Most of our clients usually open a French bank account either online (Britline for example from Caisse d’Epargne or on site in a local French bank near their property). If not owner can have rental income from French leaseback property paid into a foreign account usually.
The accounting firm selected for the French leaseback development can only apply for VAT refund on furniture pack only once the property has been delivered. It is common for buyers to have to advance the VAT on furniture as this is not real estate unlike apartment or parking where the VAT is advanced by French property developer in most cases (when buying into a French leaseback scheme of course).
The rental income is set in the commercial lease (Bail commercial). Even if your property is not rented out for a particular week, your rental income will never be affected as the rental income is clearly stated in the commercial lease.
The rental income is linked to the French index of rental variation (which can be found at www.insee.fr).
This ensures that rental figures increase by up to 2% per year. Most developers cap this at 1.5% or 2%. This rental increase is applied every 3 years giving you +15/20% in income towards end of rental period.
Eventually yes. Initially one will be appointed for you by the developer in the first year (it is mandatory to use them as they are also in charge of VAT reclaim) and they usually cost around 300€ per year. After that you can choose to use whoever services you wish or not, but most of the time buyers continue with the originally appointed accountant.
The beauty of owning a French leaseback property (freehold) is that there are very few on-going costs for you the owner.
Some developers provide the rental returns as a completely net figure, net of any costs, maintenance or service charges, and some developers provide the returns as a gross figure. In some cases buyers will have to pay a ‘charge de co-propriété’ (service charge) in the region of average €20-25 per m2 (based on your apartment surface) per year, but this can be factored into the rental income.
All property owners in France have to pay Taxe Fonciere which is in the region of €15 per sqm per year on these leaseback properties. Aside from that, the management companies take care of all upkeep and maintenance on an on-going basis and owners are not billed for this. The Taxe d’habitation equivalent to the council tax is paid by the rental management company as are all the utilities including the building’s insurance.
Once a year, a small cost will be required to engage an accountant to take care of your apartment rental income (tax-free in most cases) to prepare your books for French Revenue, cost is around 300€/year.
To recap nowadays you usually have 3 costs each year: contribution to service charges between 20-25€ per your apartment square metres, 300€ for the accountant and around 15€ (per square metre of your apartment per year) for land tax. Example for a 50m2 apartment: 1,000€/year in charges (20€/m2), 300€ accountant and 750€/year in taxe fonciere (land tax). As you can see this is extremely low compared to the usual upkeeps for an outright property abroad.
In France you pay 2 taxes on your property each year the land tax (foncière) and the council tax (habitation). The latter is not paid by French leaseback owners as this is paid by the rental management company.
All owners in France need to pay the land taxe called taxe foncière in French. It is a property tax paid on size of your property and it can vary between regions.
In general it is around 15 euros per sqm of the living surface of your property. For example if your ski apartment is 50 sqm you would pay 750€ per year in land tax. When you buy a new-build property (under 5 years old), you usually pay a reduced rate the first 2 years.
For the latest French mortgage rates and to see the different types of French mortgages on offer, please contact us.
French mortgages in Euros are available on a Repayment basis up to 85% (contact us for interest-only). Loans in other major currencies are available up to a maximum of 70%. Loans for Leaseback properties are available up to 80% of the NET Purchase Price.
The maximum term of any mortgage is 25 years, this varies on the type of loan
Repayment, Interest Only, Fixed Interest and Capped Rate mortgages are available
The minimum French mortgage amount you can take out is usually 50,000-60,000 euros.
If you are employed:
Your last three month’s payslips
Your latest P60 or Employers Reference
Your last three month’s personal bank statements
If you are self-employed:
Your last two year’s signed accounts
Your last two year’s personal tax returns
Your last three month’s personal bank statements
Example of payments with a French mortgage
If, for example, your gross joint monthly income is £2,500, 33% of this equates to £825. If your only liability is your mortgage payment, of say £300, this would leave a balance of £525 for your French mortgage repayment.
Very simple you pay your deposit first (say 20%) then the bank takes over for all the remaining stage payments. At each stage a surveying company guarantees the work done, issues a certificate which is then sent to notaire who then notifies you or the bank to make that payment. In France it is very secure and before exchanging contract, the completion financial insurance (GFA) has to be in place and that guarantees full completion of project.
Most French banks only lend on a quota of units per development. So whether it is 100 apartments or 10 within a project, they lend on a certain percentage of the apartments available rather than a defined number. There will also be other French banks who will lend to non-residents so we always have plenty of lending solutions.