france off plan property investment and opportunities

8/14/2019 France Off Plan Property Investment and Opportunities

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FRANCEcOUNTRY OVERVIEW

nWorldsmostvisite

dcountry

nSarkozyselection

encouraginginvestment

n FourthhighestpropertypricegrowthinEurope78%

increaseinfveyears

nStrategicheartoEurope


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+ 44 (0) 1273 627 900

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2 OVERVIEW < FRANcE

ExcEpTIONAl pROpERTY pRIcE gROWThFrance has had the ourth highest property price growth in Europe,

rising 78% between 2001 and 20061 . Only Estonia, Spain and the

UK have seen higher growth. Te eect o the Sarkozy governments

economic plans should help maintain strong property growth in

the years to come.

ThE SARkOzY EFFEcTTe election o Nicolas Sarkozy as president in May 2007 opened

a new era in French politics. A keen driver o economic liberal

policies, he is looking to reorm the French economy through a

programme o lower taxation, government reorm and privatisation

policies. One o his key plans is to create a homeowners revolution

with tax breaks to create a nation o property owners . Tis support

or property ownership by the government should push demand in

the market and have a positive eect on property price growth.

hIgh INFRASTRUcTURE INVESTmENT According to Business Monitor International2, France has the

highest rate o residential construction in Europe. It has outlined

plans to invest 20bn under a long-term programme to modernise

transport inrastructure. Tis includes the 9.9bn Lyons to urin

high-speed rail project and the 3.2bn Seine-Nord Europe canal.

Europes astest train the GV will also be extending its

network to Barcelona (due to open in 2009). Such inrastructure

developments are also likely to boost the property market.

ThE WORldS mOST VISITEd cOUNTRYWith over 75 million people visiting every year3 (more that the

countrys entire population), France is, without doubt, the worlds

most popular tourist destination. Few countries can combine the

magnicence o Paris with the ever-ashionable Cte dAzur and

beauty o Provence. Home to world-amous art collections, 10

wine regions and 350 cheeses, its no surprise that it is a must-see

destination or the international tourist.

TAx AdVANTAgES FOR NEW pROpERTYNew developments in France may gain exemption rom local

property tax on or two years an incentive to buying property

here. Add to this a decreasing level o capital gains tax i youhold or between six and 15 years. But big changes are expected

with Sarkozy committed to reducing taxation by 4%4 , which

should benet investors in years to come.

Why invest in France?

CoastlineofNice


3/8OVERVIEW < FRANcE 3

A glObAl EcONOmYFrance is the seventh largest economy in the world5, and

the third largest in Europe ater the UK and Germany. As a

member o G8 group o leading industrialised nations, it has

a signicant inuence on the world economic stage. In 2006,

France was ranked third behind the US and the UK in

levels o oreign direct investment, according to United Nations

Conerence on rade and Development6. Te country has

enjoyed steady growth and the orecast economic liberalisation

now makes it an attractive place or property investment.

ANd A WORld pOlITIcAl plAYERIts economic stability is matched equally with a political one,

which gives you another good reason to invest here. As a ounding

member o the European Union, France is one hal o the key

political partnership o the union, with Germany. It has signicant

world inuence reected through its status as a permanent member

o the United Nations Security Council.

lARgE ExpATRIATE cOmmUNITY

Recent research suggests that over 700,000 British people live inFrance7 , making it one o the largest British expat communities.

Many live in the south in regions such as Provence and Languedoc,

aspiring to a better quality o lie. Teir presence has a positive eect

on the property market as demand or quality yet traditional-style

property is high.

ExcEllENT lOcATIONFrance is in the heart o Europe and is easily connected with most o

western Europe and the wider world. Airlines y rom all major cities

in Europe, and a large and efcient rail network makes travel easy to,and throughout, the country. Tis makes it popular with the tourists

and international business, which has a positive eect on property

demand.

mAjOR EVENTS dESTINATIONFrom the amous our de France that pulls crowds rom around

the world to the Cannes Film Festival, France regularly hosts key

international arts and sports events. In September 2007, the Rugby

Union World Cup is coming to France, with games being held all

over the country, rom Paris and Lens in the north to oulouse andMontpellier in the south. Tese events raise the prole o Frances

dierent regions and can lead to extended or return tourist visits,

increasing regional interest, desire or quality properties, suggesting

both strong rental demand and healthy capital growth.

