MLS-2 Blog

France Real Estate Boom Supported in part by Retirees

France and Spain continue to rank high as the destinations where British pensioners would most like to live after their retirement.

A million British pensioners are receiving their state allowance from overseas, according to new figures from Saga.

A recent Bank of Scotland International (BOSI) survey found that the two countries are the most popular countries in Europe to retire in, among the 31 per cent of pensioners who have considered moving abroad

But France has become more popular with Brits than Spain because there are fewer established expat communities to annoy them, according to an overseas mortgage adviser.

Matthew Weston, manager of overseas mortgages at Blevins Franks, said that people were looking for a cultural experience and a change of lifestyle rather than a Little Britain Abroad.

“Normally what people are looking for is a peaceful home set in natural surroundings that is in close proximity to a local scene that has a good dose of its own unique culture and entertainment,” he said.

A Cluttons France spokesperson said that the France was becoming very popular with a higher class of Brit who did not want to see “an English man wearing his football shirt in France”.  (Hey, Raider Nation, are you listening?)

France’s Population Boom is a Real Estate Boom

France has the second largest population in the EU, and is experiencing an unprecedented population boom and is projected to be most populated nation in Western Europe by 2050! France is also experiencing a phenomenal migration from North to South-West. For example; Paris population in 1946 was 2.9 million by the end of 2003 it was 2.125 million.

A summary of an article about the continuing growth of the region published by INSEE, (Ministry of Economy), informs us that the rapid population growth in this area is due to;

1. Lowest Death Rate in Europe/West.
2. Highest Birth Rate in Europe/West.
3. Strong immigration from mostly North European countries.

The takeaway? NOT ENOUGH HOUSING is driving up prices….

France is not a bubble - darn! ;-)

Looking for a bubble market? Or, tired of bubbles & want steady growth you can just ignore until you retire? France real estate investing is the latter. Things move a bit slower in France, and the property appreciation/speculation is one of them!

Property and fiscal laws in France also “discourage” outright property speculation and this clearly shows in the very stable, long term increase in property values, without the usual “highs & lows” associated to other property markets throughout the world

 France is considered the safest country in the world for investing in property - according to US Government; UN and EU law offices.

 If you’re looking for more of a steady 7-9% return, instead of 20%+ of the bubble, then consider France!

France vs. UK Property Boom - Catchup Time

The French property market is experiencing sustained growth thanks to continued demand from foreign investors, SPC Overseas claims.

The property investment company told Homes Worldwide that there are several mini growth markets in France where prices are finally beginning to catch up to the rest of Europe.

Anthony Fernandes, director of SPC Overseas, explained that France’s popularity among holiday home buyers has led to a shortage of new properties, which is pushing prices up and creating a very “ripe” climate for investors.

“The next ten years will see France play catch up to other European markets and investors can expect to see tremendous returns,” he remarked.

Your Mortgage magazine also sees this trend in France, explaining that western European countries are now seeing a price boom similar to that experienced in the UK over the last decade.

French Time is long - even the “cooling off” period!

If you long for the the long dinners, the laid-back lifestyle of a French home, you’ll just have to wait!

With “off-plan” new build, you have 8 full weeks “cooling off” period from day of reserving a property. World-wide the max. is 10 days for “cooling off” and the normal is 3 to 7 days). Your deposit is fully refundable during this period. (of course, this is a good wait.)

To help we advise all investors to look at two important Government websites :
1 : www.insee.fr (have English Version). GOVERNMENT. Ministry of Economic and Trade.
2 : www.notaires.fr The official website of the State notaires. English version. They have wonderful booklets to download - in English

We also appoint an English speaking notaires for you to contact. You will find list of English speaking the notaires on their website of thru any French Embassy, or the American Embassy in Paris. (Remember : the notaire “closing” fee is fixed by the State at 2.5% per property – whether there is one, or ten notaires involved!)

Yes; dealing in a foreign language can be daunting, but you will find the benefits of French property worth the little “extra” time and effort.

Who Owns French Property - Besides the French of Course!

