Cor­po­rate con­nec­tion

Look­ing for a way to make an in­vest­ment prop­erty in Paris work for you? Gabriella Castel­more dis­cov­ered an un­ex­pected so­lu­tion…

French Property News - - Contents -

Let­tings fo­cus: An al­ter­na­tive op­tion for a Paris prop­erty in­vest­ment

This is my sec­ond time liv­ing in Paris. I spent a year here when I was 23, im­me­di­ately af­ter fin­ish­ing my univer­sity stud­ies in Aus­tralia. Hav­ing grown up in the Aus­tralian bush, find­ing my­self liv­ing within sight of the Eif­fel Tower was a life-chang­ing ex­pe­ri­ence. More than any­thing, it was the el­e­gance and so­phis­ti­ca­tion of Paris that I adored – the tree-lined av­enues and boule­vards, the sym­met­ri­cal white-gravel gar­dens and the crowded bistro ter­races, all laid out in the shadow of some of the world’s most ad­mired mon­u­ments.

Hav­ing fin­ished my year as an English teach­ing as­sis­tant, I was heart­bro­ken to leave (in more ways than one but that’s an­other story) and never imag­ined I’d have an op­por­tu­nity to come back. But five years ago, hav­ing spent 20 years mov­ing around the world, I found my­self, ec­stat­i­cally, back in Paris for work.

This time, I was de­ter­mined that a piece of the city should be mine and Project Pur­chase-small-but-per­fectly-formedIn­vest­ment-apart­ment be­gan. Step one was to raise the de­posit. This took four years. Dur­ing this time, I re­searched the mar­ket and had a clear idea of what I wanted, what I could af­ford and where.

Feel­ing down At my first view­ing, how­ever, I got a nasty sur­prise when the es­tate agent in­formed me that if I were to rent my apart­ment out (in­deed the plan), a ceil­ing on the amount I could charge would be im­posed by the mairie (town hall) of the ar­rondisse­ment in which I was buy­ing. The rental limit is fixed per square me­tre and varies from one ar­rondisse­ment to the next. Hmm… I didn’t see that com­ing.

The prob­lem was I didn’t have ac­cess to an in­ter­est-only mort­gage – these are harder to se­cure in France than in the UK – and would be obliged to take a re­pay­ment mort­gage. This meant that the dif­fer­ence be­tween the rental in­come and the monthly pay­ments on a one-bed­room apart­ment in the Gros Cail­lou neigh­bour­hood of the 7th ar­rondisse­ment, where I had my heart set on buy­ing, would be too great for me to cover.

The es­tate agent said that many peo­ple ig­nored the ceil­ing set by the au­thor­i­ties and that, while land­lords weren’t au­to­mat­i­cally tracked and fined if found guilty of flout­ing it, ran­dom checks were on the in­crease. Re­gard­less, I had no de­sire to break the law.

Bounc­ing back No sooner did my heart sink, how­ever, than it bounced back up again. The es­tate agent ex­plained that there was a way around the rental ceil­ing – to rent my apart­ment out as a fur­nished cor­po­rate let to a large com­pany who would use it to ac­com­mo­date ex­ec­u­tives com­ing to Paris to work for a year or two.

I im­me­di­ately liked the idea be­cause the com­pany that hired me to work in Paris had pro­vided the ser­vices of a re­lo­ca­tion agency which, in turn, had worked with a cor­po­rate let­tings agency to find me an apart­ment to rent. So I knew the process.

The com­ing months were a roller­coaster of emo­tions. At the age of 52 I was de­lighted to se­cure a fixed-rate mort­gage for the en­tire term of the loan… 20 years! I had an idea of the in­ter­est rate at the out­set and it came in at the end at 1.2%. Happy days.

