French Life Annuity (Viager) Property Investments?
- Introduction to Life Annuity (Viager) Property
- How Viager Property Works
- Financial and Tax Implications of Viager Property
1. Introduction to Life Annuity (Viager) Property
Life annuity investment properties are called vente en viager.
The term needs to be distinguished from hypothèque et prêt viager hypothécaire, which is a form of lifetime mortgage for an existing owner obtainable from a small number of French banks.
In the case of vente en viager a property is purchased in exchange for a capital sum and a monthly annuity for life granted to the owner, who may be allowed to remain in the dwelling until their death, or receive rental income from it during their lifetime.
The agreement may take different forms, but typically it involves a capital sum (bouquet) made at the start of the agreement, and an annuity (rente viagière) paid from the date of purchase until the death of the seller.
As the contract is for the duration of the life of the seller, the investment risk is effectively unknown. Nevertheless, these are attractive forms of property purchase in France, typically by those who have a secure income and of an age where they can properly benefit from the investment.
The properties purchased are often those in attractive and expensive locations such as the Cote d'Azur, thereby enabling the buyer to purchase a property in such a location at around 30% less than might otherwise be the case, which they can use or sell in later life.
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.
Next Page: How Viager Property Works