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Tax | Legal | Finance | Leaseback
Explained | Guaranteed Rental
Insured Guaranteed Rent on buy-to-let properties - A short Guide.
This is a classic property purchase but with the security of an insured guaranteed rental
option, which is ideally suited to an Irish resident property investor. The properties are both
new and pre-owned and are located in areas offering both strong capital appreciation and
good rental returns.
What are the main features?
• You purchase outright a new or refurbished property
• The property is rented typically for a period of 3 years
• There is a Guaranteed INSURED rental return to the owner – gross yield typically 4% to 5%
• Finance of c.80% can be arranged with a French Bank (up to 100% in some cases on an interest-only basis)
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What does ‘Guaranteed Rental’ mean?
You buy the property outright with the option to lease it for a minimum three year period. In return, you are guaranteed a
gross rental yield of between 4% and 5% by a reputable Management Company: the risk being underwritten by a major French
Insurance Company or Bank.
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What are the benefits?
• Low risk - Subject to insurance excesses insured guaranteed rentals of up to 5% per year. The insured rental yield figure is
a minimum guarantee, higher rents are possible and any difference will be paid to you.
• Potential capital appreciation - France is one of the last countries within Western Europe that can offer steady growth and
returns due to its stable economy and strong tourism. After all – it is the most visited country in the world!
• Potential rental increase – At the end of each rental period you are entitled to an increase in rent in line with market
conditions (as a guide rents normally increase in line with the French construction price index)
• Low French tax on rental income - There is an attractive low tax regime for annual rental income of up to €23,000; on
which non - residents pay an effective French income tax rate of just 7%. This French tax paid is deductible against any
Irish tax payable on this rental income.
In the first 5 years French Capital Gains Tax is charged at just 16% - each year thereafter the rate reduces by 1.6% until in
year 16 it has reached zero.
• Easy financing - Subject to some lending criteria a French bank will lend c. 80% of the price (up to 100% in some cases on
an interest-only basis).
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What if I want to retake possession of the property within the lease period?
You, as the landlord, can have a clause inserted in the lease granting you the right to retake possession during the lease
period for ‘professional or family reasons’.
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What if I want to sell my property?
As you own your property outright, you can sell, with vacant possession, at the end of the lease term by providing the required
notice in writing to your tenant.
What are the steps involved in buying a property with an INSURED rent?
Select
Property
-pay 5% |
Preliminary
Contracts |
Mortgage
Arrangement |
Get Tax &
Legal
Guidance |
Final
Contracts -
balance of
personal
contribution |
Build Period
-mortgage
drawdown in
stages |
INSURED
Rent product
put in place |
After Sales
Support |
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Oui Can Do are experienced in all aspects of the purchase finance and rental process and our multi-lingual team are on hand
to help make your French property investment happen.
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