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May
Holidays....
Late Availability Still have un-booked weeks? Why not use our Late Availability feature on the home page. Maximum exposure for £15 per single advert or £50 for unlimited use during the next year! Where better to advertise your Gites or French property or Service? Your advert working 365 days a year, every day, every hour for just £25 per year. A big request- STILL!: We need articles for this newsletter!!
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We have been busy negotiating travel deals with various operators, so if you are looking for discount ferry crossings, cheap air-fares or budget car hire - please try our offerings...... We also have some great Wine specials if you cannot get to France on a booze-cruise! |
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| Feature Article..... A Story of Foreign Exchange, Kronenbourg and Trousers. |
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The Treasury’s assessment of Gordon Brown’s five economic tests for membership of the euro now looks likely to be published in mid May 2003. In any event, it has to be published before the government’s committed date of 6th June. On several occasions in his budget speech on 9th April, Gordon Brown was critical of the European Central Bank and Europe’s fiscal rules. It seems very likely then, that the way was being prepared for the assessment to be ‘no, not yet’. Whilst there has been some convergence with the euro zone over the last five years, it seems that this has not been sufficient to make a ‘clear and unambiguous’ case for entry. It is therefore also likely that as in 1997, Mr. Brown will announce that the assessment will be rerun during the next parliament. Whatever happens next month and however things pan out over the next few years, it is clear that, for the foreseeable future, those with an income in the UK, or with their main wealth based in sterling, will need to get involved in some sort of foreign exchange as part of the process of buying a property in Europe. Releasing equity from a UK residence is a simple and common way to fund the purchase of a property abroad. Many people can take advantage of today’s low interest rates by totally re-mortgaging their UK property. This can provide funds for the overseas purchase while minimising the impact on monthly repayments. Another option is to raise money on the overseas property. Buyers are commonly advised that if their income is in sterling their repayments should also be in sterling, thus avoiding any unpleasant repayment hikes if the exchange rate changes dramatically. Certainly with UK interest rates at a 40-year low, this is good advice for many, but it is not the only solution. There is no universal right answer. Only that we should seek unbiased, independent advice and consider a number of options to find the solution that best suits our individual circumstances. For example, if we plan to fund part of the borrowing from rental income, we need to consider whether that income will be in sterling or euro. For most of us, the only involvement with foreign exchange has been the purchase of holiday spending money from our bank, at the airport or from our credit card company. We will have noticed and accepted the spread between the ‘we buy’ and ‘we sell’ rates posted in every bureau de change; after all, that’s how they make their money. These rates don’t spoil the taste of our Kronenbourg, San Miguel or Moretti. When all we are exchanging is ‘beer money’, the keenness of the rate that we get is no big deal. When buying a property abroad, most people contact their bankers with their foreign exchange requirements and accept the rate posted for the amount required. Whilst this is hopefully better than the tourist rate, is it really the best rate available? Most high street banks do not specialise in currency exchange, have high overheads, and will normally only carry out exchange at the uncompetitive rates set by their head office, once or perhaps twice a day. Branch staff members are rarely empowered to negotiate a better rate, or anything else for that matter. You either take it or leave it. Indeed, the lack of experience and knowledge displayed by staff within some organisations would lead one to believe that most of their employees are still wearing short trousers. Currency, like everything else, is a commodity, and it is possible to shop around to find a better rate than those posted by the banks. The savings that can be made will, of course, vary depending on prevailing market conditions and the amount to be exchanged. However, when funding a property purchase, shopping around for an exchange rate can leave you several hundred pounds better off, which will, at least, keep the fridge full of Kronenbourg for the summer. The process of purchasing a property can take many months, particularly in the case of a new development, so in addition to getting a good rate, it is important to protect ourselves from rate volatility. The purchase price of the property is agreed at the time of sale, but it can be many months before completion and final payment. Due to the change in the sterling/euro exchange rate, the cost of buying €100,000 increased by about £5,000 between December 2002 and March 2003. Taking a forward contract in December would have secured the rate and removed the risk from the currency transaction. Of course, nobody can accurately predict how the market will move. The key benefits of using a forward contract are the removal of risk and engendering peace of mind. Buying a property overseas is always going to appear more complicated than buying in our home country, but this doesn’t mean that we have to pay through the nose for the privilege. Much of the apparent complexity is purely due to unfamiliarity with the processes involved and the services that are available. Much of this complexity can be overcome by dealing with people with the relevant experience. There are lawyers who specialise in purchasing property abroad. There are specialists who everyday deal with foreign exchange and mortgages for overseas properties - people who will be in your corner to support you throughout the process. So when you are ready to purchase your property, be sure to speak to someone who wears long trousers. Kevin Wallis-Eade is a director of Currency UK Ltd, our foreign exchange partner. www.currencyuk.co.uk Copyright © Kevin Wallis-Eade 2003.
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| New Properties for sale / to rent.... | Advertising |
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| New properties
for sale this month .... Lots of new French properties for sale. Please check them on http://www.1st-for-french-property.co.uk/whatsnewEP.htm
Our Crete, Spanish and Italian properties..... New properties for rental this month ....
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