| At
first glance it is easy to see why France is one of Europe's
top tourist attractions, from the elegance and culture of
Paris to the glitz and glamor of St Tropez and Nice, and the
rural beauty of Province; France really does have something
for everyone. The landscape is ever changing with the flat
lands and rolling hills of the North and West to the snow-capped
mountains of the Pyrenees in the South and the ever popular
Alps in the East.
France is the largest western European nation,
and offers one of the greatest variations in cultures, which
adds to the beauty and attraction of the area. It is easy
to see why the country continues to go from strength to strength,
and remains at the forefront of the expansion of the European
Community.
In recent times we have seen a major change
in the business community of France, as the state continues
to loosen the once tight grip and embrace the free market
culture so prevalent in Europe. While agriculture still plays
a major part in the employment landscape of the country, the
flourishing wine industry grows ever stronger as the years
progress.
Indeed, the Champagne region of the country
is responsible for the ever popular party drink of the same
name, with recent a European directive stating that Champagne
must be produced in the Champagne region of the country, leading
to an increase in retail activity.
The country has excellent transportation links
with mainland Europe, and borders Belgium, Luxembourg, Switzerland,
Italy and Spain with the UK only a short hop across the English
Channel.
Property Market
In a country where it is still the norm to
rent rather than purchase property outright, the property
market has been in a general upward trend for some time. However
the sector did suffer from a lack of development and inward
investment in the 1990s, as the country sought to reposition
itself at the forefront of the expansion of Europe. Now back
on track, the French residential property market has been
growing at about 4% a year since 2001.
Unlike the UK, which has gone through many
boom and bust scenarios in the property sector, the French
market is more stable due to the preference for long term
rental agreements, rather than an outright purchase. Currently
the rental market is producing net returns in the region of
8% - 10% (depending on regional variations) for prime properties,
with the potential for sustained long term capital growth.
Overseas property investors have been targeting
the inner city and large town areas, where there is a constant
demand for business rented accommodation. This has produced
a relatively low risk market, due to the constant demand.
That is not to say that the French villages and country retreats
have not benefited, with many foreign investors looking for
second homes and holiday homes in this vibrant country.
There is also a valuable tax break in the
French property market, with off plan, new build properties
able to claim "Residence de Tourisme" status. This
allows a buyer to purchase a property freehold without a mortgage,
then lease back to a third party (developer or rental company)
for a set period (standard length 9 years) at a fixed rent.
At the end of the agreement, the property
is returned to the buyer in prime condition. In return for
this investment, the French Government has agreed to return
the VAT element of the purchase price, currently 19.6%, offering
a massive incentive to would be investors.
After taking into account the attractive tax
breaks, the varied cultures or the country, and proximity
to central Europe it is easy to see why the French property
market is so strong. Compared to France, the UK buy-to-let
market is in its infancy.
Around 25% of the French property market (equating
to around 5 million homes, against 130,000 properties on the
UK) are privately owned, but rented out on fixed tenancy agreements.
The average rental agreement in France is 3 years, which explains
why the market remains more constant, and less volatile than
the UK property market.
Why Invest In France ?
If you are seeking a holiday hideaway, or
a long term overseas investment, France is a area which you
should definitely consider. The country is within a couple
of hours drive of a variety of European counter-parts, offers
a vast array of climates and cultures together with a favorable
investment environment.
The type of property for sale in France includes
gites, apartments, country cottages and conversions.The residential
property market has benefited from a number of factors, including
the influx of both US and UK investors (inspired by such TV
programmes such as "A Year in Provence"), and the
vast array of properties styles available.
There is also the deeply embedded rental culture,
which has sheltered the French property market from excessive
price swings seen in other European countries such as the
UK. As more property is bought on a longer term basis than
most areas of Europe, there is a constant demand for both
major city and regional properties, ensuring a fairly stable
market place.
Whether you are looking for the glitz and
glamor of Cannes, the culture and beauty of Paris, the quiet
life of the countryside, or Skiing in the Alps, France has
plenty to offer. As the French industrial sector continues
to open up, and take in the Free Market culture of Europe,
it is inevitable that overseas investment will continue to
increase.
A perfect place to relax and escape from the
stresses and strains of life, France is fast becoming one
of the most popular locations for a second home.
In summary the main reasons why one should
invest into French property are given below :-
* Stable property market; * Favorable investment
environment with attractive tax breaks; * Within a short distance
of the main countries of Europe; * Ever increasing inward
and overseas investment; * A vast array of climates and cultures;
* Long term residential property price growth of 4% p.a.;
* Net Rental yields in the region of 8% - 10% ; * Capital
gains tax on property at 16% against historical figure of
33%.
A major power house of the European Community,
France is the World's most visited country and it is easy
to see why.
Outlook
As the French government continue to increase
spending on the transportation network, and encourage overseas
investment, the French residential housing market seems set
for another sustained period of constant growth. A great escape
from the ever more volatile boom and bust nature of the UK
economy where, in direct comparison to France, the trend is
toward house buying rather than the embedded rental culture
of France.
With the French authorities set to continue
the attractive tax breaks for the foreseeable future (which
has seen capital gains tax on properties fall from 33% to
16%), the potential for capital growth seems encouraging.
Net rental income is in the region of 8% to 10%, depending
on the region and style of property, offering a steady return.
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