The Property Banks French Property News
French property - an exercise for the savvy investor, Assetz News, UK - 4 Jun 2007Investing in property in France is an exercise in good research and taking one's time, various experts on the market in the country have said.
This applies to a number of issues, whether this be finding the right property, seeking out a bargain or ensuring there are no technical problems or hidden pitfalls. There is also the small matter of watching out for the taxman, since there are breaks available and also the possibility of new legislation.
Writing for the Record in New Jersey, US, expert Shannon Roxborough advises her readers to look around for bargains, since much of France can be expensive, but there are up-and-coming areas where the prices are low. She cites Paris apartment owner Joanne Clark, who says: "You can spend a lot here, but if you look in up-and-coming neighborhoods like the 10th, 18th and 19th arrondissements, you'll be surprised at what you can get for your money."
Similarly, Ms Roxborough writes that the Dordogne is a cheaper alternative for those looking to invest in the country. Writing for her American audience (although the advice is applicable to any overseas investor), she notes that many Britons have already arrived and prices in the region are going up, but states there are still bargains around. She quotes the advice of the author of The Grown Up's Guide to Living in France, Rosanne Knorr, who recommends taking three months over the process and hiring a government official, called a notary, to handle official documents and check the house is in good order.
Another area where people need to be savvy is the tax system. In France there are opportunities for tax breaks. One of these is the government leaseback incentive, which refunds VAT to holiday home buyers who lease them back to management agents. The payback is 19.5 per cent.
Assetz has launched a new scheme for such investors, which it states has more flexibility when it comes to the use of the property than existing schemes. Managing director Stuart Law said in the announcement: "Investors can use the property as much as they like and sell on after five years free of the leaseback contract, taking the capital profits." He stated this contrasts with the tighter restrictions on how people could use their properties under the old schemes.
Getting a flexible tax break on a holiday property is certainly one attraction for investors in French property. Others, looking to the longer term, may wonder about the question of inheritance tax (IHT).
Writing in answer to a reader's question on the subject, Sunday Telegraph money editor Liz Dolan noted that there is relief on IHT under a double taxation treaty between Britain and France which uses tax credits to offset any bills and noted that new president Nicholas Sarkozy has vowed to scrap the tax for all but the very rich.
Ms Dolan questioned when or even if this will occur, "politicians' promises being what they are", but Mr Sarkozy's pledge has a lot to do with his plans to encourage home ownership in France. If he is to make any serious attempt to follow through this key policy aim, not to mention if he is to live up to his nickname of The French Margaret Thatcher, changes in IHT could be a key way of trying to achieve his desire of seeing France changed into a country of property owners.
Whatever does occur, investors will be wise to keep a look out for the opportunities that may arise from any legislative and fiscal changes to this and other housing-related policies in France.
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Will I profit from French home?, This is Money, UK - 1 Jun 2007
Nicolas Sarkozy has plans to revamp the French property market and mentioned in his pre-election speeches that he wanted to make France a nation of property owners. There have been indications that one way he will achieve this is by introducing mortgage tax relief.
The prospect of a revitalised property market has brought a great deal of talk that France may be a potential hotspot, with gains to be made for investors. However, it is essential to take any claims with a pinch of salt and remember that at the moment M Sarkozy's suggestions are just that. There have been no definite changes announced and if and when they are, it is unlikely to still be unclear whether foreign investors will benefit from any tax breaks announced and whether they will be retrospective.
If you have spotted a property that you like then the best way to decide if it would be a good purchase is to evaluate it against what you want it for - permanent residence, holiday home, or investment property. Obviously, you will want to buy a property that will retain or increase its value, but your priorities will be different depending on which of the above is the primary reason for purchasing.
If it is a residence, will you want to live there permanently and will you be happy in it day-to-day ? If it is a holiday home, how are the travel connections, how often will you go there and how suitable it is for your family's holiday needs? If it is an investment, will it be rentable, will the rent cover the mortgage costs and is it easily accessible and in an area attractive to holidaymakers?
