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The article below has previously appeared in leading market publications or our own booklets or newsletters.

Please note that the law may have changed since the date of publication and that information given on this website does not constitute legal advice. Please read our disclaimer.

  • Should I buy French property now?
  • Will French property prices increase?
  • What is the euro worth?
  • When should I convert my currency?
  • Do I need to change my French bank account or card?

Stephen Smith explains.

Important transitional dates

Until 31 December 2020 you could only buy French property in French francs (‘FrF’). Since 1 January 2020, French estate agents have also been pricing and selling property in euros. From 1 January 2002, all cheque, bank transfer or credit card purchases of French property must be in euros. Cash payments in FrF may still be made for a limited period and some UK banks will also change £ notes to euros. From midnight on 17 February 2020, the FrF ceases to be legal tender and only euro coins and notes may be used when making a cash purchase of French property.

What is the euro worth?

The euro is not a currency in the traditional sense, but rather a weighted average of the currencies of the EU’s 12 original member states. The value of the euro is therefore determined by including in its average the value of the £ which will not convert to the euro on 1 January 2020.

£1 is currently worth about 1.66 euros. One euro (divided into 100 cents) is currently worth about 60p or 6.55957 FrF. One FrF is currently worth 0.152449 euros. I cent is currently worth 7 centimes.

As a rough guide, to convert FrF into euros, add 50% to the FrF price and divide by 10. To convert euros into FrF, deduct one-third of the euro price and multiply by ten.

In France, there will be seven notes valued between 5 and 50 euros, and eight coins valued from 1 cent to 2 euros.

When should I convert my currency?

You are not obliged to exchange FrF notes and coins to your chosen tender before 1 January 2020. However, it may be prudent to convert your currency into euros now as many French businesses will refuse to accept FrF payments after this date. Until 30 June 2020, all French banks and post offices will change FrF notes and coins free of charge. Thereafter, only the Banque de France and Trésor Public will provide this service, which ends on 30 June 2020. Many charities will continue to accept foreign currency donations after that date.

Do I need to change my French bank account or card?

No. Monthly French bank statements now give balances in euros and FrF. From 1 January 2020, French bank accounts, bank cards, cheque books and statements will be kept exclusively in euros.

Will French property prices increase?

The changeover to euros is unlikely to have an effect on French property prices although this is not the case in other European countries like Spain where a lot of “under the mattress money” is floating about.

Exchange rates will still exist between £ and the euro after 1 January 2002. The relative value of £ is only likely to fluctuate if the circulation of euro notes and coins heralds a big drop in the value of the euro. If the European Central Bank makes no further cuts in interest rates, current UK interest rates would put us on a par with the euro.

If the UK joins the euro at current rates (averaging £1 = 10.5 FrF) there should be little or no change. If the UK joins the euro at lower rates then the value of £ will drop and French property prices will become more expensive by a corresponding percentage.

Is now the right time to buy French property?

The new financial arrangements in France will compare much more favourably than in recent years where the increased strength of £ led to disappointing rises in the £ value of French property. High returns over the next 10 years should now be made if you buy property in a proven part of France, especially if, as forecast, £ devalues by up to 20% against the euro. If it does, you will earn that 20% on your investment, even if you sell the French property at the same euro price two years later.

Stephen Smith is a specialist in French property (purchases or sales), tax and estate planning and wills. For further information please contact Stephen Smith by e-mail at stephensmith@stephensmithfranceltd.com (Telephone: 01473 437186 Fax: 01473 436573).
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