Buying Property to Let in Cannes - New Comer Needs Advice

[MikeM]

I'm currently researching properties to buy to let in the South of France with particular interest in the Cannes area. I'm trying to ensure that I've captured all I need to know before advancing with the search of that ideal golden egg for my retirement and my childrens inheritance thereafter.

First question is "Why Cannes ?" Well the answer to this is simple, rent. I've also been told that the demand in Cannes for rental accommondation far out weights supply (Anybody anything to say on this ?). I've also been told that the area is more or less a 12 month a year resort and rental for say a 1 bed appartment close to the 'Palais des Festivals’ depending on season can fetch between €500 to €750 per week. The Film Festival brings with it silly money in the region on €1200 a week. So I'm hoping that this project could become self financing after the first year or so. Anyone see holes in these assumptions ?

I've also accumulate a list of topics I need to address before moving forward

1. French Bank A/C. Need to set one up (lots of good threads on this).

2. French Inheritance Laws. - Need to Understand this more

3. French Taxation Laws - Tax on rent, VAT on sales with 10 years, allowances on interest relief if mortgage obtained in France, Stamp Duty on new versus second hand properties.

4. French Legal System - Understanding the process, Use of the Notaire (need to decide if a Laywer is required or not). - Lenght of the process I believe is an issue and could take up to 6 months to be in a position to be able to make money.

5. Sales Commission for Agencies - What to expect in terms of costs ? Is 10% of Sale Price enough to handle all costs of purchase ?

6. Rental Process - How much to allow for managment companies costs ? 20 - 30% of rent I believe ?? Any reputatable companies known in the Cannes area ?

Have I ommitted anything from the list of topics to cover ?

Any advise/recommendations/help would be greatly appreciated.

Regards,
MikeM

 

[paddyd]

Re: Buying Property to Let in Cannes - New Comer Needs Advise

Hi Mike,

just wondering if you've had a chance to get down to Canne yet?

From experience of staying there during Festivals (not the film one), I can tell you that renting is in VERY short supply, as you say. Its impossible to find accomodation in town, and you generally commute from Nice, or else outside Canne (Golf Juan and the like).

However, (and I'm afraid its a big 'however'), I always find Canne to be the proverbial 'hole'. The quailty of the place once you leave the promenade, is outrageous. No wonder everyone stays on boats!

I've stayed in apartments and hotels that would all be closed and demolished in ireland. There is also a well-known rip-off culture all year round.

 

[bothered]

Re: Buying Property to Let in Cannes - New Comer Needs Advise

I'm currently researching properties to buy to let in the South of France with particular interest in the Cannes area. I'm trying to ensure that I've captured all I need to know before advancing with the search of that ideal golden egg for my retirement and my childrens inheritance thereafter.

First question is "Why Cannes ?" Well the answer to this is simple, rent. I've also been told that the demand in Cannes for rental accommondation far out weights supply (Anybody anything to say on this ?). I've also been told that the area is more or less a 12 month a year resort and rental for say a 1 bed appartment close to the 'Palais des Festivals’ depending on season can fetch between €500 to €750 per week. The Film Festival brings with it silly money in the region on €1200 a week. So I'm hoping that this project could become self financing after the first year or so. Anyone see holes in these assumptions ?

I've also accumulate a list of topics I need to address before moving forward

1. French Bank A/C. Need to set one up (lots of good threads on this).

2. French Inheritance Laws. - Need to Understand this more
Get a good solicitor versed in French law. Or perhaps one of the companies who sell property here may do it for you. One of the main reasons you need your own solicitor is for him/her to look over the contracts that are presented to you. You mentioned children, so perhaps there is a spouse there also? Putting the property in joint names is adviseable, but not only that, stipulate that on death of the first one the property passes to the surviving spouse and after the 2nd spouses death then the children. This is important.

3. French Taxation Laws - Tax on rent, VAT on sales with 10 years, allowances on interest relief if mortgage obtained in France, Stamp Duty on new versus second hand properties.
I believe you can also get tax relief if you get the mortgage here. You need to contact an accountant or tax person here. We were given that advise also and it turned out to be incorrect. Set up costs for a mortgage are high in France and you also have to pay the Notaire stamp duty on the mortgage.

4. French Legal System - Understanding the process, Use of the Notaire (need to decide if a Laywer is required or not). - Lenght of the process I believe is an issue and could take up to 6 months to be in a position to be able to make money. It may take even longer depending on the size of the mortgage you take out. I would definitely say your own lawyer is necessary.

5. Sales Commission for Agencies - What to expect in terms of costs ? Is 10% of Sale Price enough to handle all costs of purchase ? Try and buy direct from the owner, do some research on the web for websites that sell properties or get some of those magazines they hand out free in Cannes and Nice and check out direct sellers.

6. Rental Process - How much to allow for managment companies costs ? 20 - 30% of rent I believe ?? Any reputatable companies known in the Cannes area ?
You could register the apartment with several agencies but do not give them the exclusive contract. If they ring you with bookings and you dont have anyone yourself then thats good but other wise keep control yourself. You dont want to be in the position friends of ours found themselves in, when they decided to travel to their apartment and discovered 6 people, who didnt know each other renting the place. It was let out to the individuals by an agent. The Film Festival week and the agent was pocketing the money himself. Market it yourself from here also, I would say.

