French furnished lettings - security for both owner and tenant

French furnished lettings provide a measure of security both for the owner of the property and the tenant/occupier, following a tightening of the rules in the loi Alur of March 2014, promoted by the then housing minister Cecile Duflot.

Many are based on the regulations concerning unfurnished properties but offer a briefer period of tenure - 12 months renewable, reduced to 9 months in the case of a term-time student lettings - with the option to renew the tenancy and the right of the tenant to leave the property at any time at 4 weels notice.

On signing the tenancy agreement, the owner can ask for a security deposit of two months' rent (note that the maximum for unfurnished tenancies is just one month) and other provisions using a standard contract which will include an inventory of the contents. In order for a property to be classified as 'furnished' certain basic items must be provided by the owner, including means of eating, sleeping, heating etc and listed on a standard form which will become part of the lease and agreed between the parties.

If the owner wishes to give notice to the tenant, he can justify this only on restricted grounds,such as non-payment of rent or serious misuse, or his intention to occupy the property for his own use or in order to sell it.

How much to charge? It is possible for anyone with disposable capital to buy a property which has a tenant already in place (either furnished or unfurnished) so the rent will be known. The short-term furnished market is fairly competitive, offering a wide range of choice for a prospective tenant who will normally be well informed about going rates in the locality - from agency websites and informally from friends and colleagues. In some areas, including Paris, rents can be controlled by the local authority under new regulations (2016, 2017) designed to prevent price inflation where there is a known shortgage of available properties. Universities and other institutions may also have their own rules should a property owner wish to have his property added to their housing list.

Short term renters, according to the experts*, often have a different profile from long-termers and owner/occupiers, They may be younger, prepared to live in a small space (say, 20 square metres) on higher floors with no lift, and in cental/mixed areas that might not attract long stayers but which offer quick access to public transport, local shopping and other basic amenities, And if the property is well furnished and decorated and offers something a bit special renters may be prepared to pay an above-average rent.

Furnished lets by their nature mean a higher turnover of occupants than with unfurnished properties, and will need to be constantly refreshed and furniture  replaced. It may be possible to let them on a very short basis as holiday lets (such as through AirBnb) in popular tourist areas. In the case of 9-month student let, a two to three month summer rental might be possible - if the property is large enought for at least two people. If not, you could try attracting a seasonal worker. All these options require hands-on management in order to succeed.

* "Comment je suis devenue rentière" by Elise Franck describes in detail how she became the owner of several short-term rental properties, with numerous tips, illustrations and cost breakdowns. Essential reading, along with her website which cotains a lot of useful advice including before and after illustrations and examples of successful renovations.

Posted by peterdanton@orange.fr

Buying or selling - preparing a property for sale

If you are prepating to move here's what you can do to help sell your property - and what buyers are often lookng for - including you......

According to recent research the way houses and apartments are sold has gradually changed over the last decade - owners are now taking more care how to present their home (known as 'house doctoring') and buyers are taking less time to search, viewing fewer properties before deciding, and come armed with a list of 'must-haves' which will define their choice.

- Typically buyers spend more time on the internet searching through agency websites and consulting private sales announcements and less time on the actual search, down to actually viewing just two or three properties in many cases. Items on many wish-lists include a preference for modern or older style properties, the latter often defined as 'le charme de l'ancien'. Older houses are seen as more solid and particularly if recently converted will appeal to younger buyers making their first purchase.

- Other popular requirements include:
- a large living room, preferably with an open plan (American) kitchen (rare in older properties unless recently converted)
- separate bedrooms for each child, to include a place to do homework, store books and toys, and convertible to a 'teenage den' in due course
- sufficient space and ceiling height to install a mezzanine
- separate larger bedroom for the parents (chambre/suite parentale) to include its own bath or shower room, and if possible a separate clothes storage area - known as le dressing.
- at least one more WC/shower room
- sufficient storage generally, though this is one of the easiest to remedy (numerous storage solutions offered at DIY centres etc)
- large garage - to include space for a workshop or hobbies, storage of sports or camping gear
- outside space - balcony or terrace, space for pets and children to play, possibly a swimming pool as you move further south
- parquet flooring, tiles acceptable in kitchen or bathroom
- a separate WC is a bonus - especially if it is equipped (rarely in my experience) with a wash-hand basin (to avoid visitors using your bathroom).

