About France

Living There

France is full of delights for every taste. Whether you’re enjoying the rustic wine cellars of the beautiful Loire Valley or meandering though the bustling boulevards of Paris, you’ll find plenty to take your breath away. Paris itself, provides a sensory treat with the countless historical attractions giving way to the fervor of the city’s nightlife when the sun goes down. France enjoys mild winters and long hot summers along the Mediterranean shores in the South. Whilst the rest of the country is a bit cooler, it still boasts warm summer temperatures above that of the UK.

Economy

A member of the G8 group of leading industrialised countries, France is ranked as the fifth-largest economy in the world by nominal GDP. Tourism is a mainstay of the French economy and, with 79.1 million foreign tourists in 2006, France is ranked as the first tourist destination in the world ahead of Spain and the United States. France is also the leading agricultural producer and exporter in Europe. The government is currently implementing wide-ranging reforms to boost its economy following a slowing of GDP growth in recent years.

Politics

France is a semi-presidential democratic republic whereby the President is head of state who, in turn, appoints the Prime Minister as head of the government in a multi-party system. Executive power is exercised by the government where as legislative power is vested in the government, the Senate, and the National Assembly.

Buying Process

There are no restrictions to foreign property ownership in France although the buying process in France differs from many other European countries. There are a number of procedures you must undergo in order to purchase a property in between signing a provisional contract (which usually requires a deposit of 10%) and the signing of the Acte de vente (final contract).

Investment Facts and Guide

The French government remains keen to attract foreign investment in the property market and has recently halved the amount of Capital Gains Tax payable on the realisation of profit from the resale of property. They have also created the French Leaseback scheme which allows foreign buyers to own freehold property in France outright, purchasing it at a discount to market value and generating a guaranteed return from it whilst retaining the right to occasional personal use of the property. This fact, coupled with strong rental returns continue to make France ripe for property investment.

Price per Square Foot

The average price of apartments rose to £206 (€279) per sq. ft. in 2006, 96% higher than their 2000 level, while detached house prices rose by 71.6% to £149 (€201) per sq. ft. Housing markets in the South West were France’s weakest, although this varies considerably between provincial capitals.
In Paris, prices per sq. ft. are now high by international levels – apartments in Paris’ Rive Gauche district now stand at £488 (€659) per sq. ft., compared with £371 (€502) in the East.

Rental Yields

Rental yields in Paris have dropped as rents have become slightly lower accompanied by a rise in house prices. Larger apartments have lower yields, dropping up to 3.42%, while 30 sq. m. apartments have yields of about 4.37%.

Mortgages

Foreign nationals can often obtain 100% finance and with interest rates capped at 4%, a French mortgage is a very attractive option for many investors. Fixed rate mortgages are also available, although not for short terms and they are generally only available for between 10 and 20 years. The maximum term for a French mortgage is 20 years (or up to the age of 70, whichever is sooner). Some developers of new build and off-plan developments offer installment plans over 12 to 60 months and the charges applicable vary according to the developer. The Government’s Leaseback system offers purchase with guaranteed rental over many years and yields of some 5.5%, more than covering the cost of mortgage interest, as well as allowing a full VAT refund of 19.6%.

Rental Income Tax

Revenue Fonciere is charged on rental income and is levied at a rate of 25%.

Capital Gains Tax

Impot sur le plus-values (Capital Gains Tax) is not payable on property sold if it has been your principal residence. If the property is not your principal residence, however, tax will be levied at 16% unless you have owned the property for more than 15 years.