How to Buy Real Estate in France?

When buying Real Estate in France, there is important information to consider before purchasing a property in France. There are many benefits in investing and buying property in France such as low interest rates, high rental yields, and continual growth. There are ways to even invest in real estate digitally, through Real Estate Investment Trusts or SCPI companies. SCPI may be an easier route for you, whereas you do not need to qualify for a mortgage nor pay multiple expenses in purchasing a French Property. 

Whether you are investing in SCPI, Residential, or Commercial Direct Real Estate; Location is a key factor.

Whether you are a local or an international investor or looking to buy a home for yourself to live, different locations in France vary between zip codes if interested in a good return on investment, cash flow, long term appreciation, capital, and high rental yields. 

Before you choose to buy a property in France, it is important to consider which area you would like to invest in or live in. If you are interested in investing in a property, it is beneficial to consider the population of a region: Are there many students or a university nearby? Is the property located in a city or suburbs? Are there many workers/businesses in the zipcode for potential tenants for your investment? 

If you are looking to invest in Commercial Real Estate, you can consider: for purchasing an office, would a city be preferred for the benefit of a business? Would a student residence generate significant cash flow nearby local Universities? If you decide on a location in the suburbs, where there remains a low population, it probably isn’t the best route if you're planning on investing. These are only a few of the characteristics you shall consider when brainstorming about where to buy a property in France.

If you are investing in Residential French Property, Do you need a mortgage? Or, as an easier alternative, you can invest in SCPI (known as French REITs).  

Before buying a property, you may want to consider applying for a mortgage or pre-applying for a mortgage if you haven’t already (unless you are buying a property upfront with cash). To obtain a mortgage in France, you need to show a Credit Company or Bank your proof of income, identification, documentation of Civilization, along with your residency, and recent tax statements. Unfortunately, you need to have income statements from France in order to qualify for a mortgage in France (at least two years with a permanent work contract). This can be the downside to foreigners who wish to purchase property in France. On the positive note, it is legal for expats to own and buy French Real Estate. 

If you are unable to qualify for a french mortgage, you can easily invest in SCPI companies and  Rock N Data can help you with this project. Instead, of dealing with the difficult mortgage requirements. Investing in SCPI companies can be an easier route for you in terms of access to the French Real Estate Market. To invest in SCPI, you don’t need to apply for a mortgage. You can invest in property from the comfort of your home and still generate a positive cash flow. 

The Financials for a French Residential Property.  

Let’s say you decided on your location, successfully obtained a mortgage, and are ready to close the deal. The purchase cost of any French Real Estate includes the Agency fees (if you are buying from an agency), the notarire’s fee, and the property’s price. A notaire is different from notaries in the USA or other countries, a notaire is a French Lawyer trained to specialize in property law in France. Typically, Notaire’s fees are about 7-10% of the property’s purchase price covering the ownership costs and taxes payable for an older property (not including the agency’s fees). Whether you are buying, selling, or inheriting property; notaire’s will conduct all the contracts and financials in these instances. When in the final stages of buying or investing in a French property, it is crucial to have all the financials and team regulated. For investing and buying a home for yourself, you should consider having a team including: an Accountant, Tax Lawyer, Notaire, and Property Manager to be prepared and ready for the long term. 

What are the advantages in investing in SCPI and French Real Estate?

Investing in French Real Estate has various advantages in the long term. In general, Real Estate investing has been known to create tax benefits due to the fact investors provide housing to the economy, therefore many governments around the world are known to provide tax benefits. Due to the fact, Taxes are one of the largest expenses in the world. However, if you are looking to sell your French property, you may be subject to capital tax gains depending on your residency, the capital gain’s size, and there are exemptions. If you are a French resident, the tax rate is approximately 32.6%. For capital gains, the tax rate is about 19% with an additional 17.2% social charges. For non-residents, it is the same tax rate, but instead of the social security tax rate, they would pay the solidarity tax of 7.5%. It is recommended for non-residents to consult with a tax agent when selling a french property. 

Instead, of dealing with the complications of physical property, dealing with property repairs/maintenance, complications with tenants, and difficult mortgage requirements. Investing in SCPI companies can be an easier route for you in terms of investing in Real Estate. If you are interested in investing long term in SCPI companies, the tax rate varies between 0.50% to 1.50%. For example, It is possible to invest at least 500 euros and generate a significant return on your investment with Real Estate Investment Trusts, rather than paying full price for an investment property. Rock N Data offers investing services to local investors around Europe and Canada, where you can benefit from the advantages of investing in SCPI. 

If you're interested, feel free to contact us and learn more about what we can do for you. 

Published in : Commercial Real Estate   By : Rock & DATA   On : May 20, 2022

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