OFF PLAN PROPERTIES

Enjoy a rental income secured by insurance whilst owning residential buy to let property almost everywhere in France. These developments are generally situated in places where there is a high rental demand. Flexibility over time to get back the property for your personal use, at the end of 3 year letting contract with a management agency. Off-plan properties in partnerships with the most renowned French property developers: Bouygues, Cogedim, Eiffage, Kaufman & Broad, etc. Lower notary fees (between 2 and 4 %) than for a resale property (between 6 and 8%), Lower deposit than for a resale property (5% instead of 10%), Tax advantage: 2 years exemption from land tax (Taxe Foncière).

1) The principle of buy-to-let properties

The French people are a nation of renters and are currently suffering from a shortage of accommodation.
A number of measures have been taken by the French government to solve this problem one of which is a residential buy to let scheme which was introduced by Mr De Robien. The scheme has evolved in recent times but is still there to encourage people to purchase residential buy to let property.
Typically, properties available under the buy to let scheme are family properties situated in residential areas. You could have apartments near universities, city centres or houses in the suburbs. The purchaser buys a property which will be let as a main residence to private tenants. Therefore, the  property  is designed to offer comfort and practicality at the same time. Investors purchasing this type of property will be able to let out the properties during a 3, 6 or 9 year period, after which the owner can retrieve their property for their own personal use. This is particularly advantageous for purchasers who wish to occupy their property as their primary residence or as a second home when they retire, for example. For 9 years, the owner will pay off part of the investment, thanks to the rental income received.

2) The insurance package

The owner will also benefit from a host of special buy-to-let insurances popular in France which generally include cover for unpaid rent, wear and tear, legal assistance and periods in between tenants covering lost income, providing a re-assuring package for would be landlords.This is something that doesn't exist in other European countries as such and is one of the reasons that the French buy to let market is so attractive. The yields are generally lower than in some Eastern European countries but what is the point of a high yield if the property is never occupied? The insurance package does differ from development to development and largely depends on the insurance company providing the cover (big names like AXA are involved in this type of insurance) but generally the packages cover all of the above mentioned elements, ensuring maximum guarantees for the landlord. In all, to cover the letting agency fees and the insurances, the owner should deduct approximately between 11 and 12% of the rental income earned from the property each month.

3) The rental income

The average rental returns are between 3 and 5%. The rental income is generally paid on a monthly basis by the letting agency. It would normally be paid directly into a French bank account so we would recommend potential landlords, even those who purchase without a French mortgage to set one up. We can assist with this for no fee if required. Monthly payments can also be arranged usually for a small additional fee.
The rental income will be reviewed on an annual basis in function with the fluctuation of the INSEE Cost of Instruction Index. This index has performed very well since it was introduced. Past performance can be seen here: http://www.insee.fr/en/indicateur/indice_loyer/indice_loyer.asp
Furthermore the landlord can benefit from added security in knowing that when the letting agency interviews for new tenants, they are very strict regarding the criteria they must meet. For example, they mustn't spend more than 33% of their income on debt (rent, loans etc). If they are marginal then they will ask for a bank or parental caution of up to 5 times the monthly rental amount! The methods used are very rigorous and require a lot of selection and supporting documentation provided by the potential tenant. It is often said in France that it is harder to become a tenant than to get a mortgage!

4) Tax and charges

Each year, the owner of the property will be liable for the taxe fonciere. This is paid by all property owners in France and is like a land tax. The other charges are related to the co-ownership and represent around 0,6 € per square metre of surface area.The property is acquired all taxes included, and no VAT is to be reimbursed.

5) The short-term rental

Apart from the leaseback scheme there isn't actually a specific scheme in France for those wishing to let out their property as a short term "holiday" let although there are plenty of landlords doing it! Perhaps one of the riskier and more involved ways of investing in property in France, it is also one of the most popular because owners have complete flexibility as to when they wish to use their property. Carefully selected properties in excellent locations can rent extremely well and earn their owners a small bounty. However, the work and time involved can be a major drawback and does put most investors off. Owners who have found the ideal property can either try and go it alone, or, contact a specialist local lettings agency who are able to deal with such short term lets. These are very popular in coastal and mountain areas and they do charge for their services (agency commission on rental income) but can help to take the hassle out and make it a profitable adventure.
We will undertake to assist you in finding a local letting agent as part of our service if you were to find a suitable property through ourselves.