Highs and lows The un­ex­pected chal­lenge was to ac­tu­ally find an apart­ment. I came to learn that Paris is a unique mar­ket, mainly be­cause most peo­ple want to live on the up­per floors of an apart­ment build­ing, i.e. the fifth, sixth or sev­enth floors, in or­der to get light, but only 25%-30% of build­ings in Paris have lifts.

With in­ter­est rates so low, de­mand is ex­tremely high, while sup­ply is just as low. In

The rent I pay on the apart­ment I live in is only a few hun­dred eu­ros more than the rent I get on my in­vest­ment apart­ment, but it’s twice the size

ad­di­tion, the beau­ti­ful fa­cades of the Hauss­man­nian build­ings be­lie many a rathole, with ren­o­vated apart­ments be­ing the ex­cep­tion. That said, with de­mand be­ing what it was, this was ir­rel­e­vant. Prices were set by the square me­tre, pretty much re­gard­less of the con­di­tion of the apart­ment.

What took me a lit­tle longer to learn was what I needed to do to ac­tu­ally se­cure an apart­ment once I fi­nally found one that I liked. De­mand is so high that apart­ments were be­ing sold be­fore they were ad­ver­tised.

To get in on this game, I viewed apart­ments I wasn’t in­ter­ested in, sim­ply to meet (and charm) the agents, con­vince them that I was a cred­i­ble buyer, and tell them what I was look­ing for. My strat­egy paid off. Some 11 months into my search I got a call from an agent I’d al­ready met and built a rap­port with, who said she had a “bi­jou” for me to see.

The fu­ture’s bright In­deed she did. It was 32.5m2, in the soughtafter Gros Cail­lou neigh­bour­hood be­tween the Eif­fel Tower and Les In­valides. It was on the sev­enth and top floor, had two lifts, over­looked a court­yard so was quiet and, for good mea­sure, had a view of the Arc de Tri­om­phe from the bath­room! I knew if I hes­i­tated or tried to ne­go­ti­ate I’d lose it so af­ter 30 min­utes I of­fered the ask­ing price.

Four months later I had the keys; I had it freshly painted and fur­nished it with good qual­ity pieces brought over from my favourite Lon­don shops like Lom­bok, OKA and the White Com­pany by a driver from Any­ whose prices were very rea­son­able.

I con­tacted the re­lo­ca­tion agency which had helped me find the apart­ment I live in to­day, and they gave me the con­tacts of some cor­po­rate let­tings agen­cies they knew and trusted. Not only did they find me a ten­ant, they also gave me ex­cel­lent ad­vice and con­tacts to help min­imise the tax I’d pay on the rental in­come.

The apart­ment was rented out to an ex­ec­u­tive who was mov­ing to Paris from Ber­lin for a cou­ple of years with a phar­ma­ceu­ti­cal multi­na­tional. As the com­pany pays the rent, the risk of find­ing my­self in a sit­u­a­tion where the ten­ant stops pay­ing and won’t leave the apart­ment is pretty much non-ex­is­tent – a good thing in France where the law is highly pro­tec­tive of the ten­ant.

From start to fin­ish, the project took 14 months. The rent I pay on the apart­ment I live in (where the rent is, of course, fixed by the lo­cal town hall) is only a few hun­dred eu­ros more than the rent I get on my in­vest­ment apart­ment, but it’s twice the size. So I can jus­tify not liv­ing in the 32.5m2 my­self!

In terms of the fu­ture, never know­ing what it might hold of course, at best I’ll have a beau­ti­ful pied-à-terre in Paris (as my dream is to re­tire in Provence) and at worst, I’ll hold an in­vest­ment in one of the world’s sought-af­ter sta­ble prop­erty mar­kets un­til I re­tire.

She fur­nished it with qual­ity pieces from her favourite Lon­don stores

Gabriella of­fered the ask­ing price just 30 min­utes af­ter see­ing the apart­ment

The apart­ment is on the top floor with lifts and views

An ex­ec­u­tive from Ber­lin now rents the apart­ment as a cor­po­rate let

Paris is a unique mar­ket

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