Reversion Property FAQ
What is Reversion Property in France? The French social and economic environment is strongly favouring the reversionary property market. Pensioners can no longer live on their pensions and require an additional source of income. There are over 10,000 reversionary transactions made in France each year. The types of properties range from studio flats to apartments, villas and commercial properties. They are located in attractive areas such as Paris and its close suburbs, the French Riviera and the Atlantic
Excellent investment opportunity
• Medium to long-term horizon
• Possibility to buy property at a huge discount
• Most properties located in prime areas
• Portfolio diversification
• No capital gain tax when property reverts to the buyer
• Reduced notary fees
• Institutional investors
• Affluent individuals planning for their retirement
• Foreign investors who want a holiday home in France in the medium to long-term horizon
How does it work?
There are two types of reversion properties: tenanted or vacant, and different payment structures and discounts. In French,
There are two broad types of viager:
• Viager occupé
• Viager libre
Viager occupé agreements account for around 90% of all such sales and involve the vendor (crédirentier) occupying the property until death.
Viager libre agreements allow the purchaser (débirentier) to take possession of the property immediately.
Tenanted property More than 90% of all reversion properties are tenanted, i.e. the vendor lives in the premises until he or she leaves the property to go to a care home or passes away. 30% of the tenanted properties are vacant before the vendor passes away and buyers can then live in the property or rent it out.
Vacant property The vendor does not live in the premises and the buyer can live in the property or rent it out, which maximises return as the rents cover the monthly payments to the vendor.
Payment Structures There are three different ways of buying a reversion property:
1.By paying a lump sum plus a monthly annuity
2.By paying a lump sum, but no annuity
3.By paying a monthly annuity only, and no lump sum
Legal explanation: Rights and Obligations of the Buyer
• Buyer becomes owner on the day of the exchange of the title deeds
• Buyer pays for any major works done as well as for the land tax
• Buyer can sell the property whenever, without the approval of the Vendor
• Buyer can use the premises if the vendor decides to leave the property
• Buyer can take insurance policies to limit excess of life expectancy of the Vendor
Rights and Obligations of the Vendor
• Vendor has the use of the property, but cannot rent it
• Vendor will pay for the service charges, council tax and maintenance
• The contract cal be called off in the following circumstances:
◦ The Vendor dies within the following 20 days after the exchange
◦ The selling price is too low (i.e. to avoid inheritance tax)
◦ The buyer knew that the vendor had an incurable disease when he bought the property
Costs / Fees Notary fees: 3% of market value
How long does it take? It generally takes about 6 months to complete.