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French Property Market Expects 'Sarkozy Effect', Homes Worldwide, UK - 23 May 2007
With recently elected Nicolas Sarkozy as President of France, a new confidence in the economy is expected to influence a boost in the property market.
In his new role as President of France, Sarkozy is facing many challenges. One of the first things he will be tackling is the faltering French economy, which has failed to match the prosperity that other western economies have enjoyed in the last 10 years.
Sarkozy's previous experience as finance minister under Jean-Pierre Raffarin and Dominique de Villepin means he may have the necessary skills to boost the economy, and the French certainly seem to agree. It is already established that he will push for a liberalisation of the markets, lower inheritance tax, and break down some of the country's famous red tape. In doing so, it is anticipated that he will transform the property market to increase returns.
It is thought that Sarkozy's plans for a property-owning democracy will mean a rise in real estate value by 2008. Trisha Mason, managing director of French property specialists VEF, thinks that Sarkozy's policies will mean France's property market may soon rival that of the UK. All this means that now is the time to invest. Trisha confirms, "For anybody talking about seriously investing, France will become a lot more interesting, but people have to start making a move now".
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France's property market 'a safe bet for investors', Overseas Property and Investment News, UK - 21 May 2007
Investors have a better chance of making a profit in France than they do in Spain, according to one expert.
Trisha Mason, managing director of property firm VEF, said that France is a "mature" economy with a "safe" property market, which is set to improve under the presidency of Nicolas Sarkozy....
Investors have a better chance of making a profit in France than they do in Spain, according to one expert.
Trisha Mason, managing director of property firm VEF, said that France is a "mature" economy with a "safe" property market, which is set to improve under the presidency of Nicolas Sarkozy.
Comparing the market to neighbouring Spain, where inflated house prices are undergoing a correction, Ms Mason said that France offers more lucrative opportunities for investors.
"France we know has about 30 per cent in it that it can afford to go to before it gets over-inflated. And I think we're going to see that happening now."
She went on to say that although the French market would not match the capital growth witnessed in eastern European countries, its established market makes it a safe choice for "medium to low risk" investors.
According to French property agents Latitudes, the election of Mr Sarkozy will cause property prices to rise across the country as investors become more confident in the economy.
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French property prices will rise 'because of Sarkozy', Overseas Property and Investment News, UK - 18 May 2007
France is set to become a country that is "much more property owner-oriented" now that Nicolas Sarkozy has become president, an expert has said.
Penny Zoldan, managing director of Latitudes, said that the centre-right politician who took over from Jacques Chirac on Wednesday will strengthen France's economy and property market....
France is set to become a country that is "much more property owner-oriented" now that Nicolas Sarkozy has become president, an expert has said.
Penny Zoldan, managing director of Latitudes, said that the centre-right politician who took over from Jacques Chirac on Wednesday will strengthen France's economy and property market.
According to Ms Zoldan, Mr Sarkozy's policies will probably cause property prices to rise as French investors become more confident.
However, as these changes will take some time to implement, British investors still have time to buy properties in time for the boom.
"If things become more beneficial for the French who have money ? and that's what the conservatives do ? then there will be more money around and the French will be even more in competition for the good properties," she commented.
Her comments echo similar sentiments expressed by property specialists VEF, which has said that the new French president will boost the country's economy and make the property market much "livelier".
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Bank of Scotland finds two fifths opt for property abroad, Fair Investment Company, UK - 18 May 2007
Two in five Britons are eager to buy property abroad, whether as an investment or with the aim of emigrating, Bank of Scotland International has revealed.
The most desirable global destination for would-be migrants was Australia, with ten per cent of people eager to move Down Under, followed by New Zealand, at nine per cent.
Four per cent of people surveyed already owned a property aboard, but a substantial 42 per cent of their peers wanted to jump on the bandwagon.
But homeowners looking to relocate off-shore should remember the implications for their personal finance, commented Bank of Scotland International's managing director Tony Wilcox.
"There are many aspects of life which British expatriates have to adjust to and personal finance is no exception," he said.
Meanwhile, France was voted the favourite European destination for moving abroad, attracting six per cent of people, while sunny Spain caught the fancy of a surprisingly slim five per cent.
