British buyers target Tarn in homes hunt

As prices rise in well-trodden parts of France, buyers search for a bargain. By Julian Knight
  • @ukmoneyguru

Provence, Côte d'Azur and the Dordogne; for a generation and more these have been the stamping ground for British people looking to buy a bolthole in France. More recently, British buyers have started to look further afield at Brittany, Gascony, Bergerac, the Alpine region and Languedoc.

But with this interest prices have also risen; now Languedoc, for instance, once seen as the budget destination for British buyers, comes with a premium price tag. So the hunt is on for the next must-buy destination in France, and in the Tarn region, just north of Languedoc and an hour from the hub airport of Toulouse, adventurous British buyers may have found it.

Nestled around the Tarn river, the area is famous not just for its vineyards but also for its historic, medieval hilltop villages which were the fortress strongholds of the Cathars, a splinter version of Roman Catholicism brutally crushed by the Papacy.

Tony Dowse, whose firm is developing in the Tarn, puts the appeal of the area in simple terms: "It is a hidden and unspoilt part of France. Very low population density offers a lot to Britons, it is rural without being backward. What's more, the good climate is year-round. Property here offers people the chance to be part of a real community rather than a British enclave."

Prices in the Tarn are generally lower than neighbouring Languedoc. It is possible to buy a two-bedroom stone cottage as a project for around €80,000-€100,000 (£67,000-£84,000), a three-bedroom gite will set you back closer to €150,000, while a five-bedroom mansion with swimming pool will still leave you a little change out of €500,000.

"People are becoming increasingly intrigued by the area generally, and we have seen a 47 per cent annual increase in the number of property inquiries in the south-west of France," says Mark Harvey at Knight Frank International.

He puts this burst of buyer interest down to keener pricing: "Vendors in the south-west of the country including the Tarn have, I believe, accepted more-realistic pricing. This means that prices have bottomed out and are now starting to rise."

The La Durantie development, ( near the historic Cathar town of Castelnau-de-Montmiral in the Tarn, is an example of how the region is opening up to buyers. Due to complete in late 2014, the locally-funded development will see 57 properties ranging from one-bedroom houses up to five- bedroom villas, all with pools, being built alongside a host of facilities such as a gym and tennis courts.

Down the line, a pitch and putt golf course is planned as are more villas in the nearby woodland area. Crucially, the properties and the facilities should open together, avoiding the problems of other developments where homes have been built but promises of top-notch communal areas haven't been fulfilled.

"The idea is to create a real community with small groups of houses grouped around communal courtyards which is a building motif of the Tarn. What's more, we will be using locally-sourced materials, and although the homes and facilities will be thoroughly modern the design will be in keeping," said Jeanne Boden, marketing manager at La Durantie.

Prices start at €311,550 and top out at €740,082. The properties are available to buy outright or on a leaseback basis.

Unlike leaseback in other parts of the world, the French system has a lot to recommend it. For starters, those agreeing to a leaseback arrangement do not have to pay VAT on their new-build property, an instant saving of nearly 20 per cent of the purchase price. What's more, the leaseback arrangement lasts for nine years.

"Owners agreeing to lease their property out for six weeks in high season and three in the medium season will get a guaranteed return on their investments of at least 2.8 per cent a year," Ms Boden says.

"The idea of leaseback in France is to ensure there are enough beds for the buoyant tourism industry, while providing a safe, structured environment for buyers and investors. It really works." To qualify for VAT relief, 70 per cent of the La Durantie development must be bought on a leaseback basis, but that should be no problem.

"Most of our potential purchasers seem to be coming from the 50-plus age bracket and from the UK. They are looking for a holiday home which they can lock up and leave. The rental return then pays for the upkeep and, as they wind down from their careers, they plan to spend a little more time out here," Ms Boden adds.

There has never been a better time to be a borrower in France, with mortgage rates at a record low, particularly in the fixed-deal market.

Miranda John, international manager at mortgage broker SPF Private Clients, says: "Both the capped and fixed options allow borrowers the security of locking into rates which are historically the lowest we have seen.

"A capped product with 1 per cent cap over the initial rate for seven years starts at 2.75 per cent, so during this time the maximum interest rate would be 3.75 per cent, for example.

"Long-term fixed rates can be arranged for 20 or 25 years and start from 3.55 per cent. The banks do apply tight affordability criteria and all income must be open to scrutiny, with the bank looking at the overall picture to assess that any potential new loan can be serviced easily."

But there has been one rather big Gallic fly in the ointment for British buyers - the threat of new taxes from the socialist French President François Hollande.

Mr Harvey says this did have a damaging effect for a while: "The headlines about a wealth tax and a second-home tax definitely hurt the market for a short time but there has been a change of tone in Paris as the government realises taxing incomers from the EU would be very shaky legally but also hurt the domestic economy in the long run. British buyers are switched on to this and that is why we have seen an uptick in demand of late."

The Tarn

The Tarn is within a few hours' drive of both the coast and the Pyrenees. The landscape is undulating rather than mountainous and vineyards and fruit cultivation dominate the rural economy.

There are two major centres in the Tarn - historic Castres in the south and Albi in the north, with its imposing 13th century red brick cathedral and Toulouse-Lautrec museum (the artist hailed from the town).

Easyjet have daily flights into Toulouse, where the Airbus is made.