- A house or apartment with recent, neutral décor, as well as items from the above wish-list will make the job of selling much easier, provided it is well photographed and presented in the appropriate media. A pleasant location, including nice views, are a bonus though some buyers may compromise on either if the property itself really attracts them.

- Property descriptions to note include 'bon standing' (posh!), 'quartier tranqillle' (quiet neighbourhood), 'tout à l'egout' (connected to main drainage).

- Totally empty properties may be harder to sell as potential buyers find it difficult to visualise the overall space and imagine themselves in place. Leaving curtains hanging can help soften the space.

- Small spaces look better when furnished with a few large pieces of furniture (such as an attractive settee) rather than an abundance of smaller pieces, often advertised as 'designed for small spaces'

- I personally dislike convertible or multi-functional furniture - such as a sofa-bed (canapé) that has to be opened and fitted with sheets, blankets etc every night

- I also have a thing about ceiling (pendant) lights, particularly chandeliers, unless you happen to live in a chateau. They are best used over a table (such as a dining table) or kitchen counter, rather than as general room lighting - which can be harsh.

- Ceiling spotlights are much more subtle, particularly if you can adjust them to highlight interesting features of the property, such as wood beams.  You can do the same with 'mood' lighting, dimmers and 'task' lighting for example in your work area.

- If you are a potential buyer, your wish-list may include some or all of the above, and if these desirable elements are not already in place, you can view the property with an eye to its potential for conversion. This is where you may need to use your imagination. Many properties are on sale because their owners need more space and unless they have de-cluttered the property it will necessarily look small and un-manageable.

- You need to look at potential for shifting walls, taking advantage of large windows, introducing lighter colours (not patterned) on walls, using 'accent colours' to emphasise some features, furnishing with more modern pieces, and generally bringing the property up to modern tastes, either your own or that of a potential buyer.

- You may be depressed by the radical changes necessary to make your home  saleable, but keep in mind that your potential buyers will hopefully be the new owners with carte blanche to do what they want with your former home.

- You can get ideas and inspiration watching French TV programmes hosted by estate agent Stephane Plaza such as "Cherche appartement ou maison" featuring property buyers and "Maison à vendre" about preparing properties for sale.The average spend by vendors in the second programme is normally between 3 and 4 per cent of the asking price.  Both on Channel 6.

* An excellent source for design ideas and photographs of small spaces before and after conversions is the website elise-franck.com as well as her book which describes in great details how she goes about converting rundown  properties (in Paris, Lyon, Marseilles)  either for sale or short-term furnished letting. She also provide a consultancy service to clients. Packed with colour photographs and detailed cost breakdowns.

Posted by peter-danton@orange.fr

Buy-to-let - flat-sharing properties

If you own a sufficiently large French property, this morning's LeFigaro on-line has an interesting article about converting it to share accommodation, or 'co-location' , popular with young people including students.

The article describes an 'ideal type of property' based in the city of Orleans which cost around 500 000 euros to purchase, convert and equip and lists among the essentials, based on nine people sharing:
- a large kitchen/diner with sufficient fridge and storage areas and two hobs, with a total area of not less than 35m²
- a minimum of four bedrooms, each not less than 13m² minimim
- sufficient bath/shower rooms and WCs

In the example shown montly rentals were based on 350 to 420 euros per bedromm.

Source: LeFigaro.fr 12 October 2015

Furnished lettings

With the approach of autumn, now is the time to think about and to prepare for letting your property as a short-term furnished rental.

Short-term furnished rentals are designed for a minimum of twelve months (nine months in the case of a student rental) as opposed to three years for non-furnished rentals. You can also ask for a generous deposit against unpaid rent and damages, and a guarantee from parents.

There is an obligation (under the recent loi Alur) to provide a minimum of furnishings - including a bed and bedding; a hot plate for cooking; oven or microwave; chairs and dining table; basic cooking and eating utensils; adequate heating; sufficient and appropriate storage for clothes, books etc; and the tools to keep the rental basically clean.

You can advertise your property through local newspapers, student magazines (and/or get on their housing list), and specialist magazines such as LeBonCoin.

If you are considering letting a larger property you might considered letting it as a 'co-location', where each tenant signs the lease, and seek appropriate guarantees for example from parents.

The student rental market is relatively easy to enter as there is a shortage of university accommodation and those who do not live at home have to rely on the private sector. 

