Outstanding property investment opportunity in France
France takes tourism seriously. It is one of the world’s
top destinations in terms of numbers. The French administration came up with
a number of investment plans two decades ago in order to enhance the development
of service apartments for vacationers, thus aiming at meeting the needs of an ever-increasing accomodation
demand triggered by the growing flow of tourism.
What is buy to let in France?
Buy to let is a plan where you buy a property then grant
a lease to a management company for weekly tourist rentals,
this usually over a period of 9 years.
You receive in return a net rental income for the duration of the contract. These returns are net, everything is covered, from management fees to city tax, water and electricity
charges, heating and air conditioning, even down to replacing the furniture if needs be.
Buy to let residences are located in all the french tourist areas including ski resorts, but the best locations in terms of
capital-gain potentials are the Cote d'Azur / French Riviera and Central Paris.
Within the lease agreement of your apartment or villa you may occupy the property yourself free of charge
for a period of 2 to 4 weeks per year.
If you do not want to do so you can allow others to occupy the property
on your behalf.
The plan does not have anything to do with timeshare. You buy a freehold
apartment or villa and you are the legal owner from day one.
It is registered in your name in the French land registry. At the end of the lease period, the property is yours to do as you please.
By using leveraging you can invest in a rental property in France, a relatively
small amount and yet reap the gains on a larger amount. Assuming the bank
lends 80% of the property value, you can gear your own money. Banks will lend more money for longer periods at lower interest rates
for real estate properties than for almost any other asset. With buy to let for short term letting, the rental incomes can conveniently be used
to repay the loan, which is seldom the case with other investments.
There are outstanding fixed mortgages available in France for up to 80% of the purchase
price with fixed rates over up to over 25 years. The present fixed rate
is hovering around 4,5%. The key to this type of tourist property investment is control.
In the case of an investment property, a management company takes care
of the whole maintenance and letting.
To sum things up : Why think of investing in property in France ?
- A net return will be typically of around 4,5% net of all costs. From this return you could deduct the interest and depreciate the building and furnitures in order to minimize the french taxes.
- Mortgage
finance is available from major french banks, up to 80% of the purchase price of the property,
at around 4,5 % for a fixed rate.
- You can
use the property yourself for your holidays free of any charge. Additional
time can often be rented back from the company.
- The French
administration allows you to buy the property free of the 19,6 % VAT
- Buy to let investment opportunities are available in locations where the capital gain potential
is excellent.
- Anyone can buy a buy to let property, there are no restrictions for non residents.
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