FPN Deputy Editor's Blog

On a budget?

Budget build up

I’m sure you’re all waiting on tenterhooks for the budget announcement tomorrow. With Darling set to announce a series of measures aimed at helping hard-pressed homeowners in the UK and boosting mortgage availability, perhaps you’ll finally be able to sell up and realise that long-held dream of moving to France.

French Property News has secured the services of Stephen Hughes, Director at Foreign Currency Direct, who will be breaking down all that budget jargon into plain English for us mere mortals following the announcement tomorrow. See our daily news section on the FPN home page for information on how the budget will affect the housing market both here and in France.

It might interest you to know that Sarkozy has already ushered in a series of measures aimed at stimulating the French housing market. Introduced in France’s 2009 budget in January, the Loi Scellier is the latest scheme offering tax-breaks to buy-to-let investors – joining the Robien, Borloo and leaseback schemes.

Buying a second home or investing in property might not seem prudent in the current market but with interest rates at an all time low in the UK and Eurozone, if you’re a saver, your money won’t be benefiting from a stint in the bank right now. You may be pleasantly surprised by the competitive rates of return that can be generated on French investment property – luckily for you, we’ve included a definitive guide to euro-busting investment purchases in the May issue (out 29 April).

Dispatches: Crash, bang, wallop

Cooking with half an eye on the television, as is my habit of an evening, I almost burnt my chilli con carne, so absorbed was I by Channel 4’s Dispatches; Crash – How the banks went bust yesterday evening.

It made me think. One of the main reasons that the French property market has fared considerably better than its sickly neighbours (will Spain and the UK please stand up!), is its strict approach to lending. The UK and US could certainly learn a thing or two about mortgages from L’Hexagone. France’s superior regulation has helped to keep the country’s financial system ticking over, despite the wider worldwide malaise. Yes the recession has hit home in France too, but later and to a lesser extent than elsewhere.

Why? Not only did French banks spread their risk more evenly (Incidentally, have those bankers never heard the phrase ‘don’t keep all your eggs in one basket’?), but those of you familiar with the French mortgage application process will already know that French banks impose strict lending criteria on mortgage applicants. French banks do not use salary multiples to calculate how much to lend, instead basing their decision on the proportion of income dedicated to the repayment of all loans and mortgages. If this figure exceeds a third of your total net income, a French bank will not lend you a single centime. It is illegal to bounce a check in France and credit cards as we know them in the UK do not exist. French people do not run up scary debts. This is not because they are more financially astute than the rest of us, but simply because they are not allowed to. I’m surprised that the ultimate nanny state (aka the UK) has yet to catch on to this new angle on its-for-your-own-good politics – surely there’s a whole host of public service announcements and educational pamphlets that could be cooked up at vast expense to the taxpayer? I hope Darling has saved a sous or two in his budget!