Posts Tagged ‘property in france’
Your New Property in France – The French Leaseback Scheme
January 28, 2012 | 
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The French Leaseback Scheme can be a great way to buy new build or newly refurbished property if getting a fixed rate of return on your investment is a high priority and you don’t mind restrictions on the amount of time you can use it.
Essentially what you are doing when you enter this type of contract is buying a freehold property but granting its lease to a holiday company for a period of between 9 and 11 years where the rental return is fixed and guaranteed regardless of whether it is rented out or not. They are hence normally located in popular holiday resorts. It is possible to get a higher return from renting the property during the summer months yourself but this of course brings with it a risk and hassle factor.
Refunded VAT:
One of the great bonuses of this scheme is that the purchaser gets a full refund of the TVA (VAT) of 19.6% if it is a new build property which is either refunded 6-9 months after the purchase or paid and reclaimed by the developer in which case the purchaser never has to pay it.
At the end of the initial lease period, the holiday company usually reserves the right to lease it again until the 20th year after its construction but this is very rarely insisted upon if the client is not in agreement.
If you choose not to lease your apartment out again or sell it then you will have to pay a proportion of the TVA according to how many years are left outstanding from the first 20 years. For example, if the property has been under lease contract for 11 years and there are therefore 9 years remaining, then the amount of TVA that must be paid back to the French government is 9/20ths of the TVA. After 20 years TVA is no longer payable. Remember, if you sell the property during its lease contract then it must be sold with the contract intact to a likeminded individual who is prepared to see the contract through.
Guaranteed Return on Investment:
The guaranteed investment return will typically be around the 5% mark net of all costs tax-free as you benefit from “non-professional lessor of furnished property” status (LMNP). This in effect means that you will receive as much interest as you would in a high yielding savings account as well as the opportunity to gain from capital appreciation of the property.
Personal Use:
Leasebacks often allow the owner the option to occupy the property for a number of weeks a year in return for slightly lower investment yields. If you choose not to use the weeks then you will usually get a higher annual yield.
The Management Company:
An experienced management company will take care of the entire maintenance of the apartment or villa, usually with hotel services available such as reception, house linen, well-kept gardens, swimming pools and 24hr security.
Furnishing:
All furnishing, decoration and electrical appliances are supplied and taken care of by the management company.
Accounting Impacts During the Leaseback’s Term
* Deductibility of the loan interest
* Deductibility of miscellaneous expenses (property taxes)
* Amortisation deductibility – 3.3% per year for 30 years. However, they are deferred and not imputable in regard to the business income.
After the leaseback’s term, the deferred amortisation can be imputed and set against the received net rents.
Notary Fees and Sales Process:
The sales process follows the same routine as for new build properties with the same corresponding notary fees: 3% on new builds and for refurbished leaseback properties you will have to pay the usual 7-8% notary fees on the property before refurbishment – working out at between 4% and 6% of the value of the purchase price.
Better than Timeshare:
Unlike time share schemes, the owner actually sees a return on his/her investment through annual rental yields and also appreciation in the value of the property which can be substantial – so it is not money down the drain. The bonus though with these schemes is that, like time share, the property will be well maintained by the holiday company with no responsibility for changing of linen and cleaning – you simply turn up during your chosen weeks and enjoy it!
Nick Dowlatshahi is the managing director of Leapfrog Properties, a UK specialist agency in French property. Leapfrog offer an online database of up to 200,000 properties for sale in France plus a personal service from fluent French speakers to help you find, view and buy your property. Leapfrog Properties website is at http://www.leapfrog-properties.com.
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Six Hot Tips For Buying Property In France
Buying property in France can be a daunting prospect for some as the process is so different from the UK or Ireland. To help you we have compiled six top tips to help you from your property search right through to viewings and the final sale. These tips should help you not only be more efficient and more enjoyable but also give you an understanding of what your property purchase in France entails.
1) Spend a few days- its worth it!
If you are serious about your purchase in France then you have to spend at least a few days if not a week or more in the area in order to get a really good feel for your surroundings but also to see enough property in order to make the trip worthwhile. A longer trip will also stop you from making rash decisions about a property purchase simply because you are short on time and desperate to get your foothold in France.
