The French property market is an ever-improving picture

property on the french riviera

We are now getting into an ever-improving picture for international buyers of French real estate. The Euro is weakening as the prospect of interest rate rises fades further into the distance making it cheaper to buy in France. French property prices are soft due to weaker demand in France as a result of the low economic sentiment, making it easier for non-residents negotiate discounts.

Funding a purchase via a loan is about as cheap as it has ever been with long term value able which can be locked in for up to 25 years. If that was not enough, the European central bank has indicated that they are comfortable with the option of an “asset purchase programme” to boost the money supply (printing money) which we all know will eventually lead to increases in house prices in the French property market. So the outlook is bright for those seeking to buy in France over the next few years.

Availability of finance is key…

In terms of availability of finance, banks are quite willing to lend up to 80% of the purchase price of the property subject to a full affordability check. There are no non-status loans or “buy to let loans” which are based only on the rental asset income. All loans in France are subject to status and a full income verification and check is required.

The Brits are the biggest non-resident buyers in the French property market with just under 25% of the market. The next two biggest buyers come from Belgium and Switzerland with 16% and 11% respectively. In 2013 there were about 13,000 purchases by non-resident buyers in France, 13% down on 2012 with an average purchase price of 354k and an average loan amount of 448k. The most popular area was the Cote d’Azur with 3,285 transactions followed by the Alps and Paris with 2,351 and 1243. On average over the past 3 years there have been approximately 3,000 purchase by British and Irish buyers totalling over 800,000,000 in each of the past 3 years.

Contrary, to popular opinion the tax situation in France is apparently not that bad. There is a taxation agreement between France and the UK which allows tax paid in France to be taken into account on a UK tax return. Income tax in France can be mitigated to zero in many cases for a 20 year period via amortisation of the property and the deduction of costs and interest. Loan interest can be deducted on both French and UK tax returns reducing the overall burden. French CGT reduces each year via taper relief and effectively you only have UK tax to pay on any gain in France from years 8-10. So no extra income tax, no extra CGT after 8-10 years. Not really that bad then…