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PROPERTY

Property in France: A weekly roundup of the latest news and talking points

Whether you're contemplating taking a step on the French property ladder or are already here and need help with renovations, stay up to date with The Local's guide to the latest news around French property.

Published: 7 September 2021 15:40 CEST
Property in France: A weekly roundup of the latest news and talking points
Photo: Damien Meyer/AFP

Buy or rent?

The rise of remote working means that many people no longer need to follow the employment market when they buy, and can consider some of France’s less well-known areas.

A new study by the mortgage brokers Meilleurstaux.com looks at which towns are the best value for money for buying property, and where it would be more economical to rent.

Coming out top as places to buy were Le Mans in northern France, Perpignan down in the south west and Dijon in the east. Smaller cities, they all benefit from relatively low property prices, but in the case of Le Mans, it is just one hour from Paris by train. Le Havre, Limoges, Grenoble, Saint-Etienne and Nîmes also scored well, while Paris, Lyon, Bordeaux, Rennes and Nantes were the towns where buyers were least likely to make a good investment. Find the full study here.

Garden hire

If you’re lucky enough to have a property with a decent sized garden you might be able to make some money in hiring it out.

An increasing number of homeowners are signing up to garden-hire sites to rent out their outdoor spaces to people wanting more Covid-safe venues for weddings, parties and family gatherings.

The owner of one such site, jardins-prive.com, told Le Monde that they had seen a fivefold increase in rentals over the past year as people searched for open-air sites with a more personal feel to hold delayed family celebrations and parties.

Furnished homes

If you’re looking to rent out your French property, be aware of some France-specific rules around the registration of the property and of yourself as a landlord.

That’s in addition to more usual requirements such as paying tax on your rental income, even if you are not resident in France.

And finally, whether you are renting the property furnished or unfurnished makes a difference to the type of lease you can offer.

If you opt for the furnished route, a government decree lays out precisely what you must provide, right down to the hoover and duvet.

Renovation

Fancy adding a swimming pool to your French property? You’re not the only one as 2020 was a bumper year for pool installations, as people denied holidays decided instead to bring a bit of holiday atmosphere to their homes.

However, before you fetch your swimming cap and water wings, there are a few crucial details to know about the rules on installing pools – from planning permission to estimated costs.

Read our complete guide to pool installation for more.

Property trends

If you’ve not quite got enough in the bank to buy somewhere to live, you could look at buying a parking space to rent out instead.

This is really only viable in the big cities, mainly Paris, but investors are tipping car parking spaces as giving good returns on your investment, especially as authorities in Paris further limit on-street parking spaces in the city in an attempt to make commuters switch to greener transport methods.

Dream homes

If you really want to see what’s on the market for the super rich in Paris, the Netflix series L’Agence (or The Parisian Agency in its English title) is for you.

It follows the highly likeable Kretz family, who run a high-end real estate agency in Paris and the surrounding area, selling stunning properties to high net worth individuals for eye-watering price tags.

Perfect for planning exactly how you will spend that family fortune/imaginary lottery win.

Property tip of the week 

It’s probably not a surprise that French property comes with French property taxes, but which ones you will be liable to pay depends on where you live.

There are two French property taxes – taxe foncière is paid by the owner of the property, while taxe d’habitation is paid by the householder. If you own the property you live in, then you pay them both.

However, there are big changes afoot to this system, with taxe d’habitation gradually being phased out. It’s now only in place for higher earners, but it is still payable on second homes, whatever your income bracket.

Taxe foncière, on the other hand, is here to stay and in many areas local authorities – feeling the pinch from the lack of taxe d’habitation cash – are hiking the rates of taxe foncière – here is how the tax is calculated.

Bills for property taxes arrive in the autumn and are due in October and November.

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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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