1. www.oaroertyuie.o/ra.?i=68&i=eu&orer=1&at=182. www.usinessonitor.o/infra/frane.t3. www.unwto.or/fats/en/f/aroeter/unwto_aro07_2_en_eert.f4. news..o.u/1/i/wor/euroe/6357899.st5. siteresoures.woran.or/dATASTATISTIcS/Resoures/gdp_ppp.f6. www.fores.o/oinions/2007/07/09/favreinvestfraneoe_f_0710favre.tf7. www.eatia.o/atua/artie.as?suanne_i=22&story_i=39293.

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property market, as increased salaries generally drive up property

prices. Lower inheritance tax would also encourage investors

to buy into property or the long-term, with positive eects on

market growth.

Increased condence in the government to deliver its policies

might well bring a new period o economic growth and stability.

Sarkozys pro-business plans are opening up the French economy

to global business, as well as encouraging an entrepreneurial streak

in the local market. Tis could combine to increase the number o

new businesses, employment and better salaries. People will want

and be able to aord higher quality properties in the more

desirable areas.

Business owners, swelled by increases in prots rom increased

productivity and tax reductions, would be looking or urther

investment opportunities and with property set to benet.

Tis could cause a signicant increase in capital growth in the

housing market.

Tere is no doubt that the election o Sarkozy has brought a new

mood o optimism. In the rst month alone, business condence

has risen according to Insee, the national statistics agency. With

Sarkozy at the helm, France has the best opportunity in decades

to realise its economic potential. For property investment, now is a

perect time to get in beore the market takes o.

The Sarkozy effectTe election o Nicolas Sarkozy as president in May 2007, combined

with the victory o his UMP party in the parliamentary elections

a month later, marked a new era in French politics. His plans to

rejuvenate the French economy with a strong dose o economic

liberalism have brought a new condence to the French and wider

business world and also to property investors.

His policies are set to spark the renewal o the French economy.

Tese include: tax incentives to increase productivity by encouragingan extension o the 35-hour week; an overall drop in taxation o 4%;

a shit away rom income and inheritance tax towards consumption

and environmental tax; a reduction to the civil service (which

correctly accounts or 45% o government expenditure); and the

privatisation o stakes in key French companies such as EDF, Renault

and Air France1.

But one policy is particularly exciting or property investors. Sarkozy

recently revealed plans to use tax incentives to increase the level o

home ownership in France and create a nation o property owners2

.France has lower property ownership culture than other European

countries with only 57% owning property, compared with 70%

in the UK.

It is clear that Sarkozy has a mandate or positive change, and this is

exciting investors the world over.

So, what could be the eect on the property market? Te tax

incentives on property ownership are likely to have the most direct

eect, encouraging people to invest in property. Tis should driveup demand, which will increase property prices.

Other income tax incentives will also support people to work

longer and gain more income. Tis will have a positive eect on the

presient Nioas Saroy of Frane, eete may 2007

1. news..o.u/1/i/wor/euroe/6357899.st

news.ineenent.o.u/usiness/oent/artie2744877.ee

2. www.uarian.o.u/frane/story/0,,2091815,00.t

TheFrenchRiviera


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+ 44 (0) 1273 627 900

www.reay2invest.o.u

6 OVERVIEW < FRANcE

Tax in France

As with all tax systems, rules in France are complex. We would

suggest you contact a tax specialist to get advice about your

specic investments.

However, here is a guide to what you can expect as a UK

investor purchasing a property or investment purposes.

Please note that with the new presidency, the taxation system

is subject to change.

lOcAl pROpERTY TAx

Tis annual tax imposed on the owner, whether or not the

property is actually occupied by them, or rented out.

Like the British council tax, it is based on a notional rental

value based on the condition, size and location o the property.

It is suggested to allow around 1,000 a year or this tax1.

Tere is also the taxe dhabitation which is imposed on the

occupier o a property. Tereore, i you let the property on a

regular basis, the tax is paid by the tenant.

However, new buildings, additions to existing buildings and

rural conversion may be granted ull exemption rom this tax or

two years.

cApITAl gAINS TAx Tis tax is payable on the sale o land or buildings, and

is the dierence between the sales price and the originalpurchase price2.

A resident o France pays 27%, an EU resident pays 16%, non-

EU residents pay 33.3%3.

INhERITANcE TAx New legislation proposed by Sarkozy will end inheritance tax

between couples, meaning that assets can be let to the living

partner without being taxed4.

Te inheritance allowance o each child has also risen rom50,000 to 150,000, and the gits allowance has also risen.

INcOmE TAx FROm RENTAlS

In rentals, the net income received by a non-resident is subject to

a minimum income tax rate o 25%5.

WEAlTh TAx You only pay tax on assets that are in excess o 760,0006, your

tax specialist will advise you on this.

VAlUE AddEd TAx Tis tax is payable on all goods and services, and is currently

19.6%7.

