How to avoid horror at any time of year
... not just Halloween!
When I first thought about doing a financial article with a Halloween theme, all I could think of was the character Pennywise from Stephen King’s 1986 novel IT.
Thankfully, the editor saved me from this nightmare with the idea of the scary mistakes people make when moving to or living in France.
I soon realised I would need the whole paper, for the next few editions, to get all those written down in any detail, so I’ve just picked three.
People who have read my musings will have come across my guiding mantras, such as “deal with certainty as far as possible” and “good decisions are based on good information”.
Where things turn into a horror show, the use of either of these mantras is always notably absent:
1. I have come across several incidents recently of people signing a property purchase agreement (compromis de vente) without any planning.
They find a property, see the blue sky and sunshine and get caught up in the moment; a coup de cœur, as the French might say.
Often, little thought is given to affordability, property condition (so repairs and improvements), building and purchase taxes, etc, or even where the money will come from – “I’m sure we’ll get a mortgage”, “I’ll be able to cash in my pensions”.
On signing the purchase agreement, 10% of the purchase price is normally payable.
If you change your mind, or realise there is a problem, then you may lose that.
There are clauses that can be inserted into the agreement, known as clauses suspensives, which allow you to lay out conditions for it, such as making it subject to obtaining a mortgage or planning permission, repairs being carried out, or subject to survey. It is not generally possible to add these after.
Always use a notaire for the purchase (some estate agents will ask you to sidestep the notaire and use their contract). If you do not trust the seller’s notaire (the seller chooses), you may engage your own notaire and they share the fee (they usually don’t like this but it is your life on the line).
2. In times of uncertainty (like now for the British pound), currency can alter plans dramatically.
We have seen people ready to move, having signed the purchase agreement, and by the time it comes to the final contract (acte de vente), the move downwards of the pound means they can no longer afford the property.
Using a currency company and forward buying makes sense for such a large purchase.
We see the same with income, where people wait for the right time to move out of the currency, having none in the currency they are now living on.
Gambling one way or another on a certain outcome often leads to disaster.
3. It is so very common that we meet people who proudly tell me that they spoke to a UK adviser, changed all their investments, spoke to a UK accountant and were all set for residency in France.
Indeed, I once met a retired UK accountant who had planned his move to within an inch of his life and proudly asked me to look at all the superb analysis he had done.
“This is excellent work!” I exclaimed. “Sadly, it is all to UK law and means nothing here in France … I suggest that you move back to the UK, dispose of these assets and try again next year.”
The cost in staying would have been huge and altered their lifestyle very negatively.
He agreed, they moved back to the UK and tried again the following year. His wife was not happy with her husband for a while. Even financial professionals can get it wrong if they forget other countries have different rules and laws.
I have so many more of such nightmares jostling for a space here, but they all have a common theme:
Don’t join the WOE (Wing it On Everything) club, do some French-focused planning, and join the HAPPY club instead (Healthy Active Planning Prepares You). Bonne chance!
This column was written by Robert Kent of Kentingtons financial advisers. See www.kentingtons.com