Selling a Property in France: The Case of Wendy and John

We are very good to give guidance to those looking to buy a property in France, however we often forget that some readers are in the process of selling their property. Sellers also face the challenges caused by the exchange rates volatility with the added complexity to repatriate the funds. Moneycorp explores those challenges through a real case study.

Wendy and John who were selling their property in France. Alongside their concerns about the current EUR- GBP rate and any potential about the potential adverse fluctuations while waiting for the sale to go through, they have an extra challenge. They closed their French bank account a year ago when they pay off their Euro mortgage.

It was important for Wendy and John to find a solution to simplify this process whilst ensuring they maximise their returns when repatriating the proceeds back into sterling in the most efficient and cost effective way.

The benefits of using a foreign exchange specialist

Local bank account

Without using the right specialist foreign exchange provider, Wendy and John would have needed access to a local Euro bank account to pay the proceeds of their sale directly into. By using Moneycorp, the couple were able to open a free multi-currency account to pay the proceeds of the sale into, saving them from incurring any transactional/ international fees and also not needing a personal French bank account to deposit the euros. They were able to request the notaire sent the proceeds directly in Euros into the local Euro account with Moneycorp. They then had autonomy over their conversion and the chance to discuss their options with a market specialist before converting the funds back into sterling.

Fluctuating exchange rates

Once they received the funds into their Moneycorp account, they had access to dedicated market specialist. They mentioned their concerns around currency fluctuations, and that they wanted to maximise their exchange.

Fluctuations in exchange rates can have a significant impact on the real-term value of foreign property sales, even in a very short space of time, and therefore is one of the most important things we discuss with our clients.

With the flexibility of using an Euro account to receive the sale proceeds, Wendy and John had control over when and how they chose to transfer their euros back into pounds. It’s essential to recognise that the currency market is unpredictable, and we never know how rates will move and when.

However, speaking with their market specialist, they were made aware that they had access to a range of tools to help them take advantage of favourable fluctuations and to manage their risk if the rate was to move against them.

Here are some of the tools they considered when exchanging the proceeds of their property sale:

· Market Orders

You can use a market order to take advantage of favourable exchange rates. This involves setting a target exchange rate at which you want to convert your euros to pounds. The transaction will automatically execute once the market reaches your desired rate. This approach allows you to benefit from favourable market movements without constantly monitoring the rates.

· Stop-Loss Orders

You can combine a market order with a stop-loss order to protect yourself from potential losses if the euro weakens. A stop-loss order sets a minimum exchange rate at which you are willing to convert your euros. If the market rate falls to this level, the transaction will be executed, limiting your potential losses. This strategy can help you manage the risk of adverse market movements while still having the opportunity to benefit from favourable rates.

They also had access to a *Forward contract, however this is usually not recommended for property sellers in case there is any delays in the sale process. This tool is more appropriate for property buyer who want to lock in their specific budget.

Forward contracts allow you to fix the rate of exchange ahead of a future payment. There are mainly 2 reasons for a property buyer to fix the exchange rate ahead of completion. One, to take advantage of a rate move –even if you don’t have full availability of funds- and second to fix the price, protecting it from any negative rate fluctuations, giving you the peace of mind and the certainty on how much the property will cost you.

Knowing there was expected volatility upcoming in the market, Wendy and John decided to use a combination of Market orders and Stop-Loss orders to target their desired rate of exchange, while protecting themselves from large adverse movements. At the start of July, they targeted the EUR/GBP exchange rate of 0.86 while it was currently at 0.845 and set a stop loss of 0.84. A month later 0.86 was hit, without the stop loss being triggered, and the funds were automatically converted for Wendy and John, securing them an additional £7,500 to pay off their mortgage than if they had converted it a month prior.