he or she were over 80 the discount would fall to about 40 per cent.

The discount will also be much smaller if the property is unoccupied and therefore immediately available for the buyer to use or let immediately. In some cases, youpay just a single lump sum, in others you pay a lump sum plus a monthly annuity, either for life or for a fixed term. Note that if the term of the annuity is fixed and the vendor dies before the end of the period, the buyer will have to continue to pay monthly instalments to the vendor’s heirs. Responsibility for property taxes and upkeep is split between the buyer and seller: the seller is responsible for general maintenance, service charges and council tax, but the buyer must pay for major works as well as land tax.

EUPP: www.eupp.co.uk, 0845 2265093
Siddalls: www.siddalls.net, 01329 288641

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