How suitable would the French Viager system be in solving the problems within the British housing market?

The French Viager system, founded in the 19^th century gained popularity after the second world war as increased life expectancy led to the elderly needing new ways to sustain themselves financially in later life. Viager itself is essentially a real estate transaction where a buyer puts a down payment onto a house owned by an elder person and then continues to pay them regularly as long as this elderly owner is alive. Critics have pointed out the speculative aspect to the Viager system, however, it may be just the system Britain needs to move past the increasingly unbalanced housing as well as the toxic inheritance tax debate.

A Viager could be described as “reverse annuity” it is a gamble for buyers while for sellers it is guaranteed cash flow for the rest of their lives. The initial down payment, known in France as the “bouquet” is generally around 30% of the occupied value. Occupied value being the value of the property based on the age of the seller. This is one of the main benefits of Viager for buyers as even though their purchase presents a gamble they have much to gain from buying at the occupied value as it is usually significantly lower than the market value. Another benefit for buyers is a low interest rate which acts as another incentive to get people buying. A benefit of the system is the opportunity for significant tax breaks on the seller’s side, this creates an incentive to start a Viager with another person before you die, largely so you can avoid losing out on a lot of your houses value due to inheritance taxes. While it has been pointed out that the speculative nature of Viager could be seen as morally adverse, there is clear potential and even proven success for the Viager system when it comes to buying and selling real estate for ordinary people.  

The benefits of Viager can be directly linked to other current failures of the British housing market. Inheritance tax is commonly looked upon as an unfair theft of someone’s hard earned money over their lifetime. A Viager system in the UK could combat this as elder people could enter into an agreement with a buyer and receive a fair amount of their properties value as high market valuations often mean peoples estates are made to pay a higher inheritance tax due to them being pushed into a higher IHT threshold.  Such a system could also benefit buyers as a major problem in Britian has been the discrepancy in home ownership between the elderly and people in their 20s and 30s. We can see how the strengths of the Viager system could be adapted into the current British context and directly combat some of the leading problems in the British housing market as well as cool down hot topics like inheritance tax. Of course, such a radical new policy if introduced would run into issues, the initial shock itself of such a policy may even increases short term problems. However, in the long term Viager may certainly have a good chance of success.

In countries such as France and Britain who have aging populations and increasing economic insecurity especially around housing, Viager is an effective way to calm these two issues in a broad policy stroke. In conclusion, whilst there may be problems with the Viager system itself and it would be unlikely for it to reach the market share of the traditional real estate market, overall, it can be seen as an effective policy that along with other real estate policies could improve the state of the housing market in the UK.

Written by – Alexander Jackson

Position – Vice President

Date – 2/11/2025

References

Joey D'Rozario (2025) “Is homeownership still a priority for younger generations?” Yopa.

Charlotte Gifford (2024) “Inheritance tax thresholds, rates and how it works in 2025.” Telegraph.

Julia Kagan (2022) “Defining and Understanding Viager Transactions.” Investopedia.

Jérome Pohier (2023) “The Viager in France: historical background and market reality.” Michael Zingraf.