Renting to students

Between now and the autumn, some 1.4 students in France will be searching for accommodation at the start of the academic year. Due to the scarcity of student hostels in France, the majority will be lodging in the private sector or living at home with their parents -many students opting to go to the university nearest to them rather than in another part of France, unless their chosen course is highly specilaised. A recent article in LeFigaro* described the student rental market as follows:

Private rented accommodation - 28%
Living at home with parents - 27%
Sharing ('colocation') - 12%
Cité Universitaire - 11% (165 000)
Student residence - 8% (110 000)
Other - 5%
Family owned property - 3%
Linked to job - 1%

The minimum monthly rental in Paris is likely to be 750 euros, slightly less at 500 euros in cities such as Lille, Lyon or Marseilles; and a minimum of 300 euros elsewhere.

If you happen to own a rental apartment that is also close to a holiday resort, you may be able to let it also during the high season (July, August) when students are on holiday. A typical weekly rental would be about the same level as the monthly charge out of season, as a very rough guide.

*LeFigaro.fr

Renting out your French home for profit.....two useful guides

If you are considering renting out your French main or second home, you may be interested in a couple of books that guide you through the process and help you make a profit. Both are heavily influenced by the American short-term rental platform Airbnb and are published on Amazon Kindle.

They are:
- Doublez vos réservations by Thibault Masson (in French)
- The Airbnb Entrepreneur by Warren Bell (in English)

Masson's book is discussed in this morning's LeFigaro* online and covers six principal areas:

1. Investigating and deciding on your target market, such as families with children, business visitors or romantic couples. Each market is quite distinct, and depends on the size and type of your property, its location and what are its nearby 'attractions' that will appeal to your target group.

2. Target your marketing and description to your chosen group and emphasise the elements likely to appeal to them.

3. Reply quickly to enquiries - potential renters usually approach an average of five competing properties and a prompt reply helps win customers.

4. Having done your research, make sure your prices are in line with similar offers in the same sector.

5. Look after the details and ensure particularly that beds and baths are impeccable, as they are among renters' prime concerns.

6. Provide little extras, such as overnight items for breakfast, or a bottle of champagne for couples.

Airbnb also publish a number of guidelines, specifically tailored to France, including essential tax and legal advice.

* LeFigaro.fr

New York finally allows small apartments

The city of New York is finally following France and almost all of Europe in allowing the constuction of small apartments  that up to now had to be a minimum 37m² - huge by French standards!

Studies revealed that 31 per cent of New Yorkers - the same number curiously as those found to be living in my home town of Perpignan in apartments of less than 30m² (from one-room studios of 15m² upwards). Further investigations in New York found that single occupiers prefer a microwave oven to a traditional cooker and a small kitchen, to which I would add a washing machine/dryer popular with busy singles. Elise Franck, a very successful owner/developer of apartments designed for short term furnished rental has written a book* full of practical ideas and case studies based on her projects in Paris and Lyon.

Back in Manhattan, the New Yorkers are making a cautious start by building 55 apartmenrs ranging from 24 to 33 square metres. 'We have to admit' said a city concil spokesman 'that these are what people want, as we accommodate more singles, people live closer to work, marry later and get divorced sooner'.

* see her website elisefranck.com for details

Average prices for long term rental

Many French people opt to live in rented accommodation, either through choice or necessity, and recent research by INSEE (a government think-tank) shows that in my local town Perpignan some 55% of households comprise renters. Perpignan in many ways is a typical medium size French town, with an urban population of 115 000 and surrounding suburbs and close-by villages adding a further 100 000 residents. It has its own university with ten per cent students from overseas, and as well as being the departmental capital the town survives on tourism and retailing, much of it on the edge of the centre. All these factors make it a useful example to study in terms of 'average' rental prices, bearing in mind the usual cautions about no two properties being precisely the same.

The INSEE findings can be broken down as follows and covers all of the 55% rented households. Of these
- 31% live in single bedrooms up to 15m², paying a monthly rental avraging 311 euros ( a reflection of the highish student population)
Or - a studio up to 24m² at 387 euros per month; or a type T1* apartment up to 30m² at 399 euros per month

- 65% live in a T2 (up to 45m²), or a T3 (up to 65m²) at 595 euros per month, of a T4 (up to 80m²) at 678 euros per month

- just 4% of renters live in houses of more than 100m², costing an average 1,021 euros per month.

The report also notes that some 340 rented properties changed hands during 2014, indicating that there is a wide choice of rented accommodation from which to choose and renters will quickly move to somewhere cheaper or more attactive.

