Buying in France pitfalls

azerty

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We are currently reviewing our financial position and could have access to some cash.
We have close links with France an thinking about buying an apartment there (120 to 140k no mortgage).
The goal would be to spend 6/7 weeks a year there now and more when older (and no kids around).
We know where we would be buying, we know the region very well and this is not a concern.
It would not be for rental though we might consider renting for 4 to 6 weeks during the pick season to cover some costs.
While we always considered such an investment to be a potential in the future, we think that perhaps now could be a good time.
We are aware of the local taxes and costs.
What could be the pitfalls of such an investment?
 
Should have said a buy. Had actually written another post in the wrong thread so got deleted saying that it would not really be an investment.
The only thing would be that it could keep its value.
 
Not so much.
I know there could be inheritance issues.
And obviously if we were renting, there would be tax implications in both juridictions.
 
Have you compared the €140k cost of buying a place, plus the ongoing costs associated with owning it, with the cost of just paying for your annual sojourn for whatever number of years you think you'll be doing it? The latter also has the advantage of not being restricted to one place.
 
I have been doing it for 3 to 5 weeks a year. I know the cost benefit is low. We have family link to France so the one place is kinda the place. But really hear you on that. If we go in low season, definitely cheaper to rent. In high season, it costs us about €1000 a week. I know it's not a "good investment" but I try to establish how feasible if at all it could be.
 
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Hi
Some tips from me. In no particular order.

1 Avoid leaseback or any scheme that guarantees rent like the plague

2 You will have to pay two french taxes annually Fonciere and habitation. Always ask what these are if looking at a particular property. They vary wildly between different towns and villages. Taxe habitation has been abolished for full time residents but not for foreigners.

3 if renting out say on Airbnb you will probably need a french accountant to do your annual return. There are different ‘regimes’ I.e. LNMP where you can write off a lot of tax in France but you will also need to declare the income in Ireland and May pay tax there. Accountants charge €300 to €500 PA. You will need a local to greet guests and do the cleaning and be on standby during their stay for stuff like blocked showers or broken bits and pieces I.e. bulbs.

This will cost at least €75 - €100 per letting depending on where the property is. Finding someone reliable that you can trust with your guests is not easy. If you pay someone who does this as their business you can claim it back as an expensive. If you do it ‘on the black’ then obviously not.

4. A french bank account is essential for paying utilities. These can be tricky to open but it can be done.

5. Internet will cost €30-€40 per month. Electricity will depend on usage of course and is relatively cheap compared to Ireland. You also pay for water and it is not cheap. Especially if you have a pool

6 if you buy in a complex you will have the coproprietaire charges These vary wildly from €1000 a year to the sky is the limit. A shared pool or lifts will add to this. Sometimes this includes water.

7. Make sure you have clearly defined parking spot(s) with any property you purchase. Locals tend to park where they like and this is tricky of welcoming guests

8. A local french mobile number is very handy with nearly everything moving to two factor authentication.

9.IKEA and many others do home delivery which is very handy.

10. Many locations in france have strict rules around short term letting ie Paris Nice Cannes limit how many nights per year etc. you always have to register anywhere you are letting with the authorities. AIRBNB share everything with french tax authorities. French tax share a lot with Irish tax.

That’s all I can think of for now.

Joebloggs
 
We are currently reviewing our financial position and could have access to some cash.
We have close links with France an thinking about buying an apartment there (120 to 140k no mortgage).
The goal would be to spend 6/7 weeks a year there now and more when older (and no kids around).
We know where we would be buying, we know the region very well and this is not a concern.
It would not be for rental though we might consider renting for 4 to 6 weeks during the pick season to cover some costs.
While we always considered such an investment to be a potential in the future, we think that perhaps now could be a good time.
We are aware of the local taxes and costs.
What could be the pitfalls of such an investment?
Have a number of friends who bought in France Spain and Turkey over the years. They have all sold at different times. Common thread if you are not going to live there its not a good idea because it restricts you. You feel that you have to return to the same spot even though you do not.
Concerns around security maintenance etc are always there even if you think they are not. Lastly costs are always only going one way and are something you have no control. You are tied to the property.
A lot to be said for choice and throwing the keys back when your done. I was in Ontario for a couple of weeks in early November and am going to Plett Bay South Africa mid March. Been to both in the past Choice and no worries is the name of the game to me. Your 140k gives you a lot of choice experiences and freedom which is what it is all about at the end of the day. Forget about it as an investment. Good luck.
 
Thank you. Lots of the remarks make huge sense.
Hi
Some tips from me. In no particular order.

1 Avoid leaseback or any scheme that guarantees rent like the plague

2 You will have to pay two french taxes annually Fonciere and habitation. Always ask what these are if looking at a particular property. They vary wildly between different towns and villages. Taxe habitation has been abolished for full time residents but not for foreigners.

