Buy to Let Property in France

The rules for tenants in France may change affecting buy to let French property investors

Investors hoping to buy property in France to let might soon see some of the owner-friendly rules and regulations here change in favour of renters.  It seems the French people are tired of paying too much for rental properties and they’re not going to take it any more!

French President Nicholas Sarkozy is quoted in Tribune De Geneve as saying he wants to make letting easier for residents.  His plan involves reducing security deposits from two months to one and doing away with a guarantor requirement.  The requirement means renters have to have a guarantor that is willing to pay their rent if they don’t.  He also would like to see rental price increases come in line with inflation, rather than construction costs.

Whilst this is all good news for those looking to let in France, it might not appeal much to buyers here looking to tap into the rich buy-to-let market France has to offer. The potential here still remains high, however.

But, what exactly does this mean to investors?

It all depends on the strategy they take.  Buyers who seek to cater to the holidaymaking market are not likely to notice any real changes.  Since short-term rentals don’t typically involve issues of guarantors, two months’ deposits or price increases, the changes likely won’t impact holidaymaking rentals much, if at all.  What they will impact, however, is investors that want to cater to long-term renters.  Still, the news might not be entirely bad for investors with this kind of buy to let strategy in mind.

The article in the Swiss paper points to the rules changes as yet another reason why international workers in the border areas might want to hop the line to live.  With rents already more affordable in France than Switzerland, the new rules would make renting in France even sweeter.  For investors, this could mean a higher demand, which is never unappealing.  In areas well served by the Eurostar, it could also represent more demand as Brits are closely exploring living in France as an option to the high cost of living in the UK.

Sarkozy is pondering these thoughts, the paper presumes, for two very good reasons.  One, his approval rating is waning.  Two, housing is a very big issue in France.  At present the average family spends roughly a quarter of their income on housing.  Add to this the fact that average rents have climbed by 60% to 70% in France since 2000, and the reasons why some reforms in the French property are needed become quite apparent.

Whether or not Sarkozy gets his way remains to be seen, but the situation does bear watching.  Investors who seek to cater to the long-term rental market might see their cash cow face a government-driven diet in the near future.