Re: French property
Hi Novice Investor,
Many thanks for your email.
As you said, the positives are well known (however, if any of you need further information on leaseback scheme, please feel free to ask me your questions) so here are some advice before moving further in your investment.
You’re right, a lot of residences have been built rapidly in the past and unfortunately the apartments were not well built. What’s more, all the apartments have the same size (sometimes small indeed).
I would advise to those who are interested in Leaseback scheme to buy an apartment in a residence which is not only dedicated to leaseback scheme, that means to invest in a “mixt-residence”, i.e. a residence composed with permanent tenants & landlords.
This is a very important point in order to keep the residence in a good quality value (the permanent landlords & tenants are very actives in France in order to control and maintain the quality of their property) and also to get a normal size apartment, or the size of your choice.
I would also advise you to check firstly the management company (its apartment’s portfolio and its financial situation) and secondly the property’s market in the area concerned with your investment.
Be careful of the contract you are going to sign with the management company, and particularly if you want to get back out of the lease during and/or after the 9 years period.
It can’t be difficult to do so if everything is clearly stated on the contract.
In relation to your question about the interest of French people in Leaseback scheme, French are more interested in “De Robien law” rather than “Residence de tourisme” or also called Leaseback scheme.
Basically, De Robien decree mainly enables investors to deduce from their rental income 8% of the property price in the first 5 years and 2.5% during each of the 10 subsequent years.
The conditions are quite stringent. It only applies to new properties, which are rented for a minimum of 9 years, under somewhat market rental rates.
While this may be attractive for a heavily taxed French resident, it offers little benefit to non-resident investors.
I hope you’ve got the information you needed.
Pierre