New Housing Developments in France
New Homes: Leaseback Purchases
New Houses: Long Term Guaranteed Rental
New Homes: Demembrement Investment Properties
There are new developments to suit every type of purchaser from those who want a permanent or second home for entirely their own use, to those who will only want to use it a couple of weeks a year and need some income from it, as well as properties that are specifically for investors. This article focuses on the ways in which investment purchases can be made on new homes in France, and the types of purchase schemes that are available.
New Housing Developments in France
Developments are available all over France in coastal, town, country and ski locations and there are apartments, houses on offer as well as the occasional conversion of a chateau and its outbuildings.
New Homes: Leaseback Purchases
As well as properties to suit those who want full use of their purchase, there is leaseback purchase. This means that you buy the property and are the freeholder of that property and then give a lease to the management or holiday company for a fixed amount of years, normally between 9 and 12. The management company pays you a fixed rent for this period and in many cases will also offer you several weeks use of your property each year. This suits people who have limited holidays as in this way they get their holiday home and a guaranteed rental for when they cant use it.
However if you just want an investment there are other developments offering full year’s fixed rentals. The choice is yours. The management company have to return the property in the same condition as they received it at the end of the rental period.
New Houses: Long Term Guaranteed Rental
There is also guaranteed rental - in this case you buy the property and are the freeholder and then give the property to a management company on a full time basis - they will rent it for you normally to someone who makes the property their main home and guarantee a rent and that you will receive every month - this is for a 3, 6, or 9 year period.
If you require the property back you must give 6 months notice prior to the end of each 3 year period. Properties where this is offered are normally in towns or close by where there is a demand for long term rentals and usually only a small proportion of the development is rented out in this way, so the price of the properties will keep pace with the normal prices in the area, giving you greater potential for capital growth.
New Homes: Demembrement Investment Properties
A third investment possibility has just been released which is ideal for those who no longer trust in pension plans and would rather put their money into property, but at the same time have no need of a second home at present. It has been available in France earlier but is just being offered internationally.
Some new developments in France are now sold in “demembrement”. The ownership of a property is in that instance divided into ”nue propriete” ownership of the walls and the 'usufruit', full use of the property to occupy the property or to rent it out.
The investor who buys within the demembrement scheme, purchases the nue propriete (the walls) for only 50 to 60 % of its current value and the 'Usufruit’ (use of a property) is assigned to a local council, which will either take on the usufruit of the property or delegate it to an institutional rental agency. The purchaser cannot use the property and will not receive any rental, but on the other hand he will not have to pay for the upkeep of the property and will not be liable to income tax as no rent is being paid. The private investor (purchaser of the walls) will automatically have the full ownership after 15 to 20 years whichever is stated in the contract.
Therefore the purchaser has paid only 50/60% of the value and say 15 years later owns 100% of the property which he can now either use or sell. Assuming that there is also a certain amount of capital growth – which historically there always is over a period of so many years, his 50/60% will have grown tremendously and will provide a good pension pot for him.
Frédéric Goulet and Alain Laurier, founder of the Company Perl (Patrimoine, épargne, retraire, logement) and started to work on this concept in 2000, they are now the major players in this field. Their developments are to be found all over France including: Paris, Hyeres, Antibes , le Havre.
New Houses & Developments | Investment Property in France | Leaseback & Rental |