If you own a property you are considering letting long-term unfurnished, and live in a similar sort of town, the INSEE figures provide a working basis by which to arrive at a market rent. Bearing in mind that potential renters have access to similar information and may use it as a guide when searching, you may have to offer something a bit special if you charge a higher-than-average rental.

* Type T1, T2, T2 etc (sometimes expressed as F1 etc) basically means 1 room plus kitchen and bath, 2 rooms plus kitchen and bath, and so on. Bear in mind that many 'kitchens' are now incorporated into the main living room (sometimes described as a 'cuisine américaine'). The additional room(s) are normally bedrooms, if of a sufficient size.

Renting versus buying in France

Out of 27 million 'principal residences' (excluding holiday homes) some 60% of French are owners of their home, consisting of some 15.5 million households. Of these 80% live in individual houses and the remainder in apartments. Some householders elect to rent out of choice, perhaps also owning a secondary home, while others have fewer options - including the young, those on low salaries, the old - who are obliged to rent within the private sector (nearly 60%) and the remainder in social housing, much of it built in the period after the war when huge estates - known as cités - started to appear on the outskirts of many French cities and towns.  Many of these are now considered 'problem areas' (see post below) and have created wide social divisions between rich and poor.

Those moving to France from abroad tend to be property buyers, unless their stay is intended to be short for professional reasons, such as a temporary work assignment or to complete a course of studies at advanced level. Some potential buyers may choose to rent for a short period - say one year - while they look around one or more areas before deciding where to settle and this category can include many (older) people seeking a retirement home in the sun.

Rentals are offered either on a short term basis - up to 12 months and invariably furnished, with the possibility to negotiate an extension. Houses or apartments in this category tend to be more expensive to rent than longer term unfurnished properties. An unfurnished private rental is normally for a minimum of three years, with considerable security enjoyed by the tenant, particularly if it is his/her principal home. Even defaulting on rental payments or causing nuisance or damage cannot automatically lead to a tenant's eviction - legal cases can take years to reach the courts, while there is a 'period of grace' during the winter months with yet more protections for those in old age, all of which can make eviction difficult. Potential landlords should be aware of these potential problems, mindful of corse that the vast majority of tenants behave correctly.

As in Britain and elsewhere, the French government bemoans the lack of social housing and there are long waiting lists for properties at controlled rents (known as HLM). And as noted in the posts below, government subsidies (through tax relief) to provide lower cost rental homes have generally failed.

Very short term furnished rentals

I wrote some time ago about the crackdown by the Paris town hall against very short term furnished rentals, popular with tourists seeking an alternative to hotel accommodation, but disliked by many owners/occupiers of apartment blocks. Complaints of noise and other nuisances generated by a succession of visitors are provoked these actions, as well as overall concerns about the shortage of (affordable) accommodation in Paris for those who want to live and work there and the high number of properties that are owned as second homes.

A similar situation has been occurring in New York according to the website www.apartmenttherapy.com for all the same reasons, with the first expulsion of a tenant found to be sub-letting his apartment on a short term basis.

The situation in France is quite clear. If you own a property such as an apartment within a multi-occupancey building, such as a block of flats, you own te freehold of your apartment together with a number of shares (sometimes known as tantièmes) in proportion to the size of of your apartment. As an owner/shareholder you have a right to attend and vote at the annual general meeting of the co-owners. Decisions are taken by counting the numbeer of tantièmes rather than 'one man, one vote'.

Day to day management of the building complex may be handled voluntarily by a smaller committee of tenants or 'professionally' by a management company who charge for their services, each occupier contributing to the management and running costs of the building through an annual charge, again based on the size of your apartment. The co-owners have considerable powers, including to dismiss the professional managers and even oppose planning consents granted by the Mairie - and importantly to deal with issues such as sub-letting.

When you buy an apartment in a complex you will be given a copy of the rules before you agree to sign a pre-contract to purchase (the compromis de vente) and can learn abut the rules related to sub-letting. You also need to be aware of French law on the subject.

There are basically three types of rental - 'long term' unfurnished, for a minimum of threee years, with considrable rights of security for the tenant, including renewal of his/her tenancy; 'short term' furnished rentals for a mimum of one year, renewable by negotiation; and various short and holiday let arrangements where the building is recognised as being within a tourist/holiday area.

