Is it still worth buying a property in France?

November 1, 2023

Avocat, Deborah Vaysse’s article was first published in French Property News – September / October 2023 issue

According to statistics, France is, and has been since 1990, the most popular world destination for international tourists.

And for good reason, France has a lot to offer to its tourists and nationals. The History of France has also made it famous: literature, fine arts, architecture, luxury, and gastronomy.

France is also about grandiose landscapes: the turquoise waters of the Côte d’Azur, the creeks of Marseille, the Gorges du Verdon, the snow-capped peaks of the French Alps, the volcanoes of Auvergne, the waterfalls of Jura, the gardens of Versailles, the Dune du Pilat, the cliffs of Etretat… the list goes on!

Since Brexit I hear a lot of “I can now only stay in France for a maximum of 90 days”… which is a wrong assumption. The rules state that UK nationals wishing to visit France for a stay of 90 days or less within a 180-day period do not need a visa. It is therefore possible to spend 90 days in France, then 90 days elsewhere and come back for 90 days… which means Brits can spend up to 180 days in France per year without a visa! UK nationals should also rest assured that they will still be able to settle in France in 2023 as it is possible to stay for more than 90 days and apply for a visa.

Brexit should then not prevent UK nationals from buying their dream property in France which they could not afford in the UK. Giving the proximity to the UK and the ease of traveling between the two countries and since the cost of living is slightly cheaper in France and the real estate market less tense, France is a dream destination for second home owners or property investors. A villa in the South of France with a swimming pool for less than £300,000! A bargain you said?

Plan your project ahead

I always advise my clients to take a broad view of their project. Why are you buying a property abroad? Is it going to be your second home only, a rental investment, a hybrid project? Will you plan to resell the property, do you expect to make a gain or would you like your loved ones to inherit the property upon your death? You need to plan ahead to avoid unpleasant surprises. You also need to plan ahead to benefit of the advantages!

If the aim is to invest in rental property, as being the top tourist destination in the world, France is therefore a destination of choice. Location is a key factor: proximity to public transport, an airport, amenities, etc. The Alps, the Côte d’Azur, the Atlantic coast (Bordeaux, Mont-St-Michel, Biarritz), Paris, all those areas are very popular with investors because they are the most touristic regions of France. But as the most popular they are also the most expensive… the theory of supply and demand. On the contrary, there are some cheap houses deep in the countryside that would not be suitable for seasonal rental but still to be considered for a long-term rental which will ensure a stable income for the investor.

Taxes are manageable

France has the bad reputation of being one of the most taxed countries in the world… it is true that on paper there are many compulsory levies: housing tax (taxe d’habitation), property tax (taxe foncière) for owners of second homes; income tax and social charges for those who rent and even business property tax for those who rent furnished. In reality, many investors avoid a big tax bill by benefiting from the many tax credits available.

For investors who rent their furnished property, or on a seasonal basis, there are different tax regimes existing. One which allows to deduct the charges and expenses actually incurred on the property from property income. Thus, if the amount of the charges is higher than the rental income, this situation generates a deficit which can be deducted allowing the amount of the income tax to be reduced. The other regime allows investors who have already written off their property or who do not have many expenses to deduct to be able to deduct a fixed abatement of 50% (even up to 71% for classified tourist properties) on their property income.

For investors who want to be spared the hassle of having to manage seasonal lets themselves, a leaseback scheme or Résidence de tourisme rental exists. In that case, the property is managed by a third party. Owners sign a commercial lease with the operator, which sets out the terms and conditions of the rental. The commercial lease commits the operator to finding tenants, maintaining the property and guaranteeing the payment of rent to the investor. The owner, for his part, benefits from a right of occupation in a tourist residence for a few weeks a year, according to a pre-defined schedule. The purchase price is generally well below the market rate, making it an attractive investment. All the while, the investors are benefiting from a secure investment, which is hassle-free and tax efficient. Be careful, however, to target a good, reputable management company. Investors should also be aware that the minimum term of a French lease is 9 years and if the owner wishes to take back the property, he must pay an eviction indemnity to the management company to compensate the losses and costs incurred (In general eviction indemnity = 2- and 3-years rental).

Good to know: As a double taxation agreement exists between France and the UK, people are not paying tax twice on the same income.

Get the right advice and assistance

The purchase of real estate is an important and far-reaching commitment, especially when you buy in a country that does not have the same rules in terms of sales, taxation, litigation, and inheritance law. If only 21 miles separate France and the UK, in terms of law there is a world apart. There are different and new concepts that need to be understood before embarking on the adventure. For example, it’s the testamentary freedom that exists in the UK and the forced heirship system in France. Some people think they will be able to dispose their French property the way they wish upon their death… well not exactly!

To sum up, it is possible to purchase the second home of your dreams and also make a good rental investment in France without being overcharged, but you still need to be assisted by professionals who can give you the best advice based on your profile and your wishes.

It should be noted that in France, Notaire are not independent advisors, they are public officers appointed by the Minister of Justice to act on behalf of the state. It should also be noted that real estate agents are not legal advisors.

In France, legal advice is reserved for Avocats, who have the monopoly.

You should then seek independent advice from French law’s expert who will help you navigate through difficulties, answering your questions, managing your taxes, and planning your property resale or estate in advance so you can purchase a property with peace of mind.

At Furley Page, our strength is our unique team made up of legal specialists: French Avocats, qualified and registered with the French Bar, as well as English Solicitors and UK tax experts. Our commitment is to offer a personalized, top grade and complete service for each of our clients.