BORROWERS will find it easier to fund a property purchase on the Continent as the falling cost of mortgages and strong pound boost their buying power but buyers must beware of the threat of deflation.

The European Central Bank (ECB) last week cut its main interest rate to a record low of 0.15% from 0.25% in an effort to stimulate the eurozone economy. This will push down borrowing costs and make mortgages in the eurozone more affordable.

 Chez nous: France offers top deals (Sipa Press/REX) - read more on the Cle Mortgages page - click here.

The cheapest 20-year fixed-rate mortgage in France has already dropped from 3.75% to 3.45% since the start of the year, according to International Private Finance (IPF), an overseas mortgage specialist. Over the same time, sterling has strengthened from €1.20 to €1.23, cutting the monthly cost of a €250,000 repayment mortgage from £1,249 to £1,186.

As a result, the number of British buyers looking for a European bolt hole has been growing. IPF said it had seen a 24% increase in inquiries for French mortgages in the first three months of the year, compared with the same period in 2013.

Simon Conn, a broker specialising in overseas mortgages, said: “Over the past 12 to 18 months I have seen a steady increase in demand for the most popular countries, such as Spain, France, Portugal and Italy. Lenders have been lowering rates and also accepting smaller deposits.”

Of all the eurozone countries, France offers the best borrowing rates and accepts the smallest deposits — the cheapest being 2.3% for a 10-year fix with a 20% deposit. In Italy, the lowest rate available is 3.4% for a 20-year term and a 20% deposit, according to IPF. In Spain, the cheapest rate is higher at 4% over 20 years and the minimum deposit is 50%, while Portugal is even tougher for borrowers as the lowest rate is 5.28% spread over 30 years with a deposit of at least 60%.

Simon Smallwood of IPF said: “Mortgage rates for international borrowers are becoming more competitive. Expectations for interest rates in the eurozone are now lower than they were and this makes it likely that mortgage rates are going to stay lower for longer.”

Capital Economics, the consultancy, expects the ECB rate to remain at 0.15% until at least 2016.

However, Danny Cox of the adviser Hargreaves Lansdown urged potential buyers to be cautious. He said: “The eurozone economy is stagnating and heading towards deflation, when prices are continually falling. This could cause house prices to fall further and potentially extend the financial problems across the Continent.” Germany’s inflation rate almost halved last month to 0.6% from 1.1% in April.

Buyers should research their target country’s tax system, as there is a variety of property-based levies across Europe. Smallwood said: “Annual wealth tax in France and inheritance tax in Spain are calculated on the net value of the assets you hold in the country.”

This means buyers would be taxed less on a French property if they bought it using a mortgage, rather than by remortgaging their home in Britain and paying in cash. “It can therefore be beneficial to buy with a mortgage as this reduces its net value,” said Smallwood.

However, borrowers considering a foreign currency mortgage need to be aware of the exchange-rate risk. The pound may be getting stronger against the euro, but any reverse in this trend could leave buyers struggling to cover higher repayments.

The investment bank UBS has forecast the pound will strengthen against the euro to €1.33 in three months but drop to €1.25 in a year.

Buyers nervous about currency fluctuations may want to consider arranging a “forward contract” through an exchange specialist, to lock in a rate.

Kathleen Mackinnon-Helm is our specialist Overseas Mortgage Broker, she says between April 2013 and April 2014 borrowers in France have seen a drop of around 10% in the cost of their loan. Rates on ten and fifteen year terms dropped last month but currently rates are stable.

If market observers agree that an increase in rates is to be expected in the months to come – namely because of the FED’s monetary policy which will certainly have an impact on the European money markets - for the moment the mortgage market in France remains very attractive, even if the banks are very cautious and go through loan applications with a fine tooth comb.

In conclusion, given the historically low rates, borrowers now have a window of opportunity which will very likely not last.

Save time and money when sending or receiving international payments with Cle France. Go to our dedicated Currency page here.

Part of this article originally appeared in The Sunday Times 'Drive' section Sunday 8th June 2014.

Blog submitted by: David at The French Property Network - Cle France.

EUROPEAN POLICE forces are to be given access to British drivers’ details so they can pursue fines for motoring offences committed on the Continent. It will be the first time that information, including a driver’s name, address and previous con–victions, has been made widely available to authorities outside the UK, writes Joseph Dunn.

Police officers in France have the power to impose on-the-spot fines for speeding.

The new law, being drawn up by the European Commission and due to come into force next May, will give police in 27 countries the power to demand British motorists’ details from the DVLA if they suspect an offence has been committed and has been caught on camera.

Offences include speeding, driving without a seatbelt and driving while using a mobile phone. Once the DVLA has received the demand and the car’s registration number, it will supply the registered owner’s name and address, allowing European police forces to send a penalty demand through the post. The letter will be written in English.