Each type of rental can cause conflicts between 'renters' and 'owners' such as noise, overcrowding, pets etc, and invariably under the co-ownership rules owners are deemed responsible for the behaviour of their tenants. I lived for a time in a building that was designed primarily for holiday letting, where just six apartments out of fifty were occupied all year round by their owners. During the ever shortening high season of July and August the building was almost full but eerily quiet for the remaining ten months of the year.  The residents committee and professional managers swiftly dealt with any form of nuisance, and just before I left voted powers enabling them to take legal action in the name of the residents in the event of serious issues arising.

French short-term furnished lets

I have just completed a piece for French Property News to appear in the April issue about the very special market for short-term furnished lets, normally up to 12 months. They are an interesting and lucrative way to make money by buying, converting and letting small properties - suitable for a single person or a couple - normally located in city centres, close to where people work or are attending university.

The secrets of success include choosing the right location - these are not holiday lettings - and the right kind of property, which can be in an area you might not choose to live yourself. Being close to public transport and basic amenities  - shops, bars, cafés, sports or open space - are basic requirements, as well as being in a city where people are likely to need a short-term place to live.

The space needs to be fully furnished and equipped, but need not be luxurious provided it is modern and efficient. Wood floors, natural materials, an efficient kitchenette, washing machine, sufficient but not too much storage, and a comfortable bed are among the basic requirements.

To market your space and find potential occupiers, you can contact university accommodation officers, human ressource managers of local firms in the process of recrutinng or transfering personnel from outside the area, as well as local authorities who have an office devoted to promoting the city and attracting new businesses to the area.

Experienced investors in this sector report an above-average rate of return (around 8%) which can be achieved and fewer problems, such as damage or non-payers, that are sometimes associated with some longer term rentals.

Further crackdown on (unoccupied) second homes

An unconfirmed report this morning by AFP claims that the French government is considering allowing an increase of up to 20% on the 'taxe foncière' paid on (unoccupied) second home, in certain areas of France, where there is a housing shortage and lack of affordable rentals. No-one was available to comment on behalf of the government.

The report claimed that in Paris one in six dwellings is a 'résidence secondaire' and an investigative programme on French TV last night showed an inspector from the Mairie tracking apartments let short term to visitors and tourists but registered by their owners as their main residence. In one case, a family in Bordeaux owned six or more such apartments in Paris, all let furnished short term. The Mairie has for some time been imposing fines and other penalties, and insisting owners re-classify their (rental) properties as a business, subject to the usual tax and social security regimes.

 

New law adds to cost of apartment sales

A new law, introduced in March as an extension of the loi Dufflot concerning apartments owned within a condominium ('co-propiété'), adds considerably to the costs to be borne by the owner anticipating a sale.

Peomoted ostensibly as an additional measure designed to protect incoming tenants or buyers, the new loi ALUR requires vendors to provide additional information about the management of the building, what works have been undertaken or are planned, details of charges and a three year history of 'the state of the building fabric' - information than can only be obtained from the professional syndic (building managers) who are charging - heavily - for providing this information from their files.

It should be noted that these new requirements are in addition to the expert survey ("expertises") that already have to be provided covering lead, asbestos, termites, electrical safety etc; and the recently added 'energy efficiency certificate'. The new law also requires this package of documents to be assembled and made available to the potential buyer before the pre-contract ("compromis de vente") is signed - and before any cash deposit is handed over, as a sign of the buyer's good faith.

Coupled with the delays being quoted of four to six weeks, this now means that vendors now enter a lengthy period of uncertainty even before the buyer has the right to invoke the traditional seven-day cooling-off period (which can in turn be extended to another six weeks or so if the buyer is seeking to secure bank financing for the purchase). The fact that these new procedures will dramatically slow down the transaction process, in a property market that it already stagnant, appears not to have occurred to the leglislators.

For vendors trying to sell their property and possibly move elsewhere, the additional costs are a serious deterrent and will result in price increases. It is difficult to estimate at the time of writing how much the professional syndics intend to charge for providing the additional information required. But I spoke to two agencies one of whom had been told 'about €400', while another was quoted 'between €600 and 1000' - by the same office of the same syndic (Foncia)! Toether with the expert reports and energy certificate, costs to vendors to present their property for signature of the 'compromis de vente' could be in the order of €2000 - a pre-contract that the would-be buyer may or may not be prepared to sign.

