Posted on 08 January 2013
Buyers of property in the French Alps should be alert to how the fluctuating value of Sterling could affect their buying power during 2013 and, when necessary, take measures to minimise their exposure to exchange rates.
Most British people who will buy a French ski home this year will need to send payment for their purchase from their UK bank to a French bank, in the process converting the necessary amount of Sterling into the agreed euro purchase price. What exchange rate they are given at the point of making the transfer will affect how much their French property will cost them in Sterling.
In effect, the constantly changing £/€ exchange rate means it is almost impossible to know how much your Alpine home could cost you in Sterling until the day you send payment for it. The good news is, there is a way of getting rid of this uncertainty, namely by buying the euros for your property purchase with a forward contract, which you can do by opening an account with a currency exchange specialist.
Forward contracts allow you to fix an exchange rate for a specified transaction which stands for up to a year, having typically paid a 5-10 per cent deposit. Currency exchange specialists typically offer exchange rates that are 2-4 per cent better than those that your high street bank will offer you to make a transfer.
The timing of securing a forward contract or making an on-the-spot transfer to France is important too. During 2012, for example, exchange rates yo-yoed considerably, with the euro’s value ranging between €1.19 and €1.28 against Sterling. There is still much uncertainty about how currency markets will perform in 2013, so skiingproperty.com recommends using a currency exchange specialist to protect your buying power when purchasing in the French Alps or elsewhere in Europe. Speak to us today for more information.