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Everything you always wanted to know about France |
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France Voila - Barbeques in the shade of Mediterranean Pines
This newsletter is again mainly about buying property for investment and working in France as these are the main topics in my mailbox every day. From next week I will try to present three individual newsletters and forums for: Property Rentals - Property Purchases - Living and Working. I promise not to overload you with mail and you can select which you would like to read, the forums and blogs will give you the chance to respond quickly and open contac with other readers. By linking the points I make to our weblog at http://www.fblog.com http://www.fblog.com I hope readers will click on the adverts which help support our overheads. Our business is providing advertising and marketing services for property rentals and sales on our sites at http://rentalsfrance.com/ http://rentalsfrance.com/ and http://1stpropertysales.com/ http://1stpropertysales.com/ Please make use of these sites for rentals and sales (and do click on the adverts). And yes - we did have a barbeque in the shade of the trees (to keep out of the hot sun) yesterday lunchtime. ======= 1. Nimby Pimby 2. Leasebacks - What Do I Think 3. Capital Gains Tax on a Property Company 4. A Successful Start-Up 5. Rental Guidelines 6. A Chinese Curse 7. How to Invest In property In France ======= 1. Nimby Pimby Bonsoir Tony, I have been reading and enjoying your stories for awhile now and have noticed lately that the general theme seems to be one straight out of the US. Have you every heard of a "NIMBY"? It translates to "Not in My Backyard". You have made what seems like a successful enough business in France and although your comments about the unemployment situation and such are true, the rest of it really sounds terrible. It sounds like you just want to keep the entire place to yourself. That may not be your aim but it does come across as such. I visited Provence in September of last year and I loved it. I am from California and the pace of life is NUTS! It is so much more relaxed in France. Maybe civilized is a better word. Even the hustle and bustle in Paris seemed slower than what I'm used to, and I live in NORTHERN California. I want to return to France too! Anyway, love the newsletter and maybe the next time I come to France I will rent from you. A bientot! === Hello Jackie Yes I am aware that recent newsletters have not been "encouraging" folk to sell up everything and move to France and I do know the expression NIMBY. Over the last 6 years I have often written cautionary tales about moving to France and setting up a business here. The fact is that there is now a flood or people, mostly from the UK, but many from the USA, coming to France to find a lifestyle which seems so much better. For most immigrants earning a living will be harder here than they are used to and I would be irresponsible to write anything else. I have countless mails from people telling me that the French authorities cannot stop them opening up as estate agents, practising their profession etc. But the fact is that life in France is far more controlled and restrictive, this is perhaps one reason why the pace of life is slower, people are carefully regulated and discouraged from enterprise. Because of this it is a great place to visit to escape stress and competition. I would love to write about success stories, about opportunities for enterprise and how English or American business people have built new enterprises. Unfortunately no one has ever told me about these and I have never found one. If only someone would set up a successful business in my own back yard, perhaps I could work with them. I don't mean opening a shop or working at a trade - this is hard enough with the red-tape - but a business which creates opportunities for other employees. Au contraire - I am happy to throw out the challenge for anyone to come and join me and to help build our Internet and marketing business. Positive Internet Marketing By You (PIMBY) Tony === Hi Tony, Just got back from a 2 week visit to Provence. It was wonderful! Stayed in Aix-en-Provence as a base and traveled to the Vaucluse, the Luberon and assorted villages, visited Paris for 1 day (TGV) and basically had a great time. The food in Provence was awesome and everyone was friendly if not always helpful....When we purchased TGV tix for our trip to Paris, The station agent just forgot to tell us that the TGV station is 10 kilometers outside of Aix, great thing to find out when you are at the SCNF station and the train leaves in 10 minutes....I guess you just have to know which questions to ask. That made it a little difficult traveling. The only down side to the whole trip was the plane trips both ways. UGH! That would keep me from coming back to France for a long time. I wish I could move parts of it to California. Anyway, thanks for your answers to my previous questions and also the information on your website re: women traveling alone in France. Very informative. I felt safer in Provence than I do at home! Thanks again, Jackie ======= 2. Leasebacks - What Do I Think Tony, What do you think of the leaseback type investments? Regards, Lynn === Hello Lynn The French leaseback plans should ONLY be considered as investments similar to any stocks or shares. It is an initiative created (in 1976) by the French government to encourage people to save in French real-estate, largely for their pensions. The Incentive is to save the 20.6 % VAT on new buildings and, if you are a French tax payer, to have some tax benefits. Although in most cases you own the freehold, you should never expect to be able to occupy the property full-time, even after the 20 year period required to reduce all your tax repayment obligation to zero. You grant a lease to a management company in return for a guaranteed return on your investment - usually between 4% and 7.5%. The management company normally has the right to renew the