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PROPERTY

French property roundup: Tax hikes and up-and-coming areas

From tax rises to the best areas for investment, here's our weekly roundup of the latest news on French property.

Published: 19 October 2021 17:28 CEST
Updated: 20 October 2021 08:40 CEST
French property roundup
Photo: Valery Hache/AFP

Low interest rates

Interest rates on real estate loans have reached historically low levels – the lowest since 1949 according to the Observatoire crédit logement-CSA – suggesting that now is the time to buy if you’re relying on a loan or mortgage.

“We can reach rates below 0.90 percent, including on 25 year loans,” added Maël Bernier, spokesperson for the online broker Meilleurtaux.com. While that may not be available to all buyers, rates are certainly low contributing to a busy time in the housing market in France.

Metro extension

If you’re looking for property in Paris, the extension of one Metro line has just made six areas a lot more accessible.

Property prices in Paris tend to fall the further out you get into the suburbs, but what makes a major difference to the daily commute is whether you can take the Metro or are condemned to the frequently slow, crowded and unreliable RER trains that serve the outer suburbs.

The extension of a Metro line further out into the suburbs is therefore a big deal, and the completion of work on Line 13 has opened up Les Cortilles, Les Agnettes, Gabriel-Péri, Mairie-de-Clichy, Porte-de-Clichy and Brochant stations in north west Paris, raising property prices in the area. The extension of Line 11 into north east Paris is scheduled for completion next year.

The below infographic from Le Parisien shows how property prices fall the further out of central Paris you get.

Tax reminder 

This week sees the deadline for the payment of the property owners’ tax, taxe foncière. Many people will have seen an increase in their bills and unfortunately this is part of a long-term trend that has seen property taxes skyrocket in recent years.

Airbnb rules

If you hope to make a little extra money by renting out your French property on Airbnb, you may need to check the rules first. France has introduced some quite strict controls on renting out property, even if it’s just for a few weeks a year, and rules are set by local authorities, meaning how strict it is depends on where you are.

In bad news for people hoping to rent out their property during the Olympics, Paris has the strictest controls after City Hall fought a long battle with the online rental platform.

READ ALSO The rules on renting your French property on Airbnb

Let’s move to . . . Morvan

If you’re really looking to get away from it all, France is spoiled for choice for remote and beautiful areas.

With a population roughly the same as the UK but a land mass three times bigger some parts of France, especially the central and eastern areas, are virtually empty.

If you love wilderness, check out Morvan, it’s actually a listed natural park, but even many French people have never heard of it. In the eastern part of France it has forests, lakes, hamlets, hiking trails and even the odd château.

We asked French writer Anne Brivet, whose family live in Morvan, to explain why it’s so good.

Hidden costs

But before you get too tempted by apparently bargain properties, we suggest checking out the extra costs that come with buying and owning French properties.

From notaire fees to taxes, there are more hidden extras than you might think.

READ ALSO Retiring to France – things you need to consider

French property vocab

This week’s word will take your right through from DIY to home décor – le coffre. Coffre is usually translated as a box, chest or trunk but it crops up in a lot of property-related situations. If you’re involved in a renovation you might need un coffre de chantier – toolbox – while if you’re decorating you might want un coffre à jouet (toy box) un lit coffre (a bed with storage space) or un coffre de jardin for outdoor storage.

Property tip of the week 

Shutters are your friend. Shutters (les volets) are ubiquitous in France, but for people who have grown up in countries that don’t use them it can seem counter-intuitive to close up the shutters on a hot day.

In fact, shutters keep your property cosy in the winter and dramatically cut the heat if you keep them closed during the hottest part of the day in the summer.

So to stay comfortable as well as cut your heating/electric fan bills, make sure you use your shutters and – if your property does not have them – get them installed as quickly as possible.

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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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