3 if renting out say on Airbnb you will probably need a french accountant to do your annual return. There are different ‘regimes’ I.e. LNMP where you can write off a lot of tax in France but you will also need to declare the income in Ireland and May pay tax there. Accountants charge €300 to €500 PA. You will need a local to greet guests and do the cleaning and be on standby during their stay for stuff like blocked showers or broken bits and pieces I.e. bulbs.

This will cost at least €75 - €100 per letting depending on where the property is. Finding someone reliable that you can trust with your guests is not easy. If you pay someone who does this as their business you can claim it back as an expensive. If you do it ‘on the black’ then obviously not.

4. A french bank account is essential for paying utilities. These can be tricky to open but it can be done.

5. Internet will cost €30-€40 per month. Electricity will depend on usage of course and is relatively cheap compared to Ireland. You also pay for water and it is not cheap. Especially if you have a pool

6 if you buy in a complex you will have the coproprietaire charges These vary wildly from €1000 a year to the sky is the limit. A shared pool or lifts will add to this. Sometimes this includes water.

7. Make sure you have clearly defined parking spot(s) with any property you purchase. Locals tend to park where they like and this is tricky of welcoming guests

8. A local french mobile number is very handy with nearly everything moving to two factor authentication.

9.IKEA and many others do home delivery which is very handy.

10. Many locations in france have strict rules around short term letting ie Paris Nice Cannes limit how many nights per year etc. you always have to register anywhere you are letting with the authorities. AIRBNB share everything with french tax authorities. French tax share a lot with Irish tax.

That’s all I can think of for now.

Joebloggs
Thank you. Any difficulty with the buying process itself?
 
Hi

I unfortunately bought a leaseback so didn’t go through the normal buying process. As far as I can tell the buyer pays the estate agent fees which are very high on a small apartment. Typically 6%-8%. The notaire who acts for the state also needs paying.

One expense I forgot is property insurance. I pay about €300 for a 40sqm apartment. All bets are off if the place is empty for too long (60 or 90 days) unless you turn off the water and a few other bits and pieces. If you are in a multi storey building the insurance is crucial in case you were to have say a water leak which damaged the apartment below. The coprop fee covers insurance for the common areas.

Hope this helps

Joe
 
We did this years ago with an apartment. My advice? Don't do it. Buying was a nightmare, endless paperwork, super slow solicitors, lots of extras as outlined above- these really add up. At the end of the day we rented/ used but it was such a pain. Taxation, bank accounts etc...We are plannimg to retire to France in years to come but would only do so if we could rent long term, maybe in a few different areas. Not focused on one area but like France in general.
 
So an overwhelming no. Thought so ourselves. As I said, we have family there which would explain our possible choice. But still probably not enough to persuade us. We would not retire there at least I don't think so. We will probably take the opportunity to spend more time there in the future but might keep it to renting.
 
So an overwhelming no. Thought so ourselves. As I said, we have family there which would explain our possible choice. But still probably not enough to persuade us. We would not retire there at least I don't think so. We will probably take the opportunity to spend more time there in the future but might keep it to renting.
A sensible decision I think. Best of luck.
 
So an overwhelming no. Thought so ourselves. As I said, we have family there which would explain our possible choice. But still probably not enough to persuade us. We would not retire there at least I don't think so. We will probably take the opportunity to spend more time there in the future but might keep it to renting.
Buy-in costs, if you go through the traditional route i.e. immobillier, as purchaser, expect to pay between 6-8% on top of purchase price. Notaire fees, which are essentially government duties add an additional 6%, so budget between 10-15% of the purchase price for purchase fees. These do not cover structural surveys, which if purchasing a standalone property are an absolute must. Depending on region, where soil is "clay rich", then droughts cause soil contraction, and heavy rains result in ground swell which effectively causes the ground to heave which causes cracks in the property to open and close. This can adversely impact concrete lined swimming pools (which are expensive to drain and re-fill).

Buying direct from a Notaire is somewhat cheaper, but you forego the "benefit" of having an agent arrange property viewings. Unlike the UK or Ireland, it is typical for the property owner to walk you through the property when viewing with the agent standing back. This makes it more difficult to critique or closely inspect the property. You freqently see owners advertise the sale of their own property with a home made "AV" sign in the garden.... this is more popular for local French purchasers who are less willing to pay Immobillier fees, but in this instance you simply make contact directly wih the seller.

If you are renting property, you will need to ensure you have sufficient public liability coverage, which can become expenive (although tax deductible). We were very fortunate to have a superb local holiday rentals letting agent which whom we worked closely for years. Advertising, booking, deposit management etc, change over (including pool ph checks, cleaning etc), house cleaning and linen changes etc typically cost about €400. Two week stays were far more economical as a result. €1,000 would have to be a minimum price threshold in order for break even by the time you factor in all breakages, repairs, call-outs, water and energy charges (oil for heating water for showers etc), accountancy fees, gardening services, security checks when the property is empty. Depending on the municipality, there may also be enforceable bylaws dictating tree and hedge controls...more costs and hassle with neighbours.

