Monday, 8 November 2010

Not on Your Life?

While walking around Paris, I have recently taken to eyeing up the adverts in the estate agents’ windows, not because I believe that I will ever be able to afford to buy property in Paris but more because I enjoy the combination of admiring extravagance from afar and feeling ever-so-slighly self-righteous about not having that kind of money to throw around myself. The other day, however, Understanding Frenchman saw that my eye had been caught by prices that appeared to have a few zeros missing off the end and explained to me that these properties were being sold en viager.

The English translation of viager is “life annuity,” an expression that I had only ever vaguely encountered in connection with a Monopoly board. In France, however, it is apparently quite common to buy a house in this way and I would love to know if it happens in other countries as well. The houses are generally being sold by older people and the buyer agrees to pay a set amount for the property, followed by a fixed sum of money for every year of the seller’s life until the person dies.

The older person gains an obvious benefit here in having a guaranteed income for the rest of their life, and many choose to sell their properties in this way precisely because they need that money. The advantage for the buyer is, of course, the possibility of getting a bargain if the seller dies earlier than expected. And apparently there are enough people out there who are willing to gamble on someone else’s life (or to have their own lives gambled on) in this way to make for a healthy market in this kind of sales. Hmm …

9 comments:

  1. Have you seen Le Viager? Pretty funny movie! :)

    ReplyDelete
  2. Really interesting! So does it make the properties actually affordable for the average person?

    ReplyDelete
  3. Jennie, that was my next post - not only do people buy houses in this way, they also make movies about it that are apparently funny! It's on my "to see" list now.

    Alison, I guess that depends if your old person dies soon enough or not! In the film Jennie mentioned, I believe the greedy buyer dies and his children have to keep up the payments until the sprightly old dear finally does kick the bucket ...

    ReplyDelete
  4. So you don't have to pay a deposit or anything? It's just like renting until the incumbent karks it? Wow - perhaps I could buy a wee place in France on those terms! Except that as I don't have an EU passport I could only live there for three months at a time. But hey..... I love having something like that to think about!

    ReplyDelete
  5. No, you have to pay a lump sum at the beginning. I checked out a couple of ads for you and sometimes the lump sum is larger and the monthly payments are smaller and sometimes it's the other way round. On ParuVendu, one 3 bedroom apartment was 59 000 euros lump sum plus 1200 euros per month "rent", while another was 165 euros with 695 euros "rent". The age of the current owner is also specified, so you can imagine the factors that play a role in determining the balance between the two!

    ReplyDelete
  6. Mmmm.... Sounds very complex and very French! Thanks for checking it out, by the way. One day, one day... :-)

    ReplyDelete
  7. I'm pretty sure the ex-world's oldest woman who lived to 121 or something was in one of those arrangements. Bummer for the buyer I suppose.
    Also : hi! I have been reading your blog for a little bit, but I think this is my first comment (?)

    ReplyDelete
  8. Hi Gwan, That's really funny. I guess France is a dangerous country to engage in this kind of contract!

    I've just had a peek at your blog and it looks as though I've got some catch-up reading to do!

    ReplyDelete
  9. I saw the movie Jennie mentions, definitely worth seeing!

    Le viager really, really creeps me out! Its not something I would ever do but it does seem like a good system providing the person keels over quickly! What a horrible thought though, actually wishing someone would pass away. arrgghhh! Not for me!

    ReplyDelete