Buy-to-let properties - A Short Guide

This is a classic property purchase but with the security of an optional insurance policy, which is ideally suited to a non-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
• You can typically get an insurance policy covering
  • Gaps in tenancy
  • Non-payment of rent
  • Underwriting of the rent (in some cases)
• Finance of c.80% can be arranged with a French Bank. Typically most people borrow c.70% and contribute a 30% personal contribution.

How does the rental work?

You buy the property outright with the option to lease it typically in three year leases. In return, you get a rental return (some of which can be insured) Rental yields before insurance costs are typically between 3% and 5%. Insurance costs up to 0.5% the risk being underwritten by a major French Insurance Company or Bank.

What are the benefits?

• Low risk – If packaged with an insurance policy you have a hands-off investment with limited downside risk.
• Potential capital appreciation Growth over the past 20 years has been a steady rise. Under the new Nicolas Sarkozy led government economic reforms have kindled increased economic growth.
• Potential rental increase – At the end of each rental period you are entitled to an increase in rent in line with market conditions.
• Easy financing - Subject to some lending criteria a French bank will lend c. 80% of the price.

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’.

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.