lease after 9 to 13 years, but in any event you cannot become the primary occupant without repayment of a proportion of your tax concessions. The management company will also have a legal right to compensation for loss of profits, plus you will also have to get the majority of all the owners in the development to wish to opt- out of the contractual position. So as an investment it is sound, but only as an investment. Personally I would rather pay the VAT, not be contracted to a management company and be completely free to determine my own rentals and investment criteria. It is absolutely NOT a cheap way to get a holiday home although it is being sold as this by many agents. Hope this helps Tony === Thanks Tony.....your information in very helpful, as always! Lynn ======= 3. Capital Gains Tax on a Property Company Hello Tony: Thanks for the newsletter which we find very informative. A couple of questions you may have some answers for. We formed an SCI (3 investors) and bought a nice property in the GERS. We totally renovated over the period of one year and then received 3 stars from Gites de France. (This year will be our first year). However, we now have some friends who are very interested in buying our SCI company after the summer to use a gite rentals and use as their second residences. Do you know what the capital gains tax on selling an existing SCI is? And, would the property have to go through a property sale if we are only selling the company shares? Thanks Rosemary === Hello Rosemary An SCI is a company (although specifically for property) any profit you have on the sale of shares will be taxable for CGT - I think the current rate is 33% tax - this is my understanding and you really must get professional advice. The CGT on property owned by you is 16% with no reduction for 5 years and then reducing at 10% a year - this does not (I understand) apply to a SCI But do get professional advice - perhaps someone can enlighten me about this please. best wishes Tony ======= 4. A Successful Start-Up Dear Tony, I have just had a look at your latest newsletter, and am very upset that you would tell someone that there is no good news in starting up a business here in France. I am referring to the article on child benefit and the woman who wishes to know more about home based business. You inform her that there are no jobs and no incentive. My partner and I have not found this to be the case at all! My partner is a cabinet maker and when he planned to go to the chamber de metier, we were a bit worried about how complicated it would all be, and we would have to file so much information. However the reality was, that when he did register, he was given lots of support which included a 2 year incentive of tax free work, to help him set up. He was also offered no end of new business grants (although we didn't take any).He now has more work than he can cope with. At the same time I applied to the chambre d'commerce to set myself up as a traiteur. Again I was encouraged by being given market research material to find out if there was a need for that kind of service, which I did and there was, and when I went back for my 2nd meeting they offered to send me on different kinds of training courses for free, including a French language course. In the end this was not the path I took, but the help was there. I realise it is different in each department, but I would just like to pass on the message to Viv that there is some really good news out there, and that she should go and chat to her local department to see what they can offer. === Hello Hannah Thank you for your story - I will show it as an example of success - I could quote scores of failures, but I am fed up with narrating negatives, there seem to be very few positives. Congratulations Tony ======= 5. Rental Guidelines Tony, a direct question if I may; as a most successful renter of villas (sincere congratulations) do you have any outline guidelines you could give me for a large villa I'm considering buying near Narbonne. It's got 8 bedrooms but only 3 bathrooms in a truly beautiful building of 600 sqare meters, has swimming pool, in a village close to shops and all that. About 40 minutes from Caracassone and the same from the Mediterranean. Any guidance would be greatly appreciated. For example should I expect renting occupancy for say 12 or 16 or 20 weeks per year at 70% occupancy ...or what very rough guidelines do you think I might use? Aside from simply advertising on your web site I presume you also fully manage property rentals for people, please confirm... with guideline rates. Really appreciate whatever you can say... without obligation. I have not yet decided to buy but will come to a final decision in next weeks. Thanks, Kevin === Kevin Villa rentals and gite rentals in France have been in decline, significantly, for the last three years. Several big operators completely pulled out of France at the end of last year. Rental prices overall have fallen for the last six years. There is still a very large market - but supply is now outstripping demand. France has dropped from the number 1 tourist country in the world to number 3 for the first time. To get rentals you have to drop prices and offer better services. We have changed completely from a rental service to a direct marketing and advertising service. Our websites are developing into a complete rental and administration service for owners, but it is illegal for anyone apart from an estate agent or a travel agency to handle rental bookings. We do not get involved in property management at all now, nor can we act as a booking agency. For vacation rentals, 8 weeks occupancy would now be the basis I would want to calculate the return on investment. When we started rentals in 1998 we got over 30 weeks average. Many good villas did not even get 8 weeks last year. There are always exceptions and aggressive marketing of a very good value and well positioned villa can change this. But at a cost. For investment in the South of France, I would now only consider a property within walking