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Brexit and buying in the South of France

Even though the British public have voted to leave the European Union, we still have over three hundred days of sunshine.

A week after the British public voted in favour of leaving the European Union, the main advice from France is not to panic. With regards to property, while the Brexit vote will probably result in Britain leaving the European Union, this should not (and will not) stop Britons from purchasing their dream holiday homes on the French Riviera. With more than 300 days of sunshine every year, fine food and wine and world-famous events such as the Cannes Film Festival and Monaco Grand Prix, the French Riviera has consistently attracted property buyers since the 19th century.

Last year, French bank BNP Paribas granted 7599 mortgages to foreign buyers, 34% of whom were British. As EU residents, British buyers benefit from mortgages that are up to 85% loan-to-value. Whereas their non-EU counterparts qualify for 50% loan-to-value. This may result in a rise in property purchases by British buyers over the next couple of years as they hurry to secure their dream place in the sun before Brexit is formalised.

As many non-EU buyers, including those from Australia, China and the USA already buy in France without hindrance, this means that British buyers can be assured that a Brexit will not stop them from purchasing their dream home across the Channel.

Although non-EU citizens are usually subject to more stringent conditions when securing a mortgage, e.g. providing a larger deposit, Swiss and Finnish borrowers benefit from special agreements that provide similar mortgage application protocols as EU member borrowers. We can therefore, in the event of a formal Brexit, be optimistic for British buyers.(1)

Some concerns have been voiced around passport control; however since Britain has never been part of the Schengen agreement, British citizens are already accustomed to passport control when travelling between EU countries. Even in the aftermath of Brexit, it is unlikely that France would impose visa restrictions on British citizens, meaning that they will still be able to travel to France freely.(2)

While no one truly knows what legal complications Brexit may bring to buying property in France, we can be sure that the French administration won’t want to scare away Britons, who represent 1 in 4 overnight stays in France and own many of the 48,000 (of 170,000) secondary residences (3) in the Alpes-Maritimes region (including Monaco). Currently, 5.4% of registered secondary residences in France are located in the Alpes-Maritimes department and 13% of stays and 24% of overnight stays occur in secondary residences. The French Riviera has an 11% share in secondary residences in mainland France and 24% of sole foreign secondary residences.(4) The French government must consider these factors and statistics when deciding how to proceed.

Property prices in France have increased steadily over the course of the 20th century (albeit with a few fluctuations). Investors who are planning for the long-term may expect more of the same. Despite the drying-up of credit, sovereign debt and recent austerity measures, the French property market has proved that it is sufficiently stable to withstand and recover from temporary periods of decline. Furthermore, the French property market is one of the most well-regulated in the world, so British investors should not be unduly worried about the country's long-term future.(5)

There remains a question mark over property inheritance and taxation rules. Currently, French real estate is subject to French forced-heirship provisions, which in practice mean that the French legal system will decide who received a property following the death of an owner. At the moment, subject to EU law, any British national who has a property in France can choose either the law of the country of their habitual residence or the law of their nationality to govern the devolution of their French estate. This will have to change given that EU laws will no longer apply, but initially there will be no changes until Britain has invoked Article 50 and left the EU, which will not be for at least two years. We will have to wait to determine how the law will change in this respect.

Before making any decisions or giving up on any dreams as a buyer, remember that the international property market on the Côte d’Azur and beyond has been marching on since John Taylor set up the first ‘English’ estate agency in 1864. The appeal and underlying value of the South of France and its property has continued to thrive despite two world wars and a series of significant world events, so it’s highly unlikely that the current political situation will inflict any lasting damage.(6)

Hold onto the vision of your dream property and do not let Brexit dissuade you from taking the plunge. Remember that history is on your side.