Affordable dream apartments up for sale in Paris, but a grim condition: the death of someone involved in the transaction
The viager property scheme in France is a distinctive real estate transaction that sets it apart from conventional property purchases. In this arrangement, a buyer purchases a property from an elderly seller, often paying a fraction of the market value, and commits to making regular monthly payments for the rest of the seller's life.
How the Viager Scheme Works
The buyer starts by paying a down payment upfront, known as the "bouquet." Then, the buyer agrees to make monthly lifetime payments to the seller. The seller retains the right to live in the property, often with certain terms depending on the contract, typically until their death. Upon the seller's demise, the buyer gains full ownership without further payments.
This arrangement offers several benefits. Elderly sellers can convert their property into a steady income stream while continuing to live in their home. Buyers, on the other hand, often pay less overall than the property's market value, but only eventually after a potentially long term.
A Timely Solution for Securing Stable Finances
As France's population ages, the viager system may prove a timely solution for securing stable finances in later life. With more than 20% of French residents over 65, and one in three expected to be over 65 by 2050, the viager system could provide a reliable income source for many elderly individuals.
Notable Viager Sales
Prominent figures in France have also engaged in viager sales. Former presidents Charles de Gaulle, Valérie Giscard d'Estaing, and François Hollande are among those who have sold properties through this scheme.
A Controversial Arrangement
Despite its benefits, the viager system can be seen as morbid by some, as the buyer's investment depends on the seller's demise. However, for some sellers, like André Helman, a 74-year-old psychoanalyst, it brings a sense of comfort to think that a charming young woman will eventually live in their home.
A Recent Case of Involuntary Manslaughter
In a high-profile case, Alain Jousselin, a 60-year-old man, was sentenced to three years in prison and fined 30,000 euros for involuntary manslaughter in December 2023. The case involved Yvette Brisset, a 92-year-old woman who was found dead in her bed at a nursing home. Suspicion initially turned toward Jousselin, who had bought Brisset's home through a viager in 1995, but he was acquitted by the Indre-et-Loire Court of Appeal in May 2022. However, during the retrial in December 2023, key testimony from nursing staff began to unravel, casting doubt on the original narrative.
The Importance of Due Diligence
Property investor Raevel emphasizes the importance of due diligence when investing in viager properties. She prioritizes location and layout, often looking for up-and-coming areas with high ceilings and an open floor plan. She also ensures that the seller appears to be living a happy life, as the seller's well-being is crucial to the success of the investment.
Raevel calculates for the seller living to 100 when making investments, but acknowledges that if the seller lives beyond that, she might not make a profit. However, she believes that as long as the market holds over the next 20 years, she'll still come out ahead.
The practice of viager dates back to Roman times and was formalized by Napoleon in the early 19th century. It has since spread to countries like Spain, Italy, and parts of Belgium. As with any investment, it's essential to conduct thorough research and consider all potential risks before diving into the viager property market.
[1] It's important to note that while the viager system offers potential financial benefits, it also carries risks. The buyer's investment is dependent on the seller's lifespan, and if the seller lives much longer than anticipated, the buyer could end up paying more than the property's market value. Additionally, the buyer may not be able to sell the property back to the seller once the monthly payments have been made, further limiting the buyer's exit strategy.
- When investing in viager properties, property investor Raevel prioritizes not only the location and layout but also the seller's well-being, as it is crucial to the success of the investment.
- Investing in personal-finance options, such as the viager scheme, can provide a reliable income source for elderly individuals, as France's population ages and one in three residents are expected to be over 65 by 2050.
- The practice of investing in real-estate through the viager system, which originated in Roman times and was formalized by Napoleon in the early 19th century, has also been adopted in countries like Spain, Italy, and parts of Belgium.