Uk TAx SpEcIAlISTWith all these taxes, there are a number o exemptions and reductions,

which a tax specialist can advise you on.

I you would like to speak with a UK accountant with regards to

your tax position, you are o course ree to choose who you like,

although we use Drew Hazell at ayler Bradshaw and nd him

highly knowledgeable. His number is 01799 525 407.

1. www.frenentree.o/feroerty/disayArtie.as?Id=690

2. www.frenentree.o/feea/disayArtie.as?Id=1908



5. tt://www.oaroertyuie.o/ountry.?i=68&i=eu&at=4

6. tt://roerty.tiesonine.o.u/to/ife_an_stye/roerty/overseas/artie1966321.ee

7. www.investinfrane.or/Frane/doinbusiness/_2006_taation_en.f

Sunowerfeldsin

Provence



hOTSpOT OVERFlOWA hotspot overow occurs when the demand or a place pushes prices

up to excessive levels. Tis causes investors to look or similar property

in a nearby area where prices are lower. As one o the most desirable

places to live in the world, the south o France has a string o property

hotspots along the Cte dAzur. What you get with the Languedoc is a

real taste o the south o France without paying the earth or it.

hIgh-SpEEd TRAIN lINkFrance is home to one o the worlds astest trains the GV. Its network

stretches across France and a new link is connecting Narbonne with

Barcelona and Paris will open in 2009. With journey times slashed,

the Languedoc region will be even more accessible

to other parts o France and Europe. Not only does

this mean those living in Languedoc can easily

reach major international cities, but that those

living there will consider Languedoc as a place tovisit and even commute rom. Tere is a simple

rule in property: whenever new inrastructure is

built, prices in property rises.

TOURISm cENTRETe Languedoc itsel is a beautiul region o France,

yet is well-connected with the rest o France.

With three international airports at Perpignan,

Carcassonne and oulouse, it is served by budget

airlines making it popular with the internationaltourist. It is home to beautiul cities and attractions,

including Carcassonne with its medieval beauty,

and the thriving market town o Narbonne. Te

Canal de Midi, a Unesco World Heritage Site,

runs through the regions and attracts thousands

o visitors every year. It was recently eatured in the

BBC series Rick Steins French Odyssey, raising its

prole among the British. A popular tourist area will

increase demand or quality property or rental.

Why invest in Languedoc?

1. www.isos.fr

Montpellier

Mende

Avignon

Als

Nmes

Bziers

Narbonne

Carcassonne

Perpignan

INWARd mIgRATIONFrench people are now realising the beauty o the region, and are

looking to want to move here rom the city. Tis story is stronger even

than the enduring tourist market it is not just oreigners, but French

people themselves who are beginning to eye this beautiul corner o

the country. According to a report by IPSOS1 , 34% o French city-

dwellers would like to move to the countryside within the next ve

years. In some departments o the region, the population is already

increasing by 1.3% per annum twice the national average. Tis

cultural trend means that demand or property in areas like Languedoc

will increase, with high potential or capital growth.


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8 OVERVIEW < FRANcE

FAQ for French property purchases

dO I NEEd A VISA TO ENTER FRANcE?No. You do not need a visa to enter France i you are an

EU passport holder.

WhAT NATIONAlITIES cAN bUYIN FRANcE? Any nationality, resident or overseas, can purchase

property in France.

WhAT dOcUmENTATION WIll I NEEd? A valid passport and birth certicate. Please

note that more documentation is required or a

mortgage application.

WhAT mORTgAgES ARE AVAIlAblE?Te ollowing mortgage terms are currently available:

Loan amount up to 80% maximum loan-to-value

erm up to 25 years

Maximum age 75 years

Aordability status-based

(proo o income will be required)

Currency euros.

ARE ThERE AddITIONAl cOSTS WIThRESpEcT TO mY pURchASE pRIcE?Yes. Tere will be a notaire ee o 2.5% o the purchase

price, and mortgage setup and registration ees o 2% o

the purchase price, dependant on the type o mortgage

that you have secured.

dO I hAVE TO bE IN FRANcE TO cOmplETEThE TRANSAcTION?No, Ready2invest will help arrange a power o attorney

to be granted to a third party lawyer enabling them to

act on your behal. Tis should be in the French orm,

and signed in ront o a notaire.

4 dO I NEEd TO FINd A NOTAIRE?No, Ready2invest carry our extensive due diligence on a

number o legal rms in each country. We will recommend

a suitably experienced English-speaking lawyer or you to use.

Tis lawyer will act on your behal and will be independent o

both Ready2invest and the developer.

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BridgeovertheRiverSeineint

heheartofParis

TheLouvre

france off plan property investment and opportunities

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