Property Investment in France
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by Brian Turner
Guide to Property Investment in France
France enjoys being a popular tourist attraction for Brits and other Europeans, so the holiday rental potential remains strong in many areas. Just ensure you budget plenty for the required purchase costs.
– strong long-term investment
– good rental market
– decent tax breaks
– expensive transactions costs
– long time to complete sale
The property market in France lost some steam in 2007 and 2008 does not look to fair much better. Prices increased only around 3% in the past year (compared to a high of almost 16% in previous years). Any one can purchase property in France and a large percentage of the foreign market comes from England. There are freehold properties, co-ownership and leaseholds (for up to 99 years).
Part of the reason behind the slowing property market is the economy. As the economy begins to slow or pull back, consumers are more cautious with their money. Rising interest rates have also hurt the market by decreasing the number of consumers willing to invest in a mortgage. Consumer confidence has also shown a decrease and this is slowing most all markets.
The government has been trying to increase the interest in home ownership by offering tax breaks. Even with these incentives there has been little sign that it is making a difference in the property market. Over the last several months, prices have hit a stable point (with no growth but no loss either).
Although the purchase of properties may be down, the rental market is on the rise. Although yields are still low at present (with high yields in the 4% range), the trend is beginning to show a rise. Around 40% of all households rent their homes in France and that statistic holds great promise for the rental industry.
Transaction costs can get rather high in France and the buyer will foot a large percentage of the bill. The only cost shared by the seller is the Agent’s fee. Transaction costs can run almost 20% of the purchase price.
The process to purchase property in France can be time consuming and will often take an average of 193 days to complete the 10 procedures needed to register property. It is recommended that a buyer seek legal help during this process.
A buyer has a seven day cooling off period after the preliminary agreement to change his mind on the sale.
Notaries and estate agents can be one in the same and will be the least expensive choice.
A French notary is mandatory for the purchase of property in the country.
Duties will be collected on the sales of properties at the time the property is transferred.
On top of all the other fees that the buyer will pay there are also several taxes that will be levied.
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