Property in Perpignan
France has been increasing in popularity with foreign property buyers over the last few years. The country’s economy is the fastest expanding of any of the larger EU nations, and tax cuts and low interest rates have increased their purchasing power. French property is a smart investment proposal, as in most areas of France real estate prices are rising more quickly than inflation. There is an acute shortage of rental properties, especially in the popular areas on the west and south coasts.
Since worries about the level of house prices in the UK have begun to emerge, France has become the first choice for buyers looking for second homes because of its cheaper prices and good transport communication links to the rest of the world.
The buy to let investors are currently enjoying a very high guaranteed rental return and strong capital growth, with the market expected to grow by 20% between 2002 and 2007 and reach a volume of 432,500 units (compared to 130,000 in the UK). It currently offers one of the highest tenant pools in Europe. The basic unfurnished residential lease in France is 3 years renewable, so that tenants stay for much longer than in Britain. Whilst property prices continue to rise steadily, the demand for quality properties remains high attributing to good capital gains.
Off plan and new build properties have been granted a “Residence de Tourisme” status, which means that a purchaser can buy the freehold of a property (with or without a mortgage) and then lease it back to the developer or a rentals company for a pre-determined period (usually around 9 years) at a fixed rental.
At the end of the lease the property will be returned to the owner in perfect condition. The French Government has given tax breaks to developers in order to encourage them to build “Residence de Tourisme” properties. This discount or VAT refund is passed on to purchasers to act as an incentive, and a great advantage is that the Government gives you back the VAT paid on a new development which is currently 19.6% of the price.
