Buying French Rental Property

buying French rental property

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Buying French rental property could be the answer for those seeking a good investment in rental property now house price rises have started to slow down in the UK. The buying to let market is reaching saturation point here but the French rental market is far more sophisticated than the British and 25 per cent of the country's housing stock is owned and let by private landlords.

At French Investment Property, we offer a wide choice of properties for sale in France - whether you are interested in homes for sale in southern France or apartments for sale in Paris. We also offer properties for sale in Normandy, the Alpine ski resorts, golf holiday destinations and the Loire Valley. All offer higher than average returns, for either seasonal or permanent lettings.

Why purchase a rental property in France?

France is the first choice for many because property prices are much cheaper than in the UK and indeed, than in many other European countries, a fact confirmed by the Economist magazine in their recent survey of global house prices.

Some people want to purchase a property in France which can be let out most of the time, but available for themselves as a holiday home for two or three weeks a year. We call this a seasonal let. Others are looking for a long-term investment that will give a total return superior to that available from other financial investments. This normally means letting the property unfurnished to a local person for use as a home. We call this a permanent let, similar to a buy-to-let in Britain. We show you below that this type of investment offers a steady return that is much better than many financial investments, even if capital gains are excluded.

What return can I achieve from an investment in French property?

The rate of return on both seasonal and permanent lets varies between 4%-10% per annum gross depending on the location and the costs involved to keep them let. For example, properties in the prestigious high ski resorts like Courchevel and Val'd'Isère can command high rents and thus yield 10% gross with only 12 weeks let of an 18 week season. But the costs charged by the agents who let the apartment and handle the change-overs can be 20-25% and this reduces the yield to 7% gross. However, using a mortgage, this return can be boosted to 12 -15% p.a., excluding capital gains.

Leverage

Not all purchasers are conscious of the benefits of purchasing their properties using leverage (i.e. a mortgage) and then using the stream of rentals they generate to pay off the debt contracted to buy it. We can easily separate out the capital gains effect, and look at the returns available simply from using leverage.

For example in France, if you put down, 30% on a unit, let it at 5% and use the rent to pay off the debt over 20 years at a rate of 3.6%, your 30% investment has multiplied 5 times.

Put another way, this represents almost 12% p.a. on your initial investment, even without capital appreciation, over the 20 years. If you then add in any likely capital appreciation, a buy-to-let becomes a very attractive prospect indeed.

If you would like to know more, or receive any other information about our services please contact us.

frenchinvestmentproperty| The Pool House, Bicester Road, Stratton Audley, Oxon, OX27 9BS

Phone: +44 (0)1869 277677 | Fax: +44 (0)1869 277314 | info@frenchinvestmentproperty.com