Is the grass greener across the water? Exploring the French property market

Posted by Mark Lloyd, Property Mastery Academy on 14 October 2017 | Comments

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France is close to home, has a steady rental market and is highly appealing to British buyers.

Recent BNP Paribas International research showed that the British are the number one source of sales to overseas buyers in France. We comprise 32% of this market and spend an average of €256,463.

The French buy-to-let market

France has a robust rental market with approximately 40% of the French population renting their homes with city apartments being the most common rentals. This can sometimes make it difficult to find affordable and decent rental accommodation in the country’s main towns and cities.

As demand has been higher than supply, there’s now a thriving rental market in smaller towns and villages that can boast excellent transport links into the cites. And there are plenty of properties available in these villages, where buy-to-let buyers can still negotiate decent prices.

Regular monthly income in euros

Buy-to-lets in France can be an attractive option for those who are looking for a regular monthly income in Euros. With the pound still weak, receiving rent in euros means it’s worth more than keeping it in sterling savings.

If you do receive rental income in Euros, it may be worth taking out a loan in Euros to lessen the exchange rate risk.

In France, 85% loan-to-value is still achievable from a number of banks, for both residents and non-residents in that country. However, other lending criteria may apply, including only making loans available to those with a certain level of savings or with minimum income criteria. Loans exclude purchase taxes.

You can actually include your potential rental income in a mortgage application if your management agent can provide the bank with a confirmed tenancy agreement for a three-year rental.

Using a local management agent

Often local estate agents in the rental market will work as management agents. Management fees are generally just under 10% of the property’s rental income and include insurance against non-payment of rent. As well as helping to find tenants, your agent can be useful in helping you to navigate local bureaucracy.

The agent in your chosen area can advise if it’s wise to invest in a furnished or unfurnished property or a holiday let. A well marketed holiday let in a popular location can be a highly lucrative investment. However, holiday lets can be more labour-intensive than normal residential rentals as you will need to organise someone to regularly clean and maintain the property.

A standard minimum contract of one year applies to furnished properties, which does offer you some flexibility if you want a short-term let. A three-year lease applies to unfurnished properties. Your tenant can give notice during this time, or you can give them six months’ notice if you decide to sell, but you must give the tenant first refusal to buy the property.

Worth investigating further?

The French property market is definitely worth further consideration if you’re wondering where to invest next.

The country can offer affordable properties, low mortgage rates and a healthy rental market. If you do your homework, the right property investment can yield excellent returns and significant long-term capital gain.

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