THE ADVANTAGES OF THE FRENCH REVERSIONARY SCHEME FOR THE VENDOR

Just like the British, the French are concerned about the impact the baby boomers will have on the economy. Most baby boomers are to retire within the next couple of years; thus increasing pension costs for the state. In France, many elderly people are no longer able to live on their pensions. They therefore need an additional source of income which the French home reversion plan becomes for some of them.

Most of the reversionary property investments have a ‘lump sum plus monthly annuity’ payment scheme. The monthly reversionary annuities are often used by French pensioners to increase their pension. As most of the French home reversion schemes have reversionary annuities for life, the home reversion scheme offers the vendor security and decreases stress as the vendor knows that he or she will receive enough money to pay the expenses. Apart from the monthly increase of income, the vendor can also remain in his or her own home which increases his or her stability. The lump sum is sometimes used to top up the vendor’s pension, other times the vendor uses it to fund additional activities such as trips with the grandchildren or a treat for the family.

After the property has been sold as a French reversionary property investment, the vendor does have less responsibilities then he or she used to have before; major works and land tax should be paid by the buyer. Additionally, property taxes and upkeep are split between they buyer and vendor.

Another reason, which is less well-known, has to do with the French inheritance rights. In France you can not disinherit your children; they will automatically receive some of their parents’ possessions after both parents have passed away. When you sell your home as a French home reversion, the equity is released before you pass away. The vendor then has full disposal over their equity and can use it the way he or she prefers.