It is estimated that one out of every 10 second homes is owned by an expatriate, according to a study by INSEE. Expatriation, which is often accompanied by higher incomes and a better ability to save, is indeed a very favourable period of life for buying a property in France. Are you living abroad and considering buying a second home in France? Here is a summary of the key steps and points to be aware of in order to carry out your real estate project with peace of mind from abroad.
Why buy a second home in France as an expatriate?
Buying a residence in France as an expatriate has many advantages. On the one hand, it allows you to acquire a pied-à-terre that will serve as a place to meet your loved ones during your stays in France, but also as a place to fall back on when you return to France. Buying a second home in France as an expatriate can also be a very strategic and profitable investment. As a safe haven, real estate is a very secure investment, with an excellent risk/return ratio, which makes it a very favorable investment, especially in times of economic uncertainty.
Moreover, buying a property in France allows you to benefit from fixed loan rates (which is not the case in many other countries) and relatively low rates despite a recent rebalancing. As a non-resident, buying a property in France is also very strategic to benefit from a complementary income during your expatriation. You can indeed rent your residence in France when you are not living there. It is also a good way toanticipate the drop in income at retirement, as expatriation very often has direct consequences on retirement contributions. On average, it is estimated that with only 6 weeks of seasonal rental per year, the rental income generated will be enough to cover all the maintenance costs and various charges (this however depends on the surface of the property, the seasonality, the rent price, etc.).
Thus, the acquisition of a second home in France allows you to make a "pleasure" purchase of a home "coup de coeur" where you can gather your family. But it also allows you to make a reasoned, profitable and secure investment, to develop your assets, to make your savings grow and to secure the future of your children.
How to buy a second home in France from abroad?
Here is the main steps to follow to buy a residence in France as an expatriate :
- Definition of the project, the objective and the budget
- The choice of the location
- The search for goods
- The offer to purchase
- The signing of the sales agreement
- The application for funding
- The signing of the deed of sale
- The work and the development of the property
- Renting and rental management
Refine your project: questions to ask yourself before launching
The first step before starting to search for properties is to clarify your project and refine your search criteria. This is an essential preliminary step that will allow you to orientate your research and decisions.
To clarify your project, here are some good questions to ask yourself:
- What is your budget? What is your borrowing capacity? Talk to your bank advisor to find out if you can get a loan.
- What is your objective? To have a place of reunion in France, to pass on an inheritance to your children, to anticipate your return to France, to acquire a property for your children's studies in France, to make a profitable or patrimonial investment...
- What are your main search criteria? (swimming pool, garden or land, city center, urban periphery, close to transport, balcony, terrace, parking...)
- What is the envisaged surface? (number of bedrooms and bathrooms, minimum surface...)
- Are you ready to do some work in the house?
- What regions, cities and neighborhoods should you target? In general, focus on dynamic cities to ensure a steady rental demand;
- What type of assets do you plan to acquire ? (old, new, modern villa, stone country house...).
The choice of the location
The choice of the location of your future second home can be made according to your personal preferences (close to your relatives, in your home region, near the sea, in the mountains...), but it also depends on your objective.
In the case of a second home, it is obviously essential to choose a location that you and your family like. But it is also important to make sure that the location guarantees a dynamic rental demand, in order to ensure a seasonal rental for a few weeks or a few months a year, when you will not be living there.
The search for goods
If you live very far from France and it is impossible for you to come back regularly to France to visit properties, you can ask for help from a relative who ideally has a minimum of knowledge in real estate. You can also schedule your visits and group them over 2 or 3 weeks during a stay in France.
However, the safest thing to do is to be accompanied by professionals who know the local market and who will be able to advise you effectively.
As for the administrative and notarial procedures, you should know that it is possible to apply for a power of attorney by contacting the consulate of your country of residence or a local notary. You can then allow one of your relatives or professionals to sign the preliminary sales agreement and the deed of sale on your behalf.
Applying for funding as an expatriate
If you are an employee seconded abroad by a French company, you will benefit from the same loan conditions as any other French tax resident.
If you are an expatriate on a local contract or an entrepreneur, on the other hand, banks may be a little more cautious about your real estate loan application.
Therefore, you will have to turn first to banks that are willing to grant loans to non-residents (traditional French banks such as Crédit Agricole, Crédit Mutuel, La Banque Transatlantique or BRED are known to be familiar with expatriate clients). Nevertheless, you will have to build a solid financing file to reassure your banker.
In addition, the deposit required by French banks from non-residents is about 20% or even 30% of the price of the property.
Borrowing rates are also slightly higher for non-resident investors (+0.2% to +0.3% on average).
Currently, the average rate is 1.40% in the second quarter of 2022 (1.36% for a 15-year loan; 1.49% for a 20-year loan; 1.59% for a 25-year loan), according to the Observatoire Crédit Logement / CSA. Although rising, these rates are still relatively low and attractive. One of the great advantages of investing in France is that you can benefit from favorable borrowing conditions, with fixed rates.
It is also important to know that, since January 1, 2022, banks require a maximum debt ratio of 35% (including borrower's insurance), and non-residents cannot obtain a loan for more than 20 years.
Renting and rental management
If you wish to rent out your second home on a seasonal basis during your expatriation, it is best to use the services of professionals. This will ensure that you quickly find reliable and solvent tenants and will protect you from the risk of unpaid rent and other problems (management of claims, etc.).
This allows you to secure the rental of your second home and to receive rental income quickly.
What tax arrangements are there for expatriates?
As a non-resident landlord, you are eligible for LMNP status (Loueur en Meublé Non Professionnel). This tax system allows you to benefit from very interesting tax advantages: a depreciation of the purchase price of the property, a deduction of expenses (maintenance, repairs, notary fees, real estate tax...), and a tax reduction on your income from the rental.
In the case of a seasonal rental, you also have the LMNP status (or LMP depending on the amount of rental income), but the depreciation rates and thresholds vary according to the type of furnished property. To find out more, see our article on the taxation of seasonal rental. To be eligible for LMNP, you will have to rent your residence furnished. In addition, your rental income must be less than 23 000 € / year or less than 50% of your total income... To find out more, read our article on the taxation of seasonal rentals.
To be eligible for LMNP, you must rent your residence furnished. In addition, your rental income must be less than 23 000 € / year or less than 50% of your total income.
What are the challenges of buying a property remotely?
Lack of knowledge of the market, time difference, geographical distance... Distance can greatly complicate the management of a real estate project. Even if you have the help of a relative in France, this person will not always be able to advise you objectively. Not to mention that the search for property is very time consuming and requires a great deal of availability.
Buying a residence in France as an expatriate: why be accompanied?
In the era of digitalization, the market is seeing the emergence of new players who offer innovative solutions to buy a property 100% remotely, in a completely dematerialized way.
With Mansio, teams of experts in the local real estate market will accompany you in each step of your real estate project:
- search and selection of offers aligned to your criteria;
- property visits ;
- funding request;
- negotiation of the offer ;
- design, decoration and management ;
- notarial procedures via power of attorney;
- services and concierge ;
- rental management.
On your side, you manage the progress of your real estate project remotely, without having to return to France, for a completely turnkey and secure purchase.
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