The kings of the second home are… the French!
France has 3 million dwellings “exclusively used for weekends, holidays or leisure”, according to the INSEE (the French institute for statistics and economic investigation). It is a world record on the real estate market and is twelve times more than Germany!
Inherited from the Ancien Regime in France (from the 15th to the 18th century), it has become a common activity to have one foot in Paris and the other in the countryside. While there were around 250,000 second homes in France before the Second World War, the “Glorious Thirty” democratised the system leading to around 1.7 million second homes by 1975. Then came the new boom of the TGV (high-speed train) which dramatically reduced journey times, the 35 hour working week, which extended weekends and the Euro which opened up the market. As for the British, they’ve returned to conquer Normandy, and the Perigord.
Costs outweigh the benefits
Second homes contribute to 40,000 jobs in BTP (public building works s) for building and maintenance; 30,800 in commerce and services in current expenses; 73,000 jobs in local shops and services because of owners and tenants spending during their trips; 700 jobs in the rental business. Furthermore, these homes are resources for local finances:
– €402 per house for housing tax
– €629 per house for council tax
– €123 fee for garbage collection
However, the costs outweigh the benefits for the investment put in by the owner. This largeky untapped market and theoretically represents “more than 70% of the supply of tourist beds in France” stipulates Atout France, a French tourist development agency.
Paris has 80,000 second homes
The current tendency reveals that more and more second homes belong to foreigners (at least 260,000). A new French government project = plans a tax equivalent to 20% of the rental value for those non-resident owners in France. Even if they pay local taxes, British people “do not pay direct taxes that contribute to the financing in national public services” stresses the bill.
What about the French Leaseback?
From the moment you sign for a Leaseback, you become the freehold owner of a furnished property. You will get a fixed rent normally linked to the inflation rate. Therefore, every year you will see your rent rising according to the construction cost (INSEE Index of Construction Cost). The rent will be paid by the property management company whether it is occupied or not. This is the reason why the percentage can only be up to 5% of the cost of the property. If you decide to rent the property yourself, you could easily manage to make an 8% return on average but you may not be able to rent it all year. Furthermore you will have to deal with all repairs, refurbishment, bills, taxes… Commonly used as a second home on the French market, the purchase of a Leaseback residence often includes a number of weeks of occupancy per year. There are no extra costs to you as they’re all paid by the company for the length of the Leaseback contract.