Tuesday, December 29, 2009

A good time to invest in French property?

The French financial magazine Capital has devoted a large part of its January 2010 edition to the subject of savings and investments in a time of 'crisis' - including property.

Among the property investments surveyed are various schemes available to French taxpapers, which generally link the purchase of a (new) property to a six or nine year rental agreement, which is invariably capped in order to assist low-income tenants. Anticipated returns are estimated at between 3% and 4.5% and there are attractive tax savings for higher rate tax payers. Outside these schemes, a good investment in a new or older property can produce up to 7% according to the magazine.

However the magazine's advice is unequivocal for investors seeking an equivalent or higher return:

"The best returns come from older properties, provided you invest in a major city such as Paris, Lyon or Marseille, and choose a high quality, well equipped studio apartment, designed to accommodate visiting executives for a week or longer. Returns can exceed 8% including tax advantages".

Investors need to factor in financial costs, maintenance and refurbishment, building charges, local taxes and the costs of using a rental agency. In all cases it essential to to visit the proposed investment and the area where it is located, and investigate actual rentals received for similar properties.

Main source: Capital, January 2010.