distance of the Mediterranean or a major tourist attaction. For living I would want a home within cycling distance of the Mediterranean. If you can find an agency to market your property, it is unlikely you will now get any guarantees, their commission is from 25% to 50% of the revenue and you will be responsible for cleaning and laundry etc. Do not take any previous rental income into consideration for a purchase, only what your own current market research proves. Having said all that - the place you describe does sound very attractive, but I take your point about bathrooms. Bonne Chance Tony === Thanks very much for this. Very sober and very much appreciated. I'll revert if/when I buy. I love old properties and I might just buy from liking the property in question so much. I also kinda feel the rental sector will ultimately pick up a touch - and maybe just a touch - now that the French and the Bush-ians are making up... but whether this spreads significantly beyond the American's affair with the Loire Valley that remains to be seen. Perhaps the huge UK property boom and all those UK TV relocation programs have finally tipped the balance - the French market - from one of visitors by visitors to one of owners by visitors. Sorry we (Ireland) beat you guys yesterday! Just a little. Thanks again. Kevin === Kevin You motives for investment seem sound - liking the product and gut-feel based on experience. Important point - do not underestimate the cost of working here on older properties - whatever figure you come up with - treble it. You guys are crap at cricket though Tony === Maybe - ha- but all those apple-stealing Paddies that were shipped off to Botany bay sure know how. Bring on the Ashes. Do you ever recommend properties for purchase? I'd be interested. I live in Monaco so could drive across to view quite easily; 5 hrs approx. Whilst I like old buildings I also am not interested in throwing away money. === So with an Irish grandfather and a Scottish grandmother, I can support everyone. I used to recommend a lot of properties to people - however, in ten years not one person has bought from my recommendations (except me) and some have now increased over 1,000% in value. If you want to invest in Languedoc the only way is for you to get to know the area by being here. I would be happy to meet, and if there is some synergy perhaps I could be useful to you in sniffing out stuff. Languedoc has some good opportunities - I would tend to avoid the Narbonne area and the Nimes areas due to winds (Tramontane and Mistrale) Best wishes Tony ======= 6. A Chinese Curse Dear Tony, Thank you very much for continuing to send me your news letter. Is it my imagination or do I notice a higher proportion of what I would call whingeing pom type letters? Yours sincerely, James === Hello James It is a fact that most mail I receive from people living or who have lived in France relates to the very real problems that they have experienced and most of the letters from people wanting to come to live in France are looking for something that does not exist. I do publish mail from residents who have had positive experiences and from people coming with realistic aspirations. The simple fact is that life in France is very different from life in the UK, USA or Australia. Society is more regulated and controlled in France and there is (as there is everywhere) corruption and bureaucracy. With more people coming to live in France, their expectations will be increasingly disappointed as French society reacts to this. We live in "Interesting Times" ! Tony ======= 7. How to Invest In property In France Hi, I have the resources to buy a French property but realistically, not much time to spend there. I'm therefore looking for a property (in a popular tourist spot?) that would be ideal as an investment opportunity and ideally be managed. Any ideas ? Regards Jeff === Hello Jeff Yes I have lots of ideas and experience. My advice is always that you should only invest in what you know, understand and can control. I also believe that the best person to trust with your money - is yourself. I agree that property for investment should be where the people want to go - so the popular places are best and these will also be the most expensive. How much do you have to invest and what return do you require? Tony === Hi Tony, Many thanks for your email. At the moment I'm thinking of Brittany, not too far from the coast. Without getting involved in a mortgage, I think my maximum budget would be 150,000 Euro, to include the cost of the purchase AND all legal expenses etc. Where do I start ? Regards Jeff === Hi Jeff 150000 euro would leave you about 130000 euro to buy - I agree, close to the coast is the only viable area for investment - in sight of the sea is preferable. My advice is to go there and stop, listen and learn about the area - but - you say you cannot afford the time, you are dependant on another persons opinion - you cannot trust anything an estate agent says as their interest is only selling you what they have on offer. You should not rely on anyone else who is not risking their own capital - they have nothing to lose. You also need local management, cleaning, and key-holding - this costs money, about 20% of any rental income, is usually in illegal "cash" and non deductible - then you have local taxes, tourism taxes, property taxes and income tax (if anything is left) - then you have the advertising and marketing costs, damage insurances, time selling and collecting money, replying to many mails, phone calls etc. For a pure investment opportunity the leaseback plans seem good, but - there are many buts and ifs - the recent massive surge in this business means there is no relevant "track" to study and extrapolations are meaningless. Sorry to be a bit of a "wet blanket" - but you really are the person who should be managing your own money for proeprty investment Perhaps I should set up an "investment club" for rental property in France - I know more about it than just about anyone else. Happy to continue this dialog Tony ======= |