The French property market is a "safe choice" for making a profit as an investor, the managing director of French property company VEF said this week.
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France remains core interest for overseas ..., Landlord Expert, UK - 17 May 2007
Now is a good time for Britons to indulge in their French property fancy, a leading Overseas Property company has said.
Now is a good time for Britons to indulge in their French property fancy, a leading Overseas Property company has said.
Property agents Latitudes believes that new president Nicolas Sarkozy will help to strengthen the country's economy, making the French market more buoyant in the future.
Predicted tax cuts, combined with a stronger economy will make the nation more willing to invest in property with a more "buoyant" market as a result, the company explained.
Commenting on the change in leadership, Penny Zoldan, managing director of Latitudes, said: "It will make France much more property owner-orientated, and therefore the market will be buoyant because even more [French] people will be in the position to buy."
She added that Mr Sarkozy's plans to abolish the French 35-hour working week would not affect the country's property market, as the majority of Britons looking to buy are retirees, or second home owners unlikely to need to find work.
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France 'set to boom for property investors', Firstrungnow, UK - 16 May 2007
In news which may be of interest to first time home buyers, the French property market is set to boom, it has emerged.
According Trisha Mason from property firm VEF, although France will not produce the levels of growth available in some areas of eastern Europe, the country is set to grow rapidly under its new president.
Indeed, the company believes that the French property market sufficient flexibility for around 30 per cent growth before becoming overheated.
"France is good because it's a mature economy; it's a safe property market but, but it's not going to produce the capital growth that some Eastern countries do," said Ms Mason.
"I think as a destination to make profits from property it's better than Spain already. The Spanish market has fallen flat on its face at the moment," she added.
Nicolas Sarkozy officially became France's president today, replacing the incumbent Jacques Chirac.
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Brits may consider a French mortgage, London Stock Exchange, UK - 16 May 2007
British property investors could find appealing opportunities in the French market in light of recent political developments across the channel, according to one expert at investment firm VEF.
Trisha Mason argues that the French property market is looking forward to a positive future following the election of president Nicolas Sarkozy, stating that profitable investments are on the cards for investors who act soon.
Taking this on board, Ms Mason recommends that now might be a good time for British investors to take out a mortgage in the French market. She states that doing so would be "relatively straightforward" for UK investors, suggesting there is little difference between taking out a mortgage in the UK and in France.
However, Ms Mason asserts that France might not have the same growth potential as some emerging markets in Eastern Europe.
"France is good because it's a mature economy, it's a safe property market," she explained. "But it's not going to produce the capital growth that some eastern countries do," she added.
Bank of Scotland International reports that more than two-fifths of the population are interested in investing in a foreign property.
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French property market 'not saturated',
Firstrungnow, UK - 27 Apr 2007
The French property investment sector still contains room for
incoming British buyers, an expert has claimed, which may interest
would-be first time buyers looking to invest abroad.
According to Rightmove.co.uk, in addition to the lack of saturation,
the French property market still contains a number of bargains,
which might interest first time buyers looking to invest overseas on
a budget.
"There are lots of places where the Brits haven't managed to crack
good deals [and] have probably forgotten about as they concentrate
more on Spain," said Maud Rousseau, a representative for
Rightmove.co.uk.
"France is not quite yet saturated. There are still a lot of places
where you can buy properties at a bargain [price]," she added.
Indeed, according to Ms Rousseau, wine regions offer a number of
attractions for Britons looking to invest.
French dream could soon match that of Spain',
Overseas Property and Investment News, UK - 27 Apr 2007
Market activity across the Channel is starting to increase the
possibility of there being a "French property dream", according to
one expert.
British buyers, who are increasingly favouring France as a
destination for property investment are now looking to France, says
Rightmove.
Maud Rousseau from the online estate agent said that the so-called
"Spanish dream" could one day be matched the by "French dream".
However, people who buy homes in France tend to do so in order to
have a holiday home or as a base to travel to London, while in Spain
the property market is driven by pure investment and buy-to-let.
