If you have a holiday home in France and don’t make use of it all year round you might be able to profit from the short term holiday rental market. Alternatively, if you’re interested in purchasing real estate in France as an investment you might benefit further from long term rentals or even corporate lets.
There are many ways you can potentially benefit financially from letting out a second home in France, but there are also a number of decisions you need to make before you can begin to profit from buy to let.
This article gives you some tips to assist you towards getting the best rental returns possible from your property in France.
Firstly it entirely depends on the location and type of property that you own as to how best it can be let out to achieve the best rental returns possible for you.
Short Term Rental or Long Term Lets?
Generally speaking any property in any major city worldwide will generate you the highest rental returns, and France is no exception. In Paris you can expect rental returns in the region of £900 - £1000 a week for a two bedroom apartment. In fact, depending on the Arrondissement and quality of the property these figures can be far higher. If you were to purchase property in a major French town you could consider corporate lets and long term rental.
If you are thinking of buying a property in a French tourist or holiday hotspot you are more likely to benefit from short term holiday rentals. And depending on the region you favour the length of the holiday season will vary. For example, the Alps attract skiers in the winter and hikers in the summer - both may be interested in short term rental opportunities giving you year round income potential.
Finding Tenants.
Whether you deem short term or long term rental appropriate for your property and your circumstances the first stage of the profit process will be locating suitable tenants and managing the rental of the property in France.
Again, the methods you can choose from vary and some methods will be more applicable to those interested in letting out to holiday makers, while some will be more appropriate to those interested in long term local rental.
If you would like to rent out your French property yourself and avoid any agency charges you can choose to advertise in local publications if you are seeking a local tenant, or you can advertise in the country you are hoping to attract tenants from (especially if you are looking for holiday lets), or you can market your property via specialist tourism websites for example. Think about the nature of the tenant you are trying to attract and then think about where they will look for a rental property. Put yourself in your potential tenants’ shoes and this will make finding suitable methods for marketing your buy to let French property easier.
If on the other hand you would like to remain strictly hands off you can place your property in the hands of an agent - usually a real estate agent for local/long term lets or a travel agent for holiday lets. For a percentage of the rental returns or a fixed fee these people will market your property for you to the appropriate market you are seeking to attract - from holiday maker to business man, from student to retired couple.
Contracts & Basic Legalities
Please note that any agent or intermediary in France who rents out property for a living has to be properly licensed to do so. Therefore, if you do engage an agent to let your property or even manage it - especially if you let it out short term and need it cleaning and servicing between tenants - make sure any contract you enter into is checked over by an independent legal representative to ensure the agreement you have with the agent and the agreement the agent then establishes with any tenants services your best interests and is secure, legal and does not in some way misrepresent you or disadvantage you as the landlord.
When it comes to contracts and rental agreements here are a few boring, negative and worst case scenario facts that we feel we should mention! We certainly don’t want to put you off - we’re only mentioning them as so very often they get overlooked and we want you to be completely informed.
- Any tenancy agreement you draw up, together with both the rights and duties of landlord and tenant will be governed by French law. Therefore if you’re considering letting out your property privately it might be worth while getting a lawyer to check both the phrasing and the legality of any contract you write to make sure you as the landlord are protected.
- Be sure to advise your potential tenant verbally and in writing of any special terms or conditions of the letting arrangement before they sign the contract otherwise they could sue you for damages, demand a rent and deposit refund and generally cause you headaches.
- Be sure to detail everything from when the rent is due, how much of a deposit is required, how much notice you require in the event of a cancellation (in the case of holiday lets), what you are and aren’t liable for etc.
- Make sure your rental contract is signed by both you and the tenant before the tenant moves in!
- If you are UK resident or intend to market your property in the UK for potential tenants be aware that there are laws in place to protect the consumer (or in this case, tenant) from misrepresentation and misleading advertisements. Tell the truth about the distances to the beach, the ease of access, quality of facilities etc., otherwise you could be sued!
- If you decide all this sounds like too much hassle and decide to let out your French real estate on an informal/no contract necessary basis the whole affair will be governed by French Civil Code.
- If you have a tenant who overstays their welcome be aware that if they have no primary residence or you let the property to them unfurnished, or you let it to them for 3 months or more you may find it very difficult to evict them.
- Make sure you have the correct insurances and correct levels of insurance to cover liability, potential legal fees and also damage to property and contents. Furthermore if you’re considering letting out your primary residence you must make your insurance company aware of this as your general insurance may not cover you.
Income from Private Rental
If you own just one or two properties in France and you let out the property privately - i.e., you are not running property letting as a main business you will have to declare any income you derive from the lets on you normal French income tax return.
If you’re resident in France the form will go to your local tax office, if you are non resident it should go to the Centre des impost des non-residents in Paris - either way the form has to be in by the end of April following the previous tax year. In France the tax year runs from 1st of January to 31st of December…so for any rental income earned in 2005 the income tax return will have to be in by 30th of April 2006.
Even if you reside in another country and derive your main income from that country and submit a tax return there, you still have to submit a tax return in France if you earn any form of income from property located there. This doesn’t mean you’ll be taxed twice - in most cases you will be taxed in France and when you also declare the income on your home income tax form you will be able to deduct the tax already paid - meaning you are not doubly liable.
Speak to your accountant for personalised advice.
Buy to Let French Property - A Business
If you are thinking about buying to let a large number or properties in France, open a holiday village, camp site or hotel you will become a ‘tradesman’ and the property will be deemed ‘commercial’ according to the French Commercial Code.
This means you will need to register your business with both the local chamber of commerce and local authorities. You will then have to undergo inspections to ensure your properties meet various health and safety standards etc.
As you can imagine, running a business in France - just like running a business anywhere - incurs paper work and fees, compulsory documents and taxes! Taxes and fees levied will depend on the exact nature of the business and the properties you’re letting out, and it is possible to structure such a rental business in a way so as to reduce taxation and complications - you could consider buying through a foreign company or a French civil company for example.
If you’d like more information about this consider contacting the chamber of commerce for information, speaking to those expats who have already established a business in France - they are often to be found in expat forums across the internet - or researching ‘establishing a business in France’ on the internet for example.
There’s also a wealth of books available on the subjects of buying property abroad, buying to let and living in France. Amazon is a good place to start, here’s one book that might be of further interest to you.
Buy to Let in France: How to Invest in French Property for Pleasure and Profit
Clive Kristen
From the author of “Buying a Property in France”, this guide shows you how to maximize your investment by renting it out and how to avoid the pitfalls of the unprepared.
Click here to order a copy directly from Amazon!
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