Things to know before investing in a buy-to-let in France

A buy-to-let property can be a good way to supplement your income for your new life in France but make sure you understand these 8 considerations first

Renting in small towns and villages is a growing market

With approximately 40% of the French population renting their homes in France there is always a buoyant rental market. In the cities it is common to rent apartments, often for a decade or more. This means in the main towns and cities of France it is often tricky to find affordable and decent rental accommodation, where demand is higher than supply and prices are pushed up. The result is that there is now a rental market for properties in villages and small towns – as long as they enjoy good transport links to the city. Village properties are readily available and buyers can negotiate prices which makes them a good purchase for buy-to-let.

You will get a regular monthly income in euros

Buy-to-lets can be an attractive option for those who are looking for a monthly income. With the pound as weak as it is, rent received in euros is ‘FX proofed’, meaning it is currently worth more than keeping it in sterling savings in a UK bank.

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If you employ a management agent then you will need to do little work yourself

Local estate agents working in the rental market operate as management agents. They can often advise whether it is sensible to invest in a property for unfurnished, furnished or holiday lets. Their management fee is just under 10% of the property’s rental income, and this includes the insurance policy against non-payment of rent. In addition to finding a tenant they can help with the bureaucracy.

You can include your rental income in a mortgage application

Your management agent can provide the bank with a confirmed tenancy agreement showing a three-year rental. This rental agreement acts as a guarantee to the bank when they are carrying out their affordability tests and so they may be willing to include the secured rent as part of the mortgage application. If you’re planning to open a B&B or gîte then it is unlikely that the bank will include this unsecured future income in your mortgage application.

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You can rent your property furnished

Furnished properties have a standard minimum contract term of one year. Having a furnished property also gives flexibility as many French holidaymakers self-cater which means that a furnished property offers the landlord options if they only wish to rent out the property in the short term.

Or you can rent it unfurnished

If you decide to rent unfurnished you will enter into a three-year lease with your tenant but they can give notice within this time. If you decide to sell your unfurnished rental you need to give the tenant six months’ notice and allow them first refusal to buy the property. This can, of course, work in your favour as you may have a ready-made buyer

You must provide a number of property reports

There are various reports that must be provided by the landlord including energy performance and lead levels in the building for older properties. Improvement works such as upgrading electrical and water services or improving insulation are tax deductible against the rental income.

You can buy through a SCI to avoid inheritance issues

For those who are concerned about inheritance issues there is an option to buy the property through an SCI (société civile immobilière). For others with more straightforward inheritance issues, landlords can buy the property personally.

Steve Gillham runs Alliance French Property and Liaison Construction