Purchasing in France, is very much a lifestyle decision, not an investment one. Outside the urban areas, property does not tend to inflate as it does in Ireland. Older, second hand homes tend to be far cheaper than new builds, which the French love.

I will second previously provided advice here to avoid leasebacks. I know of several people directly who went this route and none of them had an easy experience mainly due to management company issues.
 
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We have a one bed apartment in Nice centre for over 15 years. We or family use it 6-8 weeks per year and we rent it out for the rest of the time. For us it has worked out well. We have someone good to manage it in Nice but do the admin ourselves. Nice gets visitors all year round, while winter rental rates are low, the apartment generates a reasonable return. Lots of work managing the property from afar but I enjoy it. Years ago you paid the rental sites a fixed fee and arranged bookings with guests yourself. This was often a long process but as an owner I preferred it as I got a feel for the type of guest I was letting into my property. Nowadays it is much more impersonal with little or no communication with the guests and high commission rates to the booking sites.

French property prices do not see-saw as much as those here in Ireland so it is unlikely that capital appreciation will be very high. France did not experience the drops in property prices that Ireland did following the Celtic Tiger years and property prices rarely increase more than a few percent any year since we purchased. You also need to check out the tax situation if you do make a gain as there are high CGT and "social taxes" that are weighted heavily on those that sell their properties after a few years. I think it takes 22 and 28 years ownership for them to be reduced to zero. The French inheritance laws also give children much more rights to the property than the laws here.

The local property taxes are high in Nice and we pay over 3K per year on a apartment of less than 50 sq metres. Water charges are high and no protest marches! Electricity is much cheaper partly due to their widespread use of nuclear power. Furniture, paint and most home appliances are more expensive in Nice and tradesmen charge "Nice" prices as they think all foreigners are Russian Oligarchs!
We speak a little French and when we bought we found very few people in Nice spoke English. Now most people have some English and wont allow us muddle through in French but they like us to try. They also are more accommodating when they know were are Irish as they will presume us to be British.
We use a well known Irish company to submit our French accounts and it costs a little over €500. We generally do not pay much tax in France as the property taxes and a generous depreciation allowance lowers the bill. We also have to submit Irish accounts where these items are not tax allowable so have to pay additional taxes here.
So my advice would be not to be scared of doing it. If you have a "French connection" you have more of a reason to do it. 300 days of sunshine will outweigh lots of minor problems!
Our experience is in a busy city with a population of close to 1 million and one of the reasons we bought there was because we could always rent it long term. Buying in a non tourist area quiet rural are would be much more challenging from a practical, cultural and as an economic proposition.
 
So my advice would be not to be scared of doing it. If you have a "French connection" you have more of a reason to do it. 300 days of sunshine will outweigh lots of minor problems!
Agree with the above. with interest rates here on the floor, investing in a part of France that you know and like could give you a lot of enjoyment. If it is not working out, sell after a few years. You are unlikely to owe any CGT, but it may have gone up enough to cover your costs.

if you are only renting it out for a few weeks, look into Micro-Bic. Under this tax regime, you declare your gross rental income, 50% is written off as expenses (no receipts required) and the remaining 50% is taxed at 20%. Your local tax authority should help you set this up.

French tax authorities, and utilities all accept direct debits on your Irish bank.

if you are buying from an estate agent, they will be able to give you details of the property tax. Like here this varies from region to region with property in large cities being levied higher.
 
That might be ok for French tax, but still an Irish tax liability where you will need receipts
 
I’ve thought about not contributing to this thread and I take on board all the advice given in good faith. Furthermore, I was probably to the fore advising people not to buy property in Spain, France, Portugal etc in several other threads.

Initially, we bought an apartment in the lower end of the market and sold it on within months at a loss and gladly. Our second Spanish property was more upmarket and obviously cost much more. We paid cash for 1st property and had to take out a mortgage on our current Spanish apartment which was eventually cleared.

The OP’s French property would cost €120K-€140K. No mortgage is required and I would think the risk to be small, at worst. Maintenance/local taxes/utilities etc must be paid. I’d advise him to buy it and treat it as a cold investment. Personally, I couldn’t be a cold property investor, hence my financial losses especially since the recession of 2008. But, it’s not all about the money.

The OP has amassed good savings which ‘gain wise’ appear to be going nowhere. I think it would be good financial sense to buy in France. He has family in the region, so local contact is there. And could he lose? - Yes, but it would take some really bad decision making. Could he gain? - Yes, but with some cold investment efforts

Is he tied to the region? - Certainly not; we’ve holidayed in several other countries in the past 25 years and continue to do so. Since we retired five years ago we spend some of the winter months in the Sun. We don’t miss the rain, ice, cold etc and can live considerably cheaper and have breakfast and lunch outdoors, swim in the sea, walk in healthy natural heat, etc. If we need it, the Spanish health system is pretty good. Quality of life is better.

My advice to the OP is to drive on and buy and don’t die wondering . . .
 
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