Viewing trips over a long weekend are often not enough and add to that that agencies are shut on Sundays are also often on Mondays and it can mean that you really won’t see enough options to be able to make a sensible decision. The best advice is to spend a good week to ten days in your chosen location with 5 or six days put aside for viewings and a further few days to do your own research if you find something suitable. These extra days will allow you to send in a local builder to check the structure of the property and to give you quotes on any work that is required. It will also give you the chance to pop into the local mayor’s office where you gather information such as any planning permission granted in the area so you can see how it might affect your property- if at all.
This is especially important if you plan on asking for an extension to your property as you will need to get to know the local authorities quite well and keep them on your side. If renovating or building new these extra days can also wisely be spent with a local architect so that he can give you advice on what can and cannot be done and possible costs. All these checks are well worth doing before you return to the UK and ideally before you make an offer on the property as it will give you a much clearer idea of what you can do with the property and its value to you.
2) Don’t be afraid to negotiate
Most people are unsure whether they can negotiate in France and if so how much. The short answer to this is YES and you can normally negotiate between 5 to 10% off the price depending on the state of the market. As I write this we are seeing offers of up to 10% off being accepted by the vendor because the market in France is currently a bit slow in certain areas so now is in fact a great time to go property hunting with great deals to had. Help and advice when negotiating on price is in fact one of the many areas where Leapfrog properties can help its clients.
3) Get a survey/structural appraisal
The process of sending in a surveyor to check the structure of the property and to give you a report as you would expect in England is extremely uncommon in France. There are a few French surveyors but most are based in Paris and focus purely on commercial property. You are therefore left with 3 choices: do nothing, pick an English surveyor who has moved to France or do what the French do themselves which is ask for an appraisal of the property by the local builder or architect.
The last option is most recommended as it is prudent to get a professional’s opinion before you make an offer whilst the time it takes to get one of the handful of British surveyors to see your property it could have already been sold. However if it is more a question of peace of mind as supposed to bargaining power then you can sign an initial sales contract subject to a survey being done by the surveyor of your choice. If the survey comes back reporting defects to the extent that you do not wish to go ahead with the purchase then you can withdraw with no penalty.
4) Don’t be afraid of signing the initial sales contract
The “compromis de vente” (initial sales contract) is designed to protect both the buyer and vendor. If you make an offer on a property and the agent very soon after asks you to sign a compromis de vente this isn’t because he/she is a pressure salesman it is simply because that is the way things are done in France. Once this document is signed by both the buyer and the vendor there is effectively no more room for negotiation and the property will be taken off the market while all the necessary checks are performed by the appointed notaire.
This is in stark contrast to the process in the UK where an offer can be accepted by a vendor and then gazumped a few weeks later by someone with a better offer. In the UK you send in your surveyor after an offer has been accepted and then following the report you then have further room for negotiation up until exchange of contracts. This is not the case in France as you cannot be gazumped if both signatures are on the sales contract which is why we recommend you have a few days spare while on your viewing trip to perform any checks/appraisals.
Equally if you like a property there is no point going back to the UK before you make an offer as the property is often with 4/5 other agents and could easily be sold, plus the time it takes for the paperwork and contracts to be signed by both parties if you are in another country could also allow another buyer to step in. There is a seven day cooling off period during which you can pull out of the purchase for any reason whatsoever without penalty so if it is simply a question of wanting a bit more time to decide then you are better off signing the contract to prevent losing the property and if possible get the vendor’s signature on it at the same time.
5) Get your mortgage agreed before your trip to France
If you require a mortgage your bargaining position and having a good idea what you can really afford is largely improved by getting a mortgage agreed in principle before you leave. This way when you make an offer you really know if this is over-stretching yourself or not and prevents disappointment later if your bank then decides that the risk is too great and they cannot lend you the required funds. This can not only be frustrating but also waste time for everyone involved. It is a good idea therefore to go with a company that has the system already in place to deal with arranging you a mortgage and answering your questions on finance. Typical repayment mortgages are currently around 3.5% and finance for resale properties can easily be arranged up to 70% while finance for New build/leaseback properties can often be as high as 95% due to the high demand and ease of rental of new build properties in France.
6) Use a currency specialist
When sending money from the UK to France there is lots of money to be made or lost depending on how you do it and with whom. If you simply ask your high street bank to send your money to a French bank account in Euros they will not only charge you a transaction charge but are also likely to give you rather uncompetitive rates on exchange. You may also lose money on exchange rate fluctuations adversely affecting the strength of the pound to the Euro.