A further question to which I have had no satisfactory reply is, in the event that the buyer decides not to proceed with the purchase, who is responsible for paying the costs incurred to date - bearing in mind that no deposit has been taken, and buyer may not even have entered the cooling-off period at this stage. In addition he/she may have exercised their legitimate right to view and express their interest in one or more other properties, without commitment of any kind, meanwhile encouraging further owner(s) to prepare the document bundle in the reasonable expectation of a sale.

Note that the new laws concern only co-ownership properties such as apartments within a "résidence" or complex managed by a syndic. The costs are inevitably going to hit hardest those living in and trying to sell the most property - particularly as the documentation relating to the building complex is much the same when you are selling a 20m² studio or a five-roomed penthouse.  And it is not unimaginable to assume that the larger and poorer the building complex, the more voluminous (and costly) the building reports.

Comments by property professionals have been critical of the unpreparedness of the syndics to furnish this information. My own view is that what set out to provide additional protection for potential renters and buyers has become a nightmare for vendors, many of them desperate to sell and move on. The legislation in my view is sloppily conceived and drafted with little appreciation of its practical effects on the property market and on individuals trying to survive in a continuing depressed French economy.

 

Buy to let in France

The French newspaper Libération has published an interesting profile of typical French private landlords, who between them house one fifth of the French population - 14.4 million inhabitants,  or 22.7% of all households.

There are nearly 3 million private landlords, of which 30% own a single property they rent-out, and 25% have two. Larger scale owners are divided into 29% owning between three and five properties, 10.5% between five and ten, and 5.5% own more than ten house or apartments.

Of the properties themselves, 63% were purchased specifically to rent-out, 18% were their owners' former principal or private residence, and 14% were inherited. Some 80% of owners bought the property using a mortgage, with interest deductible from income.

Finally, the 'ideal tenant' is seen as someone aged between 16 and 35, with the rent guaranteed by parents. Older tenants (50+) are not seen as ideal 'as they are likely to be/become unemployed, and go into retirement with markedly reduced income'.

Source:www.liberation.fr 04 January 2013

Paris - short-term rentals under threat

Owners of furnished apartments that are let out short-term to visitors and tourists are once again facing threats of prosecution by the socialist Mairie de Paris.

A recent article in the LeMonde tells the story of one such owner who, as a frequent user of furnished rental apartments on his visits to the capital, decided to invest an eye-watering 350 000 euros in a two-room apartment in the fashionable Marais district, paid for by a mortgate of 2 500 euros per month over 20 years.

Between the owner's visits the apartment was let furnished and rapidly produced an income of around 1 700 euros per week, less agency fees and charges for cleaning and changeover. All was going well until a fellow resident in the block where the apartment was located issued a complaint about noise and continual disruption caused by the comings and goings of short-term tenants, and threatened to report the situation to the Mairie.

The Paris Mairie has the unenviable task of trying to cope with the capital's perennial housing shortage and therefore discourages - and even forbids - such short term rentals, arguing that they deprive the resident population of affordable housing. Hoteliers concerned about their own livelihood have added their voice but are challenged by those anxious to encouarge tourism and offer an attractive form of accomodation that is popular with visitors to Paris - and incidentally many other European cities. Over 100 estate agencies are reported to be engaged in the short term rental business in Central Paris. There have so far been only 15 legal cases brought by the Mairie against owners.

Wherever apartments are let, particularly short term, conflicts can arise between resident owners and those who are virtually absentee landlords. This occurs in holiday areas, where second homes are left empty for 10 months of the year but can account for 70% of the local housing stock. Nationally, 10% (or 3 million) of French properties are classified as second homes, out of a total 30 million properties. Again the rental market is huge and encouraged by communes living off seasonal tourism. An active and vigilant owners syndic (management team) offers the most effective means of resolving any conflicts that may arise.

Potential buyers of property in resort areas should ideally inform themselves of current legilsation on short-term letting, local bye-laws and the policy of the building's managers.

TGV Perpignan - Barcelona at last !

It seems that the fast TGV international train link between Perpignan and Barcelona will be operational from the third quarter of 2013 - that's about one year's time.

This is the first time I have seen a firm date given, after numerous delays, the most recent involving problems of tunnelling under parts of Barcelona close to the famous 'Sagrada Familia' still unfinished cathedral.

Journey times are estimated at 45 - 50 minutes, which will bring Barclona within easy commuting distance of Perpignan, for work, shopping or entertainmen and for using Barcelona's inyternational airport.. Currently it can take two to two and a half hours to drive. Barcelona is also notoriously difficult to get around by car and to park, though the public transport system - including the Metro - is excellent. 