At the moment, British drivers can be fined for most offences in Europe only if they are stopped by an officer, who can issue an on-the-spot penalty. The new rules mean that speed and CCTV cameras can be used to capture the licence plate of the car, allowing police to trace its owner across the Channel. Parking offences are not covered by the new rules because they are not regarded as a road safety problem.

According to Brussels, the move is a response to concerns that foreign drivers were getting away with many offences when driving on the Continent. “This is the result of 10 years of frustration with blatant abuses of traffic laws,” said Helen Kearns, a transport spokesman for the European Commission. “Figures show that foreign drivers’ offences are relatively high and this measure is necessary to say: you can’t just get away with it.”

Police in most European countries have been sharing driver information since November 2013 under a European policing directive. Britain exercised its right to opt out of the directive on the grounds that the penalty notice applied to the registered owner of the car — so-called owner liability — rather than the person who was driving the vehicle at the time the offence was committed. Under British law, the driver at the time is responsible.

Earlier this month the European Court of Justice ruled that the law had been in–correctly drafted and should have fallen not under the policing directive but under the road safety directive, an area where Britain has no right to opt out. “Transport safety is part of EU rules where everyone is involved,” said Christopher Fretwell, a spokesman for the court. “There are no opt-outs. If re-adopted, it will apply across the board to member states.”

Some MEPs are furious that the directive will now be applied to British drivers: “The UK decided that on balance it was not in our interests to take part [in the previous law] because the directive prosecutes vehicle owners, rather than the offending driver, and it seeks to implement fines when other deter–rents — such as points on a licence — may be more effective,” said Timothy Kirkhope, a Conservative MEP who sits on the transport committee.

“If the commission brings forward a similar piece of legislation then we will oppose it when it reaches the European parliament.”

Experts say it is unlikely the legislation can be stopped since it would mean blocking the entire road safety directive. Foreign police forces have no powers to enforce the fine — that remains a matter for British courts — and British drivers could ignore the demand for payment. However, the next time they visited the country where the offence had been committed they would run the risk of being issued with an on-the-spot fine, or in extreme cases having their car impounded. British drivers issued with speeding fines in France have been escorted by officers to cash machines where they are expected to withdraw money to make the payment.

The new law could prove a boon for the Treasury, however: because it works both ways foreign drivers could be traced by British authorities. Although no official figures are available, the number of unpaid fines issued to foreign drivers runs into the millions. According to the most recent estimates, based on a survey of speed camera partnerships in 2012, an estimated 60,000 speeding fines worth £3.6m were written off because there was no effective way to track down foreign culprits.

This article originally appeared in The Sunday Times 'Drive' section Sunday 18th May 2014.

Blog submitted by: David at The French Property Network - Cle France.

The market is picking up in France — at least in the places we like to buy — and the exchange rate is in our favour, says local Anthony Peregrine reporting in The Sunday Times on 6th April 2014.

The good news sweeping in from France — or, at least, those bits of it favoured by Britons — is that the property market may be stabilising. In short, this may be your best chance for years to buy into rural France and annoy the hell out of everyone by raving about the joys of French village life. It drives listeners nuts. You know the sort of thing: marvellous little place, just like English villages were 50 years ago; nobody locks their doors; locals are so colourful; salt-of-the-earth neighbours always ready with a lettuce; you should see the village carnival... and so on and on, until you long for them to get hit by le TGV.

The truly irritating bit is that much of this is true. Let me tell you what I did last Sunday morning. After a sunshine stroll by vineyards and through garrigue scrub, I arrived at the village centre, then bobbed into the bakery for a baguette and, as it was Sunday, a cake or two. Generally I go for pets de nonne and têtes de nègre (respectively, nuns’ farts and negroes’ heads: France remains unrepentant in the pâtisserie department).

I bought meat from the general store and, from the tobacconist, the regional Sunday paper, which takes about three minutes to read. Then, in true weekender slacker’s mode, I joined those milling about the square, greeting some, avoiding others. As church came out in a flow of Sunday best, senior faithful surprised themselves, as they do every week, by noting there was time for an apéritif. I am easily led. After more minutes than necessary in the sunny, fuggy bar, I wandered home. There was a barbecue to light and the prospect of Sunday lunch.

I could go on about sports associations, full-blooded village fetes, the OAPs’ society and the fact that even the smallest of France’s 36,552 communes runs its own affairs, with a mayor and council. As I said, astoundingly irritating — and the particularly irritated might insist that there’s not much in the above that can’t be done in Britain. But, I’d argue, you couldn’t do it in such warmth, so routinely, or in a place comparably pleasant, anywhere I could afford to live. Whereas it’s all available in France, right now, and — here’s the point — at what remain knockdown prices.