To avoid any of these negative affects and charges it is best to use a currency specialist who not only offers the most competitive rates on exchange but also doesn’t charge commission on the money sent. They will also offer you the possibility to buy your currency in advance of the completion date which is often 3 months after the signing of the initial contract and much more if buying off plan. This will ensure that you know exactly how many British pounds you will be spending up to 2 years in advance instead of playing the risky currency game which could end up costing thousands.
Leapfrog Properties are agents specializing on Property sales in France and Niclas Dowlatshahi is the Managing Director. Visit http://www.leapfrog-properties.com to see how we can help.
Help Looking For Property in France
There are many different places in the world that we all want to live in, we all dream about it at one stage or another, but how many of us actually do decide to take the step and move out of the country and live abroad?
Many people dream about it but think that it will be too much time and money to be able to do it and return a reasonable profit when we are done or just live out the rest of our lives out there. This is why I say to a lot of people, “why not purchase property in France?” A lot of people look shocked or just plain out say no when I say this to them and all I can think is “well your loss”.
Buying property in France can be a bit of a slow process but it will definitely be worth it in the end. You have so much choice when you are looking at property in France, from the alps to the coast there are so many different places you can buy into. And wouldn’t it be great to be able to come out of your summer or winter home to be able to step straight onto the mountains and go skiing or to walk out of your front door and be on a hot Mediterranean sandy beach with amazing weather in the summer. What more could you ask for?
One of the best parts about purchasing property in France is that the country is so accessible from pretty much all of Europe, there are fast trains and luxury travel from many different places in Europe to get here and is also even a short drive and a short flight from most places. A lot of British people love buying property in France because they are able to return back to the UK very easily and cheaply via flights or EuroStar or driving.
Another reason for buying property in France, especially if you are British, is the fact that you can use the property as a summer house or winter getaway or whatever you want to do with it and still live in the UK for the time that you are not in France, leaving you the chance to rent out the property if you wish during the months you are not there, so it will still pay for itself in these months.
All in all I would definitely tell people that have dismissed buying property in France so quickly to have a rethink and even go and check out the area because you may want to move further from your home land or to a tropical country, but why do that for a lot of money when you can just move to a neighbour country and get everything there that you could in a tropical one, at a lower price and with great transport to pretty much anywhere in Europe that you want to go to.
Buying property in France is completely recommended by me!
Find more information on property in France.
Property In France – A Look At The French Property Market
Being one of the closest countries to the UK, France has always dazed the British property investors in every sense of the term. Historically, culturally, and politically, France has always lured investors from all over the world with its prized natural possessions spread across the country.
The nation better known as the love capital of the world has several things in its favour, which make it the much-desired property investment destination in the world today. As they say, there’s something about Paris that keeps you hooked on the nation’s capital. Perhaps, there’s no better place to spend a romantic break than in the city of the lovers.
Property Market in France
After experiencing a recent lean patch, the property market in France is once again in favour with the British investor. As one of the most sought-after destination for commercial and industrial powerhouses, the country has always remained one of the best investments for business and commerical property.
Paris is also one of the hottest fashion destinations in the world and as such property in the capital city definitely commands a premium. Indeed, according to a recent survey, Paris has become out of bounds for the average property investor. But small investors need not worry as they can still find suitably priced properties throughout the picturesque French countryside and coastal towns.
Since the property market is going through a transition phase in France, an intelligent investor can strike an interesting deal even in some of the major towns and cities of the country. To give you a price indicator, you can grab apartments in Languedoc Roussillon starting from GBP 40K. But you’ll still need to spend in the upward range of 50K+ for a decent flat in the Var region of Provence . However, closer to Paris, you can lay your hands on comfy apartments in Ile De France for a little over 40K. Alternatively you could consider a mobile home in France starting from 13K already sited.
Coming back to the alternatives to Paris, prospective investors are well advised not to just hook on to the capital city, as there are lots of other cheaper and viable options available all around the countryside. The country cottages in the rural settings, or ski chalets in the mountains are an immediate turn-on for the tourists, and offer the best investment if you are looking for a steady regular rental income from your property investments in France.
