Viager and Property in France

A guide to a viager or equity release scheme for French property owners

Viager - what is it?

A Viager is a well established equity release scheme in France, and broadly speaking, allows the release of cash to a property owner in return for an interest in the property on the owner's death. (It is more common for property owners over the age of 70, to consider such a transaction.) On the flip side, the Viager is also advantageous to a buyer who wishes to purchase investment property rather than to purchase a home for himself.

Provence and Paris are popular areas for Viagers

The system is complex and offers several different options, with both buyers and sellers being advised to take expert legal advice before deciding to go ahead. However, a Viager can be extremely useful to both parties, and is especially popular in the most desirable areas of the country (French Property Prices). Traditionally, properties in areas such as Paris (Paris Arrondissements Property Guide) and Provence (Provence-Alpes-Côte d'Azur Property Guide), on the Riviera and in Côte-d'Azur, are involved with viagers (where property prices and demand for properties are high), although technically it is possible to obtain one anywhere.

What types of property are most suitable?

Viager loans are available on most types of property, however, they usually fall within certain limits. Many are small, residential properties such as apartments near the coast (Apartments and flats in France), or in the capital city of Paris. Even Parisian garages have been subject to these types of sales, as demand and price for such properties are high.

Viager - how does it work?

A Viager loan, in its most basic form, allows a buyer to purchase a property, or an interest in that property, while the seller receives a sum of money (an annuity) yet retains the right to live in the property for the remainder of his or her life. The property then passes fully to the buyer on the death of the seller.

Viager terms explained

A lump sum, known as a Bouquet, is payable to the seller on the agreement of the Viager, followed by agreed monthly "rental" or annuity payments thereafter to the seller. The Bouquet is normally 15-30% of the value of the property. The purchaser (who provides the lump sum and the annuity) is called the Débirentier. The vendor or annuitant is known as the Crédirentier.

Why purchase property through a Viager?

Purchasing a property via a Viager can be advantageous to buyers who are expanding an existing property portfolio, making an investment purchase or who seek to buy property in high demand areas for lower prices. The prices agreed for both initial Bouquet payment and the rental payments are usually lower than the valuation price of the property.

Different types of Viager

Nothing is straightforward in France, at least, not when it comes to legal and financial matters, and this is of course true of the Viager system of property purchase too. Although the basic idea is that outlined above, there are several different systems which exist within the system. The trick is finding the best option for your personal requirements. There are two main types of Viager; Viager Occupé, and Viager Libre.

Viager Occupé

In a Viager Occupé agreement, the seller usually retains the right to remain in the house for the duration of his or her life. However, even within this type of Viager agreement, there are variations. The simplest is the form detailed above, but it is also possible to have an agreement whereby the seller retains not only the right to remain in the property themselves, but to move out and install a tenant, receiving the rent payments himself in addition to the rent payments from the buyer.

Pros and cons to consider

Clearly, the first type of agreement is preferable for a buyer, as the situation is cut and dried: on the death of the seller the empty property is immediately available. The second type of agreement leaves the possibility that the property may be occupied by a tenant at the time of the seller's death, with attendant complications for the buyer. The upside to this second type of agreement, however, is that the purchase price is usually lower.

Viager Libre

The second main type of Viager is known as a Viager Libre. In this type of agreement, the property is vacated immediately the sale is completed, although the monthly rent is still due to the seller. These agreements, while advantageous in that the buyer can take immediate occupancy of the property if desired, are almost always more expensive and nearer to reflecting a normal market value purchase price, representing less of a bargain for the buyer.

Viager Vacances or Holiday Viager

There are variations on these two main types of agreements. One is a Viager Vacances, or Holiday Viager, which can be useful in the popular holiday regions such as the Côte-d'Azur. This, in effect, works a little like a leaseback agreement (Leaseback Property in France, French leaseback property - Top 10), with the seller/occupier agreeing to vacate the property for a specified period every year, in peak holiday times, allowing the buyer to use the property for his or her own holidays, or to obtain extra rent during the high rent seasons.

