Property investment in France
Find great investment property in France with Leapfrog Properties
The market since 2007
Following the arrival of the credit crunch at the end of 2007 and its subsequent turmoil it has forced everyone to take a fresh look at what really makes a good property investment in France and what doesn’t. Gone are the days when investors would clamour to buy an investment property in Bulgaria or Spain or somewhere in France for the matter - just because everyone else was doing it and they didn’t want to miss the boat.
Quite sensibly, investors are now considering their purchases much more carefully, looking at a wider range of options and comparing prices so that they are confident in the investment they are about to make. This means that developers and private sellers alike are having to price themselves very competitively or even sell with significant discounts in order to attract would be investors which actually makes this a perfect time to invest.
Tax advantages for French residents investing in new build French property
In order to assist developers and encourage investment in French new build property, in 2009 the government introduced significant tax advantages for French tax residents investing in new build French property. These came in the form of the Loi Scellier and Loi Bouvard and go somewhat further than any tax reducing regimes that preceded them. They allow investors to offset a percentage of the value of the property against any direct income tax they are paying in France:
- If it is a leaseback property and the property conforms to BBC (Bâtiment Basse Consommation) regulations, then the amount which is allowed to be offset is 22%
- If it is a regular leaseback property then currently the amount to be offset is 18%.
Both of these offers are applicable under the Loi Bouvard scheme. Regular Buy to Lets fall under the Loi Scellier scheme which is currently allowing 13% of the price to be offset against income tax. These offset amounts are applicable over 9 years and are for French residents only and are only for certain areas of France, mainly in large towns and cities. What this means is that those properties that fall under this scheme have been selling very well, largely due to the tax incentives while developments which don’t conform to these tax regulations have not done so well and has left some developers in a tight situation. It is these sorts of developers who tend to be prepared to discount prices and/or offer various purchase incentives to buyers.
And more advantages too...
Regardless though of whether or not there are discounts available on properties, France is one of the safest places to invest in the world and here are some of the key benefits of investing in property in France:
- Safest place in the world to buy property due to the rigorous buying process and protective legal system
- Extremely low Euro interest rates with highly competitive mortgages offering 100% finance for overseas investors and French residents alike
- French leaseback investment property may have guaranteed yields up to 5.5% (which more than covers mortgage interest) and full VAT refund of 19.6%
- France is the number 1 tourist location in the world with over 82 million tourists in 2007 alone and demand consistently exceeds supply of tourist accommodation thus ensuring good and reliable rental yields
This is due to a number of key factors including excellent transport links and infrastructure, an unrivalled lifestyle envied by many of its neighbouring countries, a rich and diverse culture and history, a good climate and a varied landscape from the mountains to the seaside offering many different leisure activities. This leisure industry contributes to a GDP of $2.98 trillion giving a GDP per capital of $46,016 in 2008.
- After a couple of years of falling or stagnant property prices we are seeing prices rise again in most areas of France
- This contrasts strongly with other nations where we have seen price drops of 50% or more, notably in Spain and the fledgling Eastern European economies. This is in part due to the strength of the French economy but also largely due to the strict lending criteria of the French banks. This means that those who have taken out mortgages in France have been able to afford them as they continue to base their lending on the financial status of the buyer; buy-to-let mortgages and self-cert mortgages, both of which have caused many of the problems elsewhere with their loose lending criteria have been avoided by the French banks.
The result of which has been more robust property prices and the continuation of high finance of up to 85% and low interest rates while most other nations such as the UK have withdrawn many of the high finance mortgages and imposed high interest rate charges for all except the most wealthy buyers with large cash deposits at their disposal. The political and legal stability in France also gives investors the confidence for investment property in this country where the risk is low.
- A proven and existing exit strategy: Unlike any other tourist destination France does not rely on foreigners for investment in their property as 95% of property sales are to French residents who constantly purchase holiday or permanent accommodation. This means there is a proven resale market when the time comes to sell up and cash in on your investment
- An investment you can enjoy: with such fantastic weather, wine, food and culture you may choose to use your property a few weeks a year and really enjoy it whether it is in the Mountains, beach, town or countryside
- Double tax treaty between France and the UK so you will not pay tax twice on earnings
- All your costs including your mortgage can be set against your rental income so that a very minimal amount of tax is actually paid
So when you compare property investment in France to past performance of many pension schemes across the world, you will notice that it has performed better - whilst also having an intrinsic value that bricks and mortar possesses but which stocks and shares generally do not.
Have a look at our selection of investment property in France.
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