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Why is this French city so popular for property buyers right now?

It’s a vibrant, student city less than an hour from Paris. But there are plenty other reasons why property investors can’t get enough of Tours right now.

Published: 16 September 2019 17:57 CEST
Why is this French city so popular for property buyers right now?
Tour's town hall and Place Jean Jaurès. Photo: Tango7174/Wikipedia

Tours may not be one of France’s most famous or important cities, and it’s perhaps this reason why it’s taken foreign and French investors so long to notice its many assets.

Only 55 minutes away from the French capital by TGV train, the capital of Indre-et-Loire department is known primarily for its wine, the so-called perfection of its spoken French and its beautiful historic centre (UNESCO awarded).

Between 2009 and 2014, all the HR and IT staff for France’ Air Force, Army and Navy relocated to the outskirts of the city, which accounts for 10,000 new homes being built in the last decade to house the ever-changing workforce. 

“Between 2017 and 2018, the number of property purchases in Tours increased by 30 percent,” Cyril Decoux, director of estate agency Avenir Immobilier, told French newspaper Le Monde.

Such is the demand for homes in the central western city of 136,000 inhabitants that per square-metre prices have increased by €200 in just two years.

In the area of Tour-Nord prices are currently at around €3,200/sqm.

According to property experts in the city, Tour’s appeal as a good location for a second home or a buy-to-let investment is bolstered even further by its large pool of student renters (19 percent of the city’s population is enrolled in higher education there).

Property prices have risen as a result of demand but the rental yield still remains high: around 4 percent annually in the good districts.

In the neighbourhood of Fontaines and other southern parts of the city, where house prices are around €1,000/sqm, the annual yield is even higher (7 to 10 percent) if it has good transport links.

In fact, a second tramline is being built in the city, with plans for it to be operational by 2025. Buying along the route from La Riche and Chambray-lès-Tours is the assurance of seeing the value of your property grow over the next few years.

As an added plus, the city known during Roman times as “Caesar’s Hill” is one of only a few places in the region that is still eligible to the PINEL tax exemption.

This measure can entitle a property owner to a tax reduction equal to 12%, 18% or 21% of the cost price of the building, with a maximum limit of € 300,000 depending on whether the buyer undertakes to rent the property for 6, 9 or 12 years.

Ambitious plans to expand operations at Tours airport from 200,000 passengers a year currently to 500,000 by 2035, turning the city into the true gateway to the Loire Castles.
 

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PROPERTY

French property: What is buying ‘en tontine’?

If you're buying property in France, you might be thinking about buying 'en tontine' - this has advantages especially when it comes to France's strict inheritance laws, but can also have tax implications.

Published: 25 March 2024 11:17 CET
French property: What is buying 'en tontine'?

What is it?

The ‘clause de tontine’ sometimes also known as a ‘clause d’accroissement’ is a clause that is inserted into the property deeds when you are buying a house or apartment.

It can only be inserted during the purchase, and cannot be added later.

It’s basically a ‘group purchase’. It’s most commonly used by unmarried couples who are buying together but it can be used by larger groups too – for example a group of friends buying a holiday home together.

You will have to ask a notaire to draw up the tontine clause during the property purchase and it can only be used if 

  • the parties are equally involved in the financing of the purchase
  • the parties involved have a roughly equal life expectancy (for this reason tontine clauses may be rejected if there is a significant difference in age between the purchasers)

What’s the point of it?

The main reason that people use it is to sidestep France’s strict inheritance laws, which assign that a certain portion of every estate must go to children, at the expense of a partner. 

READ ALSO How France’s strict inheritance laws work

For this reason it is particularly used by couples who have children from previous relationships.

On a property with a tontine clause in effect, when one owner dies their share of the property passes in its entirely to the other member/members of the tontine.

This cuts out children from inheritance, but means that a surviving partner is not evicted from their home in favour of the children of the deceased. 

It also has the advantage of making the intentions of the deceased clear, to avoid arguments among heirs after their death.

It should be noted, however, that the tontine clause only takes in the property that it covers – other assets may be subject to French inheritance law so it’s therefore probably wise to arrange a will, to ensure your wishes for your estate are met.

The surviving party can ask a notaire to update the property deeds to show that they are the sole owner, if they want. Be aware there will be a fee, which could reach four figures for the privilege – and it doesn’t actually involve any change to the property title.

Drawbacks

The advantages of the system are clear, especially for blended families, but there are some potential drawbacks too, which mean that anyone considering buying in this way would be well advised to take proper legal advice before they start.

Inheritance tax – while a tontine will help you to avoid restrictions on inheritance, it does not exempt you from inheritance tax. French inheritance tax is structured according to your relationship to the deceased, and people who are neither married nor related to the deceased pay an eye-watering inheritance tax rate of 60 percent.

The only exception to this top rate of inheritance tax is if the property is your main residence and it is valued at under €76,000 – in that case, tax is paid at a rate of 5.8 percent.

Married couples and family members pay a much lower rate or not tax, but if you’re not married to your tontine co-purchaser, be careful that you’re not lining yourself up for a massive tax bill in future years.

Wealth tax – depending on the value of the property, it could tip you over into the ‘wealth tax’ category when you inherit. France’s wealth tax is a real estate based tax and is levied on anyone who has real estate assets (property and land) worth €1.3 million or more.

The calculation includes property held en tontine.

Tax savings – you might hear tontines being advised as a way to limit your French tax liability.

While this used to be true, changes to tax laws means there are no no significant tax advantages to buying this way – the same is true for buying a property via an SCI, which used to represent a tax saving until the law was tightened up.

Disinheriting family members – One side effect of the tontine clause on mixed families is to effectively disinherit any children of the first person to die.

Because the property passed to the survivor, under French law, only their direct descendants – rather than any family by marriage – are entitled to automatic inheritance.

That means that the children of the surviving partner will be entitled to the statutory share of the entire asset (between 25 and 30 percent depending on the number of children), but the children of the first person to die will be entitled to nothing. Obviously you can choose to leave them something in your will, but you can only leave them some or all of the estate which is not automatically given to the children on the survivor.

Divorce/dispute – if the members of the tontine split up or (in the case of friends) fall out, then they can either sell the whole property or agree to buy each other out.

However, if one party refuses to sell, then you have very limited legal options – unlike a standard property purchase a tontine is not regarded as joint ownership, so one partner cannot be forced to sell as part of a divorce procedings, for example.

Basically the tontine can only be ended or changed with the agreement of all parties – so if you can’t agree between yourselves then you may be stuck with it.

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