The post-2008 slump in property values and sales lacked the drama that swept Spain. But, notably in rural areas, some drops have been startling, especially in pretty little towns in the profoundly rustic Creuse department. Pre-2008, there was a silly bubble. Prices were grossly overinflated. Then they dropped back to what they should have been, and then dropped some more — up to 30%. There have been some shockingly low deals.

Yet there are signs of change in early 2014, and even (whisper it gently) of an uptake. This is not what the headline national statistics are saying. These are predicting continuing bad times — or poor times, at best — with 4% drops and sales volumes falling, too. For the individual buyer, however, national figures are meaningless. They include cities, suburbs, towns and parts of the country where no foreigner would live unless obliged to.

According to most agents, Britons these days are looking for bucolic properties mainly in the west and southwest — from Brittany down to Midi-Pyrénées, by way of Poitou-Charentes, the Limousin, Gascony and Aquitaine. In other words, they are intent on retaking, by stealth and property deals, land we lost in the Hundred Years’ War.

And here the market appears to be firming up, the past few months have seen signs of mild recovery, no stampede, as between 2000 and 2006 — it’s more of a crawl, but the strength of the pound has jolted people into thinking it’s make-your-mind-up time.

Most movement is around the €150,000 (£124,000) mark. That won’t buy you the rural idyll of a stone farmhouse with an acre of land, but it might get you close if you’re prepared to do some work.

Over in the Dordogne, things are also improving in loftier reaches — from €300,000 upwards. Late last year was the nadir, but in the past three months, inquiries and visits have picked up, especially from the UK.

There are reasons for all this. Britain’s economy appears healthier, so we’re more confident shelling out for the French house after which we’ve long been lusting. At the same time, hardly anyone trusts Spain, what with its vertical price dive and authorities itching to knock down seaside homes that upset them. Interest rates in France remain low (about 3% for a 20-year mortgage) and — an unexpected bonus — favourable rates of capital gains tax on second homes have been extended through to next August.

Now is a fantastic time to buy, there’s still oversupply — but that will even out over the next couple of years. In other words, you’re buying relatively cheap, with a decent expectation that properties won’t get cheaper — not in the west and southwest, anyway.

So there we are. Welcome to France. If you decide to have a crack, may I mention a couple of considerations? You’ll need an English-speaking estate agent and, ideally, an English-speaking notaire, the lawyer who handles the paperwork and charges handsomely for it. (Their average annual salary — admittedly boosted by big Parisian earners — is not far shy of £200,000.) Bite the bullet. There are pitfalls out there, and not all French sellers are as honest as they look. And they don’t look that honest.

Keep the mayor on side. He or she is the person who can smooth edges or render life rocky. Most are highly intelligent, deeply charming, extraordinarily helpful (this is “keeping the mayor on side” in action), and may appreciate an invitation to apéritifs.

Don’t be afraid of resentment. At some stage, some bloke whose family has lived in the village since 1567 will cut up rough against you as an immigrant. It happened to me when my red setter carelessly impregnated a neighbour’s standard poodle. “You immoral foreign b******” was the least of it. Yet most of the village saw the flaw in his reasoning, life carried on, and, a few years’ later, the poodle-owner and I now exchange bonjours.

Avoid feuds. Every village has them, especially those in remoter spots. A history of tough living hasn’t always disposed inhabitants to love all their fellow men. Boundary disputes last for generations. Smile at everyone, but keep well clear. I’ve known people who are not above poisoning enemy neighbours’ dogs.

Finally, if you don’t speak French, consider learning. Otherwise you’ll be confined to an expat ghetto and will miss the essence of local life. Imagine a Frenchman moving to Derbyshire, unable to speak English. Derbyshire people would find this odd. They might even grow annoyed that this person comes into their shops and pubs and talks at them in French (and, Lord knows, Derby folk are tolerant).

This is the same as monoglot Britons living in Aquitaine. We may be numerous — 20% of house purchases in the Dordogne last year — but this is not our country. We are also famously polite. It’s not easy, but we know where our duty lies.

NOTE: The bulk of this article was originally published in The Sunday Times "Home" Section on 6th April 2014.

Blog submitted by: David at The French Property Network - Cle France.

The Welsh retailer whose floral prints evoke Victorian England is to open websites in France and Germany to try to overturn a slowdown in annual online sales.

Laura Ashley reported a fall in profit before tax and exceptional items from £20.1 million to £19.3 million in the year to January 25 after like-for-like sales dipped 0.4 per cent.

The shares rose sharply, however, after the company said that sales had risen 2 per cent in the first two months of the year and the dividend was increased from 2p to 3.5p.