Even other prominent areas, like the Cote d’Azur are getting increasingly out-of-bounds for the average property buyer. Similarly, the cities along the French riviera, considered as the millionaire’s playground, are just too expensive for an average property investor. However, if you are an above-average investor, then these places should be an automatic choice for any kind of investment.
Overall, the natural choice of property investment in France include the resort properties all along the coast, the Alps, residential property, apartments, villas, and mansions in major cities, like Paris, Toulouse, Monte Carlo, and Nice – and business and commercial property in and around the capital city of Paris.
And here is a tip for any prospective property investor looking to buy a property in France. The majority of French nationals speak and understand only French. So, it’s an added advantage if you polish up on your French before investing in the country.
Why the British love buying property in France
Though France attracts investments from all across the world, it holds a special place of pride among the British property investor. Here are some of the reasons for this favourable trend -
- Both the country’s are founding members of EU and enjoy considerable mutual goodwill among the people.
- Regular flights from low cost airlines between the two countries makes the countries easily accessible.
- Who can overlook the undersea road tunnel the Channel Tunnel that runs between the two countries and the Eurostar high-speed rail system?
- France offers the closest and one of the globally recognised holiday destinations in the world for the British with coastal and mountainous resorts beckoning the property investor from all walks of life into France.
- French food and wine (not to mention Champagne!) is just too good to resist.
- French Leaseback Property option is a great incentive for the British investor to cash in on the property boom in the country.
- France offers better rates of returns on real estate property both for short-term and long-term investors. All it requires is the fulfilment of certain legalities and you are the proud owner of a French property.
- France is a fashion powerhouse and offers one of the best standards of living in the modern world.
- Regular tourist influx to boost rental income from the property.
Property Abroad’s director Les Calvert writes interesting and useful articles on all subjects dealing with investment property abroad and buying property abroad. Check out their property for sale in France as well as their French mortgages and news articles on France.
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Property in France – Guide to Buying a Property in France
Overview
The French Property Market
The French real estate market has been booming over the course of the past ten years. Indeed, since the birth of the European Union, a greater number of foreign nationals have taken to purchasing property within the country of France
When it comes to the sale of real estate in and across France, there are two primary areas in which the real property market has been hot. On the one hand, in major cities in France — particularly in the French capital of Paris — newly constructed residential properties have experience a brisk business and trade. A notable number of foreign nationals have taken to purchasing new residential properties in major cities such as Paris in the past five or six years.
In addition to the fast paced market in new residential properties in major French cities, older, larger residences in more rural regions are also in demand. Foreign nationals are making up a significant portion of the group of purchasers who are seeking out and purchasing these types of older, larger properties in rural areas in the country.
Investment Property in France
Like other nations comprising the European Union, France has experienced an up tick in the number of foreign nationals who are investing in commercial real estate in France since the creation of the EU. The pan-European marketplace has created an environment in which investing across national boundaries and throughout Europe has become a profitable enterprise for many men and women.
One example in which foreign investors have played a significant role in real property is found in the number of foreign nationals who have invested in real estate associated with the retail trade in major French cities. Indeed, within Paris alone, the number of foreign investors in commercial real estate, most particularly in buildings and property associated with retail operations, has increased by over 100% in recent times.
Overall, the commercial real estate market in major French cites has proven to be a very profitable investment for many foreign nationals. Most analysts agree that the commercial real estate marketplace should remain a stable and solid investment for investors, including foreign nationals, well into the next decade.
Even with some of the civil unrest that has been experienced in some locations in France during the past year, the real estate market has not experienced any real aftershocks as a result of this restiveness in some parts of the nation.
Residential Real estate in France – Single Family Properties
As mentioned previously, the residential real estate market has been hot in many locales throughout France. In the major cities, newly built properties have been the subject of brisk sales in recent years. Many foreign nationals have been found snatching up these new residences in Paris and in other larger French cities.
In addition to newly built properties in larger French cities, rural residences have also traded on the marketplace steadily over the course of the past decade. Many foreign nationals have taken to purchasing larger residences in rural areas in France for retreat and holiday or vacation properties. For many years, France has been a destination of choice for holiday travelers from much of Europe and from other ports of call around the globe.
