A lovely little place in the Latin Quarter
(This article first appeared in the Daily Mail, August 1, 2003)
As our property market cools, many investors are turning to Paris
for a better deal, reports Nigel Lewis
The British buy-to-let market has been one of the great success
stories of recent times. Ever since 1996, when lenders started to
offer affordable buy-to-let mortgages, the number of landlords has
been increasing. Today it stands at more than 400,000.
But the market is no longer a goldmine. The recent hike in house
prices, coupled with shrinking rents, means that yields are lower
than they were. Landlords once raked in 15 per cent returns, but
today that figure has slipped dramatically. So investors are starting
to look for more lucrative buy-to-let properties. In Europe, Paris
is fast becoming one of the most popular places to invest. It's reasonably
close, and property is cheap. Furthermore, there's a chronic shortage
of rental property - so landlords are almost guaranteed a tenant.
'Up to 50 people queue outside a property advertised for rent,' says
Marie-Pierre Saint-Martin of London Paris Dream Home Ltd.
But there are some flies in the ointment. Buyers will find France,
and Paris in particular, a long-term investment - expect to own your
buy-to-let investment for at least ten years - but the potential
profits are good. French property laws protect the tenant more than
the landlord. That's because most people in France do not buy their
own home until they are well into their 30s. These laws mean that
even if tenants default on the rent, it's difficult to get them out.
'You cannot evict someone from a French property during the winter,'
says Monique Fauchon, of London-based French property law firm Fauchon
Levy. 'If someone stops paying their rent in September, you won't
be able to get them out until March.'
Also, unfurnished properties must be let out for a minimum of three
years and the rent is monitored and regulated. Furthermore, tenants
can leave a flat whenever they like and a lease can be passed to
a son or other relative if the tenant dies.
Also, if your flat doesn't come up to scratch, the tenant can apply
to have the rent reduced.
But if a flat is rented fully furnished, leased to a company for
its employees, or used for holiday lets, then the rules do not apply.
The process of buying property in Paris is expensive - taxes, fees
and moving costs can be as much as 15 per cent of a house's value.
However, stamp duty in France, once 10 per cent, has dropped to 7
per cent and is likely to fall again next year to 5 per cent - so
there is potential for a property boom in the near future.
WHERE AND WHAT TO BUY
The city is divided into 20 arrondissements (or areas) starting
at the centre near the Louvre and working clockwise, outwards. The
most expensive are the Ile de Saint Louis in the middle of the Seine,
and Place Des Vosges, where even a small flat will cost £400,000.
More reasonably priced areas, which are popular with British buy-to-let
investors, include the 6th arrondissement around St Germain Des Pres,
as well as the next two along, the 7th and 8th. But the most sought-after
is Le Marais in the 4th arrondissement. It's quite pricey, but there
are plenty of flats for sale that would make great buy-to-let properties.
One up-and-coming area is the Gare du Nord station area in the 9th
and 10th arrondissements which, similar to King's Cross in London,
is trying to transform itself from sleazy to chic.
But studios are in demand almost anywhere in Paris by students who
normally have their rent paid by their parents. They are relatively
cheap - even large ones can cost as little as £60,000 in the
heart of the city. Rents for such properties can be as much as £400
per month.
Family flats are also highly sought after but harder to find, and
can cost more than £150,000, for which you can expect an income
of between £700 and £900 a month, depending on the location.
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