Choosing the right Buy to Let

Buy-to-let has long been a popular investment model and has proved to be a great way of generating an income and capital growth. Buy-to-let generally means buying a property to let out on a long-term basis to permanent tenants but it can also mean letting a property on a short-term basis to holidaymakers. The latter would normally be classed as FHL (Furnished Holiday let) by HMRC. Generally, investors in the French property market have preferred to let out their property for holiday exploiting the popularity of the country among tourists. Indeed, having a holiday let in France can be an easy and reliable way to make money, if the property is in a good location and well marketed.

However, the trend in holidays nowadays is to prefer several short time periods (such as weekends) as opposed to long stays, therefore, getting bookings has become increasingly competitive. Holiday lets are also labour-intensive and the investor must find someone to clean and maintain the property on a regular, if not a weekly, basis.

Therefore, for property buyers wanting to generate the maximum income with the least effort, a long-term let is worth considering. Longer term lets can ensure a regular stable income, have fewer advertising costs, no changeover fees and the property is less likely to be damaged.

An alternative to these two solutions is the Fully managed buy to let option. A fully managed service takes all the work and worries away from the landlord.

In addition to finding & referencing the tenant, the letting agent will prepare a detailed inventory of the property and its contents, collect all rent payments on behalf of the landlord, deal with all enquiries from tenants, undertake routine maintenance work using approved and qualified tradesmen, change over the accounts with utility suppliers, and undertake regular inspections of the property to be sure it is being kept to a good standard.

Is it worth it?

Buy-to-let investment can reap outstanding monthly returns. The things that really matter when considering investing in a property with the buy to let scheme are:

• The income the property generates: Managed buy to let might be a little less attractive in terms of potential yield but the return on the investment is guaranteed in amount and time
• Location: An attractive touristic location will assure not only higher income from the rental but a potential increase in the capital value of the property as time goes by. To ensure a successful return from a buy-to-let property many factors should be taken into account. But your top priority should be the location. If you are looking for long-term tenants, buying a city-centre apartment is a sensible option. The safest places to invest are, not surprisingly, Paris, the French Alps and the Mediterranean coast (French Riviera). In more general terms any major town in France is a safe bet for rental income
• Property type: Buying a well-kept and maintained property will maximise the return on the investment. In addition to this, if you are focusing to buy with the intent to maximise income and see the property as a pure investment, you should concentrate on finding a studio, one or two-bedroom apartment in an urban area with good employment opportunities. If you are aiming to find a pleasant environment for holiday and use the property for some sporadic personal use a leaseback property could be an interesting option.
• Market value: 2017 was in many ways an ‘année exceptionnelle’ with record sales of around 950,000 across France. Overall in France, average property values are reported to have increased by as much as 4.2*

Cash flow: In France, you can get fixed rates of 2.5% on mortgages (*Data updated on 12 July 2018). Well-sourced city centre properties with tenants will yield from 3% in Paris, in the Alps and Côte d’Azur: from 3.50%. Banks in the UK and France are paying savers about 0.5-1% for their money.

What seems to be clear is that it is a great time to buy in France, whether you fancy a ski apartment, a townhouse or an apartment within an easy access to local amenities.