The Daily Telegraph - Saturday - Money
How to build a buy-to-let empire in France
Prices are lower than in Britain and it is also cheaper to get a loan, reports Ruth Bloomfield
Imagine buying an investment property for well below the average UK house price and paying a mortgage interest rate of 3pc- 4pc, rather than the 6pc or so charged by British banks.
Then imagine being a landlord in a system that is designed to promote long-term stability, and in a market where house prices are growing.
This is not a fantasy world. It is what you get for being a landlord in France.
While soaring interest rates and increased regulation is strangling the British buy- to-let model, things are very different across the Channel. Landlords can still make a reasonable income from their properties, capital growth is a real possibility and, by UK standards, regulation is light-touch.
Here, Telegraph Money talks to the investors who have ditched Britain to build a French buy-to-let empire – and how you could, too.
‘YOU HAVE TO DO YOUR HOMEWORK’
Moving to France was a long- term dream for Barbara and Peter Calder, and once their two children had grown up they decided to pursue it.
In 2019, Barbara, a retired special needs teacher, and Peter, who worked in supply chain logistics, exchanged their life in the East Sussex village of High Hurstwood for a home in L’Hermenault, a village in the Vendée, in the west of France.
They rented out their UK house and once settled in France took on a French rental property, enlisting the help of estate agent Leggett.
Aware there would not be huge demand for rental homes in their small village, they bought in nearby town, La Châtaigneraie. Their strategy was to keep entry costs low. They chose a rundown two-bedroom, three-storey period townhouse, which had been languishing on the market for the past three years and had an asking price of € 80,000 (£ 70,000). Its owners, a divorced British couple, were keen enough to get rid of it to accept an offer of €25,500.
The Calders then spent 18 months carrying out a € 36,000 renovation, bringing their total investment to €61,500. “I had it valued before it was rented out, and an estate agent said it was worth €100,000,” says Peter.
In January 2022 Peter, 66, and Barbara, 72, found a tenant – a single mother with two children –who pays them €500 per month in rent.
Once their estate agent fees (€500 per year), property taxes (circa €300 per year) and maintenance costs are taken into account, this leaves the couple with a solid 8pc annual yield. “You have to do your homework,” says Peter.
“Renovating the house was obviously a lot of hard work, it was not quick or easy, but buying at the price we did means that the numbers do stack up.”
NAVIGATING FRENCH RENTING RULES
Renting rules in France were foreign to Barbara and Peter. Leases, for example, vary depending on whether a property is rented furnished or unfurnished. Furnished homes are usually let with a one-year lease, but unfurnished homes – like the Calder’s house – come with an automatic three-year lease. Landlords cannot terminate leases early, and must give six months’ notice if they want to sell, but tenants can move on with a month’s notice.
If a tenant defaults on rent there are legal mechanisms to allow landlords to evict them, but the process may be slowed down by the timing. “Under the French system you can’t evict someone over the winter period,” says Peter.
Just like their British counterparts, French landlords also face a degree of red tape. Before a property is rented out it must be surveyed. Its gas and electrical systems will be checked, and the surveyor will look out for the presence of dangers such as asbestos, termites and lead paint.
More recently, Peter and Barbara also had to get the house’s energy efficiency rated. The newly renovated house met the required standard. But, says Peter, some landlords have not been so fortunate and have started selling off older properties – a scenario that will be familiar to many British landlords.
When it came to buying the property, Peter and Barbara bought it in cash. However, experts say British buyers interested in following their example will be considered for a mortgage by British banks.
Matthieu Cany, co-founder and managing director of Sextant Properties, a French estate agent that specialises in working with international clients, says French mortgages are usually fixed and long term, lasting anything from 10 years ( with interest rates of around 3.4pc) to 25 years (4.2pc).
“The only problem is the language barrier, because most of them don’t
‘Renovating it was a lot of hard work, not quick or easy, but at the price we bought, the numbers do stack up’