The official INSEE figures, (as of 1 Sept. 2007), of English speaking foreigner’s presently owning RESIDENTIAL properties in France :-

• British : over 500,000
• Ireland : 108,000
• Scandanavia : 43,000
• USA 58,000.
• Japan is 9,000 in last 3 years!

Over 250.000 Americans work & live in France - 90% in Paris region - which is why there are American Churches; Cathederal; Library and numerous schools - 30% own residential property either for living or investment, or both.

Why France III - Maximum Capital Growth

Maximum Capital Growth! Since 2001 and the introduction of “Loi Robien”, capital growth in the main metropolitan city areas has grown at average of 22% per annum! 2007 has seen a slow down in the market by the French, in anticipation of the May and June Presidential and senate/house elections. This was especially so as the outcome depended on the tax concessions to be given by Nicolas Sarkozy. (Prices have only risen slightly while the French waited. Overseas investment has broken records so far!) Well Nicolas Sarkozy won!! New laws are in and conditions remain favorable for investors!!

Property for buying and renting is in extremely short supply in France and new build start up is very far behind demand. Official figures at the end of 2006 project the housing shortage as over 1,000,000 (1 million!) units. As an example - new build start up in Toulouse for 2007 will be approx. 2,600 units for the year, but 1000 people PER MONTH are moving into the area! French law mandates that only 25% of any building can be sold to investors! The remaining apartments are for owner/occupants only! Rents rose by over 8% due to the tremendous shortage in rental property!
(Source : Chambers of Notaires and Commerce / FNAIM)

Published market values/figures have consistently shown that while development is under construction the capital value of the property increases by approximately 6% per annum over normal capital growth!! This is influenced by the fact that the tax/notaire/legal fees, (“closing costs”), on new build is fixed by law at 2.5%, while on old build it averages 15%.  Obviously, maximum profit potential comes from investing in a new-build as early in the construction process as possible when prices are typically a fraction of what they will be when the project is complete and becomes publicly available.

French Real Estate Investing - How Do I Get Started

(I don’t Speak French), How do I get started?

According to French Law, in order to acquire all new build properties for investment (income producing/buy-to-let), a person must:

1. Attend a meeting or seminar with a French licensed expert.
2. Or visit the property/development site first

Let’s make it simple for you & invite you to one of our quarterly meetings with our French expert partner. (Unless you’re headed to Paris soon.) Email us for times… patrick (at) realtyconcert . com

Why France II - “Guaranteed rental income”

Guaranteed Rental Income! The second part of why France is a reat place to buy investment real estate - “Guaranteed rental income”.

“Guaranteed rental income” (buy-to-let), began in France in 1964 and is the “prime” investment of the French. Currently, guaranteed rental return on long-term, unfurnished rentals averages 6% per annum (based on total purchase price) 30% on RISK.

“Guaranteed rental income” is for long-term (3 year contracts) unfurnished properties, (NOT vacation rental), and owners receive the following FOR THE ENTIRE PERIOD YOU RENT OUT YOUR PROPERTY:

• Guaranteed initial rental
• Guaranteed regular income: if your property becomes vacant, or remains vacant for more than one month, you will receive a regular monthly income corresponding with the market value, (excluding rental charges), for an unlimited period.
• Guaranteed cover against rent default, as from first month and for an unlimited period.
• Guaranteed cover against damage to your property by tenant

These guarantees are fully backed by the French Government program “Loi Robien”. Robien’s Law was introduced by the Government to encourage buy-to-let (own-2-invest) rental investment in France!

Why France I - Non-Recourse Mortgages

Non-Recourse Mortgages!

• French mortgages are totally NON-RECOURSE!! Each property in France is its own entity; in respect of tax; mortgage and inheritance.
• French mortgages do not affect your credit rating/points in your home country!
• 80% mortgages are obtainable through all the major banks/lenders. (90% is now being offered by some banks; but only on full amortisization – in which case you will not cover the repayments with the rental – therefore, it is not recommended for investors)
• Loan interest rate between 4.2% and 5.2%
• Interest only mortgages available.
• * NOTE: Mortgages in France are available to private individuals only; not to business entities; trusts or professional property/real estate investors.

See also: 
Why France II
Why France III
& Louis XIV