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Understanding French Property Finance – The Beginners Guide

Britons have always found property investments in France a viable proposition. The French economy has always been stable and has provided good returns on property investment to Britons who invested in a second home over the last decade. Infrastructure growth in terms of better connectivity between the two countries in the form of road networks, ferry routes and French airport access to many budget airlines has also fuelled this interest in French property.

The properties to the South of France in particular offers excellent opportunities for investment given its proximity to the French Riviera and other developments such as the restoration of Mas, construction of family villas, holding of winter sports tournaments and so on. It is also serviced by major budget airlines and the chances of appreciation of capital as well as rental income are bright.

France has been the refreshing exception in the manner they have tackled the mortgage lending issue. Unlike the US and the UK, the French property finance regulations have been strict and do not allow for indiscriminate lending. The borrower cannot have debt payments exceeding a third of his total monthly income and that restriction has ensured that mortgage lending has been tempered and extended only to responsible borrowers. This has enabled them to steer clear of any subprime crisis of the kind seen in the US and the UK.

The French President too is committed to the objective of enabling his countrymen to own homes. Currently the ownership percentage is just 58 and as compared to Britain and Spain is on the lower side. To achieve this objective, he has recommended the following measures:

1) Increasing the week working hours from the current 35.

2) Reducing the tax paid on any inheritance and even exempting spouses from any tax liabilities.

3) Permitting a tax benefit on the interest payment for mortgage loans taken for the first home.

These measures will surely perk up demand for French property and considering that property prices have taken a dip, this is the best time for Britons to make an investment in French property. The housing shortfall along with good GDP growth will fuel demand for good property and you should be able to get a good rental income as well as capital appreciation on the property invested.

Moreover for nonresident property investors, the current low interest rates charged on loans is extremely attractive and the fact that you can make payment or foreclose if you wish to any point of time without attracting any penalties makes it the ideal time for such an investment.

The only care to be taken prior to investment is to get acquainted with French property finance rules properly and to ensure that you engage the services of a mortgage broker who has a French registration Siret number. The broker should also have the Carte Demarchage Bancaire authority issued by the Bank of France to carry out mortgage business in addition to the ORIAS membership as well.

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