Maud Rousseau commented: "A lot of people used to talk about the
'Spanish dream', living on the Costa del Sol in the 80s and 90s.
"Now, the prices are as high as English prices so Brits start
looking elsewhere and France is obviously another option."
However, Ms Rousseau did assert that the overseas property market in
France is unlikely to ever be quite as buoyant as that in Spain
because the French people "won't let it happen, probably".
French property 'offers excellent alternative
to Spain', London Stock Exchange, UK - 25 Apr 2007
The property market in France offers British investors an excellent
alternative to the saturated Spanish market, according to one
property search company.
Rightmove claimed that there are still "lots of places" in France
that are relatively untouched by the overseas property market, such
as the wine regions.
Burgundy and Rhone, for example, are "definitely" locations that
investors should be thinking about, thanks to the beautiful
surroundings and affordable prices from a British perspective,
revealed Rightmove.
While these areas have often been overlooked by those seeking
properties on the Costa Del Sol, the saturation in the Spanish
market means that France offers many investment opportunities by
comparison, the company stated.
Maud Rousseau, a spokesperson for Rightmove, commented: "If you buy
a house in Burgundy, you can still get a very good price for an
amazing property - it's very expensive for a French wallet, but for
a British wallet, it's not at all."
French Property now more attractive, 11th March 2007, Homes go Fast
French real estate
has become even more attractive with recent changes in the way
French Leaseback property is taxed on its sale. Changes in French
law now remove the necessity to pay VAT on French Leaseback
properties when they are sold making this type of French property an
attractive overseas property investment.
The Leaseback System is a scheme which was introduced by the French
government in 1976 to boost the tourist industry in different parts
of France. The French government was concerned about the slow French
housing market and a slow down in tourism in certain areas of
France. The leaseback property buying system was introduced to
counteract these problems. Leaseback developments were originally in
the less popular areas of France but the scheme has greatly expanded
since those days
Before the introduction of the new French property law, the payment
of VAT on the new property - currently 19.6% - was waived but, if
the property was sold prior to completion of the 11-year term, the
vendor was obliged to pay a proportion of the VAT back to the state.
The investor is no longer required to repay any VAT at all when
selling the apartment, even if he or she re-sells within the first
five years of ownership. The only condition is that the residence
must be ‘classified’ with an official tourism star rating
The French property market was brought into the fore by allegations
of greed and advantageous property deals as Ségolène Royal was
accused of underestimating the value of her French Riviera holiday
home to minimise her tax bill.
Ms Royal the first woman with a chance of becoming French president
faced down the charges, saying she had been "transparent" over her
property portfolio. The tax authorities would have intervened if
there were grounds for concern, she said.
Now French property law may
attract more investors, 3rd March 2007, Assetz
Following a recent report from
International Living that France enjoys the best quality of life in
the world, there is another piece of news that may interest
buy-to-let investors that are currently thinking Gallic. A new law
enacted last year, and subject to several recent revisions, has
served to make things somewhat easier for the investor who leases
their freehold property to a management company.
Under the so-called 'leaseback' scheme, foreign investors are able
to purchase a freehold property and let it to an approved management
company for a fixed term of between nine and eleven years. As part
of the arrangement, the company agrees to pay a fixed rental for the
property, even when it is not being used. this means the investor
can bank on a guaranteed income for the property and make
appropriate forecasts. Of course, the terms of the deal are likely
to mean that the rental income the management company pays the owner
during peak season will probably be considerably less than the price
that they could get on the open market, but this is offset against
continued regular income during the off-season.
Previously, investors taking advantage of the leaseback scheme did
not have to pay VAT - 19.6 per cent -on the purchase price of the
property earnings, unless they sold the freehold inside the duration
of the agreed leaseback term. At that point, a proportion of the
VAT, known in France as TVA, would be payable to the government. The
proportion was calculated by deducting the number of years the
agreement had been in operation for from 20.
A nine year lease would mean that, once it had run its course, the
owner would pay 11/20 of the VAT on the original purchase price.
With inflation over those nine years, the proportion payable would
likely not be a significant sum. If the owner of the property
engaged in leasehold for 20 years, there would be no VAT payable on
expiry of the lease.