Seán Anglim, the chief financial officer, said that online sales had increased by 20 per cent in its British retail business in 2012, but that online sales were “broadly flat” last year.

“Over the last four or five years we’ve seen this [online] grow extremely well, he said. “We know there are enhancements we need to make.”

Laura Ashley offers customers a click-and-collect service, which is one of the fastest growing areas of the retail sector. Mr Anglim said that the company could do more to improve the way customers navigate the website.

Overseas markets are a key opportunity for the retailer, he said. A local language and currency website will open next month in France, where it has reduced its stores from 24 to 5, and in Germany, where it will return in the third quarter.

Cle France says this is great news for Ex Pats living in France and should cut down on delivery costs when ordering from the UK. This would have perfect when I lived in Haute-Vienne department of Limousin especially for the soft furnishings and even during our last 12 year stint in the Mayenne department near to Lassay-les-Chateaux in the region of Pays de la Loire it would have been welcoming.

But will it confuse the 'French interiors' design the Brits go for and instead be picked up by the young French who love all things 'Anglais'?

Blog submitted by: Sharon at The French Property Network - Cle France. 

François Hollande has let it known that he intends to become a bachelor president without a first lady, for the time being at least.

But Valérie Trierweiler, who was France’s de facto first lady until Mr Hollande ended their relationship this weekend, believes he is making a mistake.

In a conversation with French journalists, she said the head of state needed a women at his side – although she refrained from saying which one.

She also denounced the sexism and the treachery which she says reign in French politics – comments likely to anger Mr Hollande’s ruling Socialist Party, which claims be egalitarian and honest.

“How will we manage if there is no longer a first lady?” she said, according to iTélé, the rolling news channel. “Who will look after the Chinese first lady?”

Peng Liyuan, the superstar folk singer whose husband, Xi Jinping, is China’s President, is expected in Paris in April when she will accompany him on a keenly anticipated state visit.

French presidential aides now face the unenviable task of concocting a programme for Ms Peng in the absence of a first lady to show her around Paris, as usually happens on state visits.

The protocol conundrum is the latest consequence of the revelation by Closer, the glossy magazine, that Mr Hollande, 59, was having an affair with Julie Gayet, 41, the actress and film producer.

Ms Gayet, who has avoided public appearances since the disclosure, has reportedly told friends that she has no more desire to become first lady than Mr Hollande has to give her the role.

The assumption in Paris is that Mr Hollande will travel to Washington next month to meet Barack Obama without her and will continue to see her away from the Elysée Palace.

Ms Trierweiler, for her part, insisted that she remained good terms with the Socialist leader.

“We are not at war and we are continuing to telephone each other,” she said.

This was taken in Paris as a sign that he was likely to accept her demand for compensation for ending their decade-long relationship following Closer’s revelations.

However, her decision to meet journalists at the end of a long-planned charity trip to Mumbai will have appalled presidential advisers, who hope that she will disappear from the public eye.

Ms Trierweiler, 48, was described as relaxed by RTL radio, but tired and weak by Europe 1 radio. Alexandre Kara, its political correspondent, said her hands trembled as she spoke.

The former first lady, who was admitted to hospital for a week after discovering Mr Hollande’s affair said she was better but added: “I will perhaps suffer the repercussions in a month’s time.”

Ms Trierweiler said she had underestimated the sexism and bad faith prevalent in politics when arriving at the Elysée after Mr Hollande’s victory in the 2012 presidential election.

She said male politicians had little consideration for their female counterparts and even less for political wives.

“People don’t realise how much treachery and hypocrisy there is. You get hit without doing anything. That is not my way. In politics, a traitor is sometimes worth more than a friend.”

She said that her relationship with Mr Hollande might have survived if he had never been elected president, and added that some staff at the Elysée were in tears when she left on Saturday.

Ms Trierweiler, a journalist at Paris Match magazine, said she had no intention of going back to her previous post as political correspondent, but would carry on writing book reviews.

Her main aim, however, was to undertake charity work, she added in a comment that will fuel speculation that she hopes to become the French Diana, Princess of Wales.

She also rebutted claims that she was behind the unforeseen ascension which took Mr Hollande to the presidency. “I didn’t push him to become president and I never dreamt of entering the Elysée.”

In a final shot across her former partner’s bows, she rejected a claim by Nathalie Kosciusko-Morizet, the centre-right candidate to become Mayor of Paris, that Mr Hollande’s announcement that he was leaving her read “like a redundancy letter”.

“My separation is a break-up not a redundancy,” she said. “There was no notice.”

Article originally appeared in The Times newspaper.

Blog submitted by: Alex at The French Property Network - Cle France.