Residential Real estate in France – Apartments
In the 21st century, the resort communities in France remain some of the most popular destinations for travelers and tourists from around the world. When it comes to French resorts, including the magnificent cities located on the French riviera, many travelers and visitors actually return to these cities time and again for holiday stays. As a result, the demand for residential properties to be used for vacation purposes runs high in some of these communities. Apartments in resort communities have been in steady demand over the course of the past twenty years.
For the most part, apartments for sale in French resort communities are priced high. Buying an apartment in a major French resort community does not come cheap.
In addition to resort communities, Paris has also experienced a significant increase in the number of new and more expensive apartment units that are being constructed each and every year. Many foreign nationals have taken to purchasing apartments in the French capital city — particularly since the inception of the European Union and the integrated European economic community.
Holiday Property in France
As mentioned previously, vacation real estate has been in high demand in France in recent years. The French resorts, most particularly those resorts in and around the French riviera, have experienced brisk business in vacation real estate. Generally speaking, these properties come in the form of apartments that are being snatched up by foreign nationals at record rates.
In Paris as well a significant number of residential properties are sold each year to foreign nationals that intend to make use of these properties for vacation or holiday purposes. As in the resort communities, apartments tend to be the residential property of choice for people seeking vacation or holiday properties in the capital city.
Finally, when it comes to vacation or holiday properties in France, rural residences are also greatly in demand. There are some spectacular (and large and expensive) estates that are on the market at this point in time, a good share of them having been purchased by foreign nationals for vacation purposes. Rural French residences are expected to remain in high demand by foreign nationals for use as vacation or holiday properties well into the next decade, according to real estate analysts in France.
Specific steps to buying real estate property in France
The first step that occurs in the real estate buying process in France is an oral agreement to make a purchase. The oral stage of the real estate buying process is informal and actually not legally binding. However, once a buyer conveys a purchasing price to a seller, and if the seller agrees on that offering price, movement towards a binding agreement which is known in France as the compromis de vente.
At its essence, the compromis de vente is a conditional or preliminary agreement to purchase real estate,
Generally speaking, the compromis de vente will set forth those steps and acts that must be taken and that must occur before a final contract will be entered into between the parties and before ownership of the real estate will transfer from the seller to the buyer. For example, after the signing of the compromis de vente, the buyer will have to obtain suitable and appropriate financing while the seller will have to work to make certain that the title to the property is free and clear and that the real estate can be transferred to the buyer without any encumbrances.
At the time the parties enter into the compromis de vente, the buyer will have to make what normally amounts to a deposit in the amount of 10% of the total purchase price. There are limited instances when the deposit is refundable. For example, if free and clear title to the property cannot be arranged during the time period set forth within the compromis de vente, the buyer can back out of the deal and get the deposit money back. However, barring something of this nature, if the buyer does back out of the agreement, he or she generally will lose the deposit money that has been paid pursuant to the terms and conditions of the compromis de vente.
It is highly recommended that the deposit be paid to either a qualified solicitor or a designated notaire. A solicitor or notaire will hold the money until all of the requirements and obligations of the compromis de vente appropriately are completed and concluded. At that time, the money will be paid to the seller if the deal goes through or will be refunded to the buyer under limited circumstances as outlined previously.
Generally, there are legal fees of under 10% that are associated with most real estate sales in France. These fees are due to be paid upon the completion of the sale — at the same time that the balance due on the overall property sale is paid by the buyer.
The real estate agency will also be entitled to a commission. Negotiations between the parties will determine whether it is the buyer or the seller who will pay these fees. The real estate agency fees can be as low as 5% of the purchase price or as high as 10% of the purchase price in some instances.
There are restrictions on how much of the purchase of real estate a foreign national can finance in France. If a foreign national is a citizen of another European Union nation, that person can finance up to 85% of the total purchase price of the real estate. If a foreign national is from a country beyond the European Union, he or she can only finance up to 80% of the total purchase price of the property. On the other hand, a French citizen can finance 100% of the purchase price of the real estate in question.
The final agreement in the real estate sales transaction is what is known as the acte de vente (which roughly translates as the final deed for sale). This agreement is to be signed in front of an official notaire.
Property Abroad always recommends using a Solicitor or Lawyer.
Les Calvert is the Director and founder of the UK’s Number 1 overseas property website http://www.property-abroad.com For more details on thousands of properties for sale in France and a directory full of useful information visit http://www.property-abroad.com/france
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