French property still offers very solid medium and long-term investment opportunities. In some cases, taking the plunge comes with the added bonus of having your own pied-à-terre to enjoy for holidays. Here we take a look at some of the main French property investment options.
Holiday Home & Investment
In 2012, France attracted over 83 million international tourists, making it the most visited country in the world. In addition, the vast majority of French residents choose to spend their vacances without leaving the country.
‘Bed & breakfast’ and self-catering lets – the latter are known as gîtes – accounted for more than 50 percent of the total holiday accommodation booked in France during 2012.
Over three million French properties serve as a vacation or weekend retreat, as opposed to being used as a permanent residence. In fact, the owners only occupy them for an annual average of 30 days. Therefore, an increasing number of people who own a holiday home in France decide to make the best of their investment and let it out while they are not occupying it. According to Gîtes de France, the average property is booked for 16 weeks per year, generating a mean income of €440 a week in high season. Happily, coastal and mountain properties command much higher rates and enjoy longer seasons.
Leaseback – The Managed Option
Although the idea of enjoying a couple of weeks per year in France is appealing, some investors may not wish to be burdened with the responsibility of owning a holiday home.
Leasebacks were introduced to help the French economy, by way of boosting the development of high-quality tourist accommodation. The incentive is aimed at providing long-term investors with a guaranteed rental return and stress-free ownership. Leaseback can prove to be a very sound investment proposition, provided that you do your research and know exactly what you are buying and on what terms. Taken together with an attractive tax break and the bonus of a free or highly subsidised holiday, leaseback should be included on your list of investment options.
Student & Senior Housing
If you are looking at a pure investment and do not wish to share your property with paying holidaymakers, investing in other types of accommodation can provide a suitable solution.
Each year, over one million students enrol at France’s universities, which generates a corresponding need for accommodation. House-sharing is not that common in France, therefore, private student accommodation has flourished in the big French university towns. These résidences are financed by private investors who are set to receive fixed monthly return for the duration of their contract with the management company.
Based on the same principle, the past few years have seen new investment opportunities in serviced properties catering to France’s senior population. These offers can be interesting, in terms of revenue and tax advantages, but as with any other investment it is essential to exercise caution and get to know the company you are dealing with, thoroughly checking its background and fiscal health before committing to a deal.
The seemingly easier solution, when it comes to investing in French property, is to look at long-term rental opportunities. However, this is an option which needs to be very carefully looked into because, compared to other countries, France has very stringent rights for tenants. Of course, this is no bad thing, but it does mean that if you get stuck with a tenant who does not pay their rent, eviction is only possible after a very long and costly legal action. Insurance policies are available, to provide coverage for any loss of income during the eviction process, which appear to be worth every Euro!
On the positive side, French mortgage interest rates are currently at record lows so buying a property with a potential rental income in order to cover your repayment instalments can be a solid long-term strategy, provided that you are aware of the tax applicable on any capital gains realised at the time of resale of your property.
As with any investment, getting the right advice on what works best for your circumstances is essential. Our team at FrenchEntrée has been assisting international clients since 2003, both with their property search and in making the decision to purchase their own little slice of France. So if you are thinking of buying a property in France – as a permanent residence, holiday retreat or investment – please contact us to discuss your circumstances and requirements. We would love to hear from you.
Gaëlle Perreaux is in charge of FrenchEntrée Property Services Ltd, which has been helping international buyers find their dream property in France for a decade. With over 120 estate agent partners, they are able to source any kind of French property, priced from 40,000 euros to 40 million euros.
Originally published in the December 2013-January 2014 issue of France Today