Buying to let furnished

France has a huge private rental sector, estimated at 98% of rented properties owned by private landlords (compared with just 2% by institutions such as banks and insurance companies). Out of France's 27 million households, just over 11.6 million (40%) live in rented accommodation - of which 6.55 million are in the private sector.

This furnished rental sector represents a major opportunity for small investors and is a more secure alternative than short-term furnished holiday lettings - June to September in the warm south, during the ski season in the winter. Furnished rentals normally involve an annual lease (renewable) and tenants are often young and mobile, students or salary earners, and tend not to stay for more than two or three years. For them the furnished rental is a more attractive alternative to buying or even renting (and equiping) an empty house or apartment for a relatively short period.

The French fiscal authorities recognise a category of small entrepreneur or furnished property renter (loueur en leublé non-professionnel) with an attractive tax regime. The rules for 'long term' furnished rentals, based on a one year renewable lease, are less onerous than for unfurnished rentals (which provide wide protections for tenants for whom it may be their main home). They generally involve less management than, say, holiday lets requring frequent changeovers and cleaning between rentals.

I shall be providing a longer article on the subject to appear in French Property News in the autumn.

P-D de R.

Buying to let

An interesting article in the French daily newspaper Le Figaro has highlighted the situation of people who invested in French property to rent before the spectacular price rises of the 80s and 90s compared with the situation today. Investing in studios and apartments to rent was particularly attractive to future pensioners at the time, with one example cited of a lady able to add some 1 500 euros monthly to her retirement pension (in addition to a further 1 500 from her employment!).

Another investor, a lady teacher, recalls buying three studio apartments in a sort-after area of Lyon, spacing the purchases over a period of ten years each, giving her time to repay the bulk of the mortgage. She reckoned on contributing a further 100 to 150 euros a month, but overall is currently earning a 6% return on her investment. For someone starting out today, this would be more likely 2.5 to 3 per cent, she admits.

Although monthly rentals are now approaching the levels of mortgage/loan repayments - and in some cases exceeding them - many investors admit that the market is less attractive than it used to me. Among the complaints cited in the article include higher taxes and charges, including the new CGT rules on resale, the higher turnover of tenants and the attendant costs of refurbishing the property between rentals; and unpaid rents as tenants disappear when unable to pay the rent due to job loss or other circumstances.

In the correspondence following the article, many complain of the attitude of French banks towards new borrowers who are forced into renting when they could easily afford monthly loan repayments, and the resulting rise in rentals. For their part, landlords talk of increasing irresponsibility among tenants and complain that the new laws allowing them to accept only a one month deposit mean that tenants can leave behind them a trail of damage, with subsequent repair costs and loss of rental income to the owner.

Source. LeFigaro.fr 19 november 2011

French Property News, November 2011

In this month's issue I have taken a look at France's buoyant rental markets, from the point of view both of owners wishing to rent out their property, and renters needing guidance about how to secure the best long or short term deal. France's rental market is highly controlled and tenants are carefully protected by law from summary eviction, including in cases of non-payment of rent. However, many French choose to rent, particularly in large cities where the cost of buying an apartment may be prohibitive, and instead invest their savings in a second home in the country or on the coast, which may have been in the family for several generations.

The article also looks at seasonal/holiday rentals and the formalities that need to be completed in order to reach a satisfactory agreement between owner and tenant - guarantees, responsibility for repairs, periods of notice, a tenant's options to buy are all covered. 

French Property News is on sale in newsagents or see www.french-property-news.com

New CGT rules on sale of second home in France

As part of its austerity measures, the French government has announced new rules for the calculation of capital gains tax (CGT) on the sale of second homes - and certain other types of property, see below - with effect from today.

The principal measure is the abolution of the automatic abatement of 10% per per year of ownership, from years six to sixfteen, which had the effect of reducing the CGT to zero after 15 years. This will be replaced by a new calculation based on the rate of inflation during the period from initial purchase to sale. Details yet to be published on how this will be calculated.

In addition to second homes, the new rules will also apply to "empty properties, rental properties and land for building" (last three definitions also awaiting clarification) but will not affect main or principal residences, which are not subject to CGT on sale. To establish that your French property is your main or principal home requires proof of your resident status in France, for example a history of submitting French tax returns and being within the French healthcare system.

The new measures are expected to generate 180 million euros in 2011 and 2.2 billion euros in 2012.

Source: LeParisien 25 August 2011