Buy to Let Properties

Buy to Let properties have been very succesful in the UK for the last 10 years and the recent slow down show decrease in profitability. Investors are more and more looking abroad such as France which represent a safe investment (Political and Financial stabilities). 

The magic of Leverage Buyout (LBO) 

Usually doing a LBO means that you bring 30% equity and borrow 70% of the property price with an interest only mortgage. The aim is to cover the mortgage repayment (with maintenance) cost with the rent. It does not cost you anything as long as the property is rented. In France, on a long term basis we saw that prices increased between 5 and 10% per year. At the end of the mortgage (usually 10 to 20 years) the property value will be higher compared to the intial cost. The difference will show you Capital gain. You can then decide to sell it and pay back the mortgage. 

To maximise the profit, sharp people will see very fast that they should get the lowest interest rate possible.

We advice to our customers to take a euro mortgage for 2 reasons:
 The interest rates in the euro zone are lower compare to the UK
There are no currency fluctuations because the rent and the mortgage are paid in euros 

Differences between Leaseback and Buy to Let 

The property is let out to permanent residents
No personal use possible  during the lease term
Terms more flexible compare to the Leaseback with a possibility to break the contract with the management company at any time
There are more Buy to let than Leaseback in France so you have a wider choice.

Taxes:

There are different tax schemes in fonction of theway you will rent the property:Short term holiday let (such as gites),Furnished properties and Unfurnished properties. Tax system can be a maze for a foreigner so we strongly advice to talk to a tax expert or a French accountant to minimise the costs.