Under the new legislation, selling the freehold does not attract any
VAT repayments at all, even if the transaction takes place in the
first few years of the leaseback agreement, which would previously
have attracted a 100 per cent VAT payment to the government. This
makes a relatively simple scheme even less confusing and may well
serve to attract more investors to the French market. However, It is
important to be aware that this arrangement applies only to new
build properties. The investor who purchases a refurbished property
or in a regeneration area will probably not be able to take
advantage of the scheme.
As an added bonus, although the terms of leasehold agreements will
vary between companies, most will allow for the owner to use the
property as a holiday home for a certain number of weeks each year.
During such time, the property will continue to be cleaned and
serviced as it would normally be for a paying holidaymaker, meaning
the investor can look forward to several weeks of ease each year
plus a guaranteed rental income.
Investors welcome new Property Law, 3rd March 2007, Easier Property
Investors in Britain
and Ireland have welcomed a new French law which, in effect, boosts
substantially the value of leaseback properties for owners who
decide to sell.
The leaseback scheme, a French Government incentive designed to
encourage tourism, enables purchasers to buy a freehold apartment
and then lease it back to an approved management company to let for
an 11-year term. Prior to the introduction of the new law, the
payment of VAT - currently 19.6 per cent - was waived but, if the
property was sold prior to completion of the 11-year term, the
vendor was obliged to pay a proportion of the VAT back to the state.
Under the new law - which gained little attention in the UK and Eire
when it came into effect last year - and subsequent recent
revisions, the investor is no longer required to repay any VAT at
all when selling the apartment, even if he or she re-sells within
the first five years of ownership. The only condition is that the
residence must be ‘classified’ with an official tourism star rating.
Most residence de tourisme developments built by MGM, the leading
developer in the French Alps, have four-star ratings.
Says Richard Deans, sales consultant in MGM’s London office. “The
new law represents a significant and immediate increase in capital
value for investors who are being attracted in increasing numbers
once the scheme is explained to them.”
“Typically an investor who buys a two-bedroom apartment priced at
€350,000 only pays €292,600 if he does so under the leaseback
scheme, but the value of the property remains at €350,000 or more,
as prices increase every year.”
Leaseback explained . . .
While some owners of MGM properties in the French Alps have bought
outright and arrange lettings privately, the majority of new
property in the region now is sold under the leaseback scheme.
Introduced by the French Government to make more properties
available for the tourism industry, the scheme enables purchasers to
buy a freehold apartment within a residence de tourisme - a
residential development which generally incorporates an indoor pool,
sauna and jacuzzi, as well as steam and fitness rooms - and then
lease it back to an approved management company to let for an
11-year term.
MGM offers two leaseback options. They are ‘lease with rental
income’ and ‘lease with price reduction.’ Key elements of the
schemes are:
Lease with rental income
- The buyer pays no VAT (currently 19.6 per cent) on the purchase
price.
- The buyer receives a guaranteed annual rental income (the amount
varies according to development and the type of property).
- The owner retains three weeks use of the property each year.
Lease with price reduction
- The purchase price is reduced by 30 per cent. The discount
consists of the non-payment of VAT (19.6 per cent) and a one-off
lump sum equivalent to rental income paid in advance.
- The owner has six weeks use of the property each year.
- No rental income is received by the owner.
Under both options, owners can sell at any time and, at the end of
the 11-year term, can choose to enter into a new lease agreement on
mutually agreed terms or opt out of the scheme and retain full use
of the property.
In a few resorts in the French Alps, where local authorities are
worried about the shortage of rental properties, laws have been
introduced making renewal of leaseback arrangements for a further
seven years compulsory at the end of the initial 11-year term.
Purchasers of leaseback apartments say that attractions for them
include the way in which the rental and management of the property
is handled, and maid and laundry services are provided.
MGM says that the scope for capital growth is still considerable in
the French Alps - typically between 5 per cent and 15 per cent per
annum depending on location and demand - and there is no French
capital gains tax if the property is sold after 15 years of
ownership.