Fixed term Viagers

Another, less common agreement sees a fixed term decided after which the property passes to the buyer and the rent ceases to be paid, even if the seller is still alive. The flip side to this is, of course, that should the seller die before the time is up, rent must still be paid to the estate of the seller. These agreements are generally also more expensive than the normal types, but can circumvent certain common problems associated with the others.

Risk elements involved with Viagers

With any investment, there are risks. Viager loans are not exempt from risk, and the most common problems are outlined below:

Property Market Fluctuations

Fortunately, in France, the property market is relatively stable, but there is still the risk that the value of the house may fall during the period between the agreement of price and the buyer taking possession, due to the long term nature of the investment.

Failure to keep up payments

As with any other type of mortgage or secured loan, if the buyer is unable to make the monthly payments he stands to lose the property, the bouquet payment and all the rent payments made to date, while the seller can then repossess the property in its entirety.

Occupancy by tenant at time of seller's death

The situation can be complex if the agreement has been of the second Viager Occupé type, where the seller has moved out of the property and brought in a tenant. The property may then be occupied by the said tenant at the time of the seller's death.

Unpredictable life spans

Even with quite elderly people, lifespan is not easy to accurately predict. Clearly, buying a Viager property from a person in his or her late 80s would seem to guarantee that there will be a limited period before the property passes to the buyer, however this "limited" period can be rather elastic, perhaps especially in the south of France, where there are a higher than average number of elderly people living to very ripe old ages! Should the seller, as has been known, live well past the age of 100, the rental payments can negate the original advantages.

How easy is it to obtain a Viager?

The market for Viagers is fairly small and the issues can be complex, especially with regard to taxation, maintenance of the property and suchlike, which can vary depending on the type of agreement chosen. In France, most transactions are undertaken by individuals, although insurance companies can also provide a Viager. Non-residents can also sell property using the Viager method under French law. The best advice is to approach a specialist agency which will be able to lead you thorough the entire process and make sure that you have the best legal advice throughout.

Additional articles which may be of interest:


French Riviera Property - an insider's guide
Buy-to-let Property in the South of France
Letting property in France
Selling houses in France
Property sales in France

About the author

Joanna Simm moved to the Languedoc area of south-west France in October 2004 having found her property through French Property Links.

your questions...

1. A question about using a Viager to avoid Inheritance Tax (added 8/12/11)...

I was wondering if it is possible to sell your property by the Viager process to your brother via a Bouquet and rent and avoid Inheritance Tax to him or his sons in the event of his death. I am the sole owner, fiscally resident in France and I have no direct heirs, just one brother and his two sons, my nephews. Am I right in thinking that if this was possible that should he die before me after the viager sale, his sons as his direct relatives would inherit the property from their father and be liable to continue with the rent to me until my death. I am a healthy 65 year-old and he is a healthy 73 year-old and it would be a cash sale based on current market price. I would also require a legal document within the sale to allow my partner of 76 years to live in the property (if he so wished) until his death.

Jo Rhodes, editor of French Property Links replies...

Thanks for contacting us. However, as I am no expert in these matters, I would suggest you contact Franck Haloche, who assisted us in our article on Inheritance Tax in France, and is familiar with Viagers. Franck speaks fluent English and is happy to advise anyone who wishes to know about Inheritance Tax avoidance. His details are as follows:

Franck Haloche
Agent Général
Parc d'Activité des Sémondières
1 Rue Louis Blériot
53500 Ernée

Email : 4005411@agents.allianz.fr
Tel : 02 43 05 21 82
Fax : 02 43 05 83 24
ORIAS Number : 09052461

2. Questions about a viager libre (added 10/3/15)...

My husband and I have a property wih a viager libre in the Gard and wish to sell the house. We have a buyer who wants to buy it outright, so we must deal seperately with the viager libre as the owner is still alive, albeit very old now. We are moving back to the UK so won't have a French property as guarantee on our payments. Do you know if we can we take out insurance on the remaining monthly payments as a guarantee until the owner dies? If so, do you know any good notaries who are experts in this area of law? Thank you.

Our reply...

Thanks for contacting us. Though as viager matters can be complex, I would suggest you contact an insurance agent for advice about this, perhaps using our Business Directory. Franck Haloche, of Agency Allianz, is usually very helpful.

Should anyone reading this be able to offer any advice, please do get in touch.

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