In January, President Macron made changes to the Wealth Tax in a bid to revive the dormant market, attract investors and boost the economy. Tim Swannie, Director of the French property buyer’s agent Home Hunts, explains why this is proving to be a success and comments on the increasing demand for French properties from international investors.
The booming French economy has put France at the forefront of buyers’ minds
“France is well and truly on the map for the international buyer. Each area of France is different of course but for us the prime property markets are the busiest they have been for many years! Paris saw an average increase of around 12% last year and demand currently outstrips supply by a long way. Other areas such as the French Riviera, Provence, Languedoc and the French Alps are also seeing unprecedented levels of interest from both French and international buyers. We are getting a large amount of interest from the UK at present, particularly those who are looking to relocate before leaving the EU in March 2019 -the UK government have guaranteed UK citizens who are living in Europe before that date will have their EU rights guaranteed so this is a huge factor in the decision to relocate. The French tax changes are having a really positive impact on this for us too, particularly from clients who have been deciding between France and Spain or Italy for example. They are also wanting to buy now in case the pound loses a lot of value after March next year. We are also getting a lot of enquiries from French nationals who live overseas and are looking to relocate back to France, and a lot of interest from Germany, the Netherlands, Belgium, Scandinavian countries as well as the Middle East, USA and further afield. We have never had a busier start to a year since we launched the company nearly 15 years ago.”
The change to the Wealth Tax are encouraging wealthy buyers to relocate to France permanently
“The changes are making France more attractive to wealthy non-French as a permanent base. With the previous tax regime, wealth tax for French residents was charged on worldwide assets whereas second home owners who were not tax residents in France were only charged wealth tax on their assets in France (which was usually made up largely from your French property anyway). The tax thresholds have remained the same so their non-property assets in France will no longer be included. Macron and his government have been very clever here, their goal is to attract the wealthy to France (this includes wealthy French families who have previously chosen to relocate to other countries, partly because of the wealth tax system). This is not only aimed to have a positive impact on the property market but the longer term goal is to boost business and the job market throughout France too.”
Buyers are encouraged to take advantage of the low interest rates in France and take mortgages to make the most of the Tax Changes
“The Wealth tax is charged on the net value of your property, so this is the market value of the property minus any outstanding loans, meaning it can be managed through the use of a mortgage and the way you structure your purchase. Interest rates are extremely low in France at present so most buyers are taking loans anyway (even if they can afford to pay in cash). There are some rules around this and from a tax perspective, the amount of loan you have on the property is reduced over a period of time but it allows you to keep your tax position to a minimum. We work closely with finance brokers and tax specialists who can assess all of our clients personal situations and guide them to the best way to purchase the property.”
More properties are being put on the market, offering more supply to meet the increasing demand
‘We are finding some French residents who own several French properties are selling their secondary properties, particularly if they are not used too often or if they were bought as an investment and rented out long term. Property prices have gone up over the past few years in Paris and many other locations so there are some French residents looking to cash in on those second home investments while the market is good and reduce their tax position. This means there are some great properties coming to the market in certain areas.”
About Home Hunts:
Home Hunts specialise in finding luxury homes and investment properties throughout France, Monaco, Geneva, London and New York. Home Hunts is a leading buyers’ agent, whose role is to find the hidden gems that the property market has to offer. The team collaborates with all of the best estate agents, notaires, developers and private sellers to provide the ultimate selection of properties in a desired area. Home Hunts work closely with their clients, offering unbiased advice and support throughout the entire buying process and beyond.
Home Hunts contact details:
Website: www.home-hunts.com / Tel: UK: +44 (0)208 144 5501 or France: +33 (0)970 44 66 43