I have no idea how this sort of thing works in the UK, but the two possibilities that leap to mind for are:
1. Create an SCI where your friend purchases a number of the shares in the property.
2. If you are of retirement age or thereabouts, look into a "vente en viager" - which is basically a "reverse mortgage" (as it's called in the US).

Talk to a notaire (or take a look at the material - available in English) on the notaire website:

Notaires de - Annuaire officiel et conseils juridiques

Retrouvez toutes les informations sur les services notariaux, les conseils juridiques et les démarches proposées par les Notaires de .

www.notaires.fr

You can at least determine whether either arrangement might accomplish what you are looking for.

 

 

Thank you for your quick reply. Yes, the SCI route sounds like something to pursue. Have you had any first hand experience of this? Tax implications for the 'shareholder ' utilising funds from the UK? Death of shareholder and rights to remain in the house.. I guess questions for the notaire.

 

We bought our house in using an SCI (and by an accident of fate I have also managed a few SCIs for clients). So I can give you some basic answers.

Money
Best way to set it up is so the money to "buy" the house is loaned to the SCI by each party in their country of origin. That way there is no tax liability in or UK for your friend - assuming he is simply using his "UK income tax paid" savings to fund it.

So your friend sets up a UK loan agreement between him personally and the SCI. He can either do the loan as interest free or interest bearing - the cleanest tax way is to make it interest bearing at a commercial rate (eg Bank Base Rate).

Ours is interest bearing, but with no repayments until the end (you can pick as long as you like up to 99 years).

The down side is he will then potentially pay imputed income tax on the interest. To give a round figure example: lend 100,000 at 5% a year, means potentially paying at basic rate income tax, 20% of that interest = 1,000.

As mentioned, your friend can lend it interest free. But depending on your friend's relationship with HMRC, this could lead to them charging imputed tax anyway. Same might happen if you use a non commercial interest rate (eg 1%).

Now of course, you need to lend money too. This will be the proceeds of the house "sale", when you transfer it to the SCI.

(Note: It MAY be possible for your to "transfer in" the property at a value in lieu of money, but you really need the Notaire for that answer)

Buying the property

It MAY also be possible for the SCI to buy part of the property, rather than all of it. But that's another Q for the Notaire (and I wouldn't).

Cleanest way is to then sell the property to the SCI. You can probably short circuit some of the costs by not needing an agent and so on, but this of course triggers some tax liabilities for you and some property transfer taxes.

You don't need to put cash in first if you pledge the house proceeds - as long as your friend can stump up the fees etc.

At the end, through the SCI, you and your friend own the house at whatever percentage split you agreed when setting up the SCI. (50/50 is best!)

Renting the property
SCI's can only rent out unfurnished property. So you then need a rental agreement to yourself, which can be on whatever you decide (and which are legal under French law). It is this rental agreement that helps with the rights to remain in the property.

What happens on death?
Both of you need to make/update wills and mention what happens if you die. You each leave your shares in the SCI to... someone/some people. You also leave the rights to reclaim the loan to that same someone/some people.

So if your friend dies first - and he has left the shares/loan to his son - then son inherits 50% of the SCI. But he is bound by the on the loan agreement - so he can't ask for the money back OR to sell the house without majority agreement.

If you die first - and you've left you half to your daughter - same applies. Neither party can sell until both parties agree.

There's more but I've run out of time to post this!


Kind regards

Ian

 

Probably best asked of the notaire. My only direct experience with SCIs was when my husband and his sisters were settling their parents' estate, which included two properties - one the family home and the other a business building. Ultimately, one of the sisters took the family home (as her part of the total estate) while the siblings set up the business building as an SCI. But I believe there were in the SCI related to the fact that the building was part of an inheritance. When they decided to sell the building (to the business operating in the building) they had to all three agree on the of the sale because with inherited property the children inherited it tly with indivisible interests. Don't think that would apply to the arrangement you're looking at.

 

Thanks. Yes a notaires visit sounds best. Thank you again.

 

I was wondering if anyone has had experience of a friend ‘investing’ in one’s property to Explore ways of helping to release equity? The same way as is prevalent in the UK but perhaps without financial penalties.

I haven’t tried to attract friends to invest in my property just to free up capital, but I’ve heard people sometimes do this instead of taking out a loan. I think it’s important to discuss everything clearly in advance and put it in writing, so there are no disputes-especially when it comes to large sums and debt.