Have I ommitted anything from the list of topics to cover ?

Any advise/recommendations/help would be greatly appreciated.

Regards,
MikeM

 

[bothered]

Re: Buying Property to Let in Cannes - New Comer Needs Advise

Hi Mike,

just wondering if you've had a chance to get down to Canne yet?

From experience of staying there during Festivals (not the film one), I can tell you that renting is in VERY short supply, as you say. Its impossible to find accomodation in town, and you generally commute from Nice, or else outside Canne (Golf Juan and the like).

However, (and I'm afraid its a big 'however'), I always find Canne to be the proverbial 'hole'. The quailty of the place once you leave the promenade, is outrageous. No wonder everyone stays on boats!

I've stayed in apartments and hotels that would all be closed and demolished in ireland. There is also a well-known rip-off culture all year round.

Paddy dont be stuck next time around, I know a few people down there with very nice apartments, no need to stay in a dump

 

[bacchus]

Re: Buying Property to Let in Cannes - New Comer Needs Advise

I've stayed in apartments and hotels that would all be closed and demolished in ireland. There is also a well-known rip-off culture all year round.

I wonder if you have even been to Cannes.

 

[bothered]

Re: Buying Property to Let in Cannes - New Comer Needs Advise

I wonder if you have even been to Cannes.

We go down 4 to 6 times a year, have a few friends who live there and
some others who own their own apartments. Seriously, if you need accommodation
there I can send you contacts. Anyway Bon jour and slan leat.

 

[MikeM]

Re: Buying Property to Let in Cannes - New Comer Needs Advise

Bothered,

Thanks the advice is welcomed. Do you know of any reputable agencies/management companies around the area preferable English speaking ?

In general terms I lived in Antibes for over six months many moons ago and returned on many occasions so I not only think the area is a good investment opportunity but I also love the region, as do my family.

Regards,
MikeM

 

[bothered]

Re: Buying Property to Let in Cannes - New Comer Needs Advise

Bothered,

Thanks the advice is welcomed. Do you know of any reputable agencies/management companies around the area preferable English speaking ?

In general terms I lived in Antibes for over six months many moons ago and returned on many occasions so I not only think the area is a good investment opportunity but I also love the region, as do my family.

Regards,
MikeM

Do you need to contact the estate agents to buy the property or
to enquire about a management and rental service after you have
bought it? Before I contact my friends I need to be clear on what
it is you want?

 

[plotman]

Re: Buying Property to Let in Cannes - New Comer Needs Advise

Check out Legifrance.gouv.fr All the Notaires use it, but of course they pay for deeper access

 

[MikeM]

Re: Buying Property to Let in Cannes - New Comer Needs Advise

Hi Bothered,

I need both. I seen some postings on this site and it seems from my view that Century21.fr seem to have the best selection I've seen. Plan to go down and have a look in the next couple of weeks. Any other sites worth noting + reputable management agencies would be welcomed.

Regards,
MikeM.

 

[simon@empire]

Re: Buying Property to Let in Cannes - New Comer Needs Advise

The Cannes rental market is one of the strongest I've come across, due to the large number of shows that take place in the Palais de Festival, there's many more of them than people realise. I've worked at the biggest MIPIM (which is on this week) for a few years, it's the property show thats attended by 16,000 official delegates and many more who aren't signed up for entry to the Palais and who just visit Cannes for the week to coincide with the show. The large number of attendees at these shows mean people do often have to stay outside of Cannes and travel far in to attend. I can also recommend Mougin great place to buy, but if possible go for Cannes as close to the Palais as possible. Cannes as a place is a let down the first time you visit and apart from the old town, harbour and Croisette it's a of bit dive and a bit seedy. With so much rental accommodation it also lacks a real soul to the place. Two good agents I have used for a number of years are Immosol (www.immosol.fr), they're reliable and cheap, but a bit more downmarket; there are also John & John who are also very good and bit more upmarket (www.cannesrentals.com). Obviously with such good rental demand in the Cote D'Azur you pay a higher entry price.
Good luck,

Simon

 

[Rhino 1]

Re: Buying Property to Let in Cannes - New Comer Needs Advise

Is Cannes really a dive Simon?

Once again some good insight re the rental market and reasons to invest in this area.

 

[simon@empire]

Re: Buying Property to Let in Cannes - New Comer Needs Advise

It's subjective but I agree with Paddy D's comments, once you get away from The Palais, Croisette, Old Town, Harbour and the Rue D'Antibes, then the quality of the place isn't all its made out to be and in my opinion it isn't as nice as other places on the Cote D'Azure such as Mougin, Antibes, St Tropez or Monte Carlo, but this shouldn't stop people investing in Cannes as long as they do their homework and also visit the place.

 

[Rhino 1]

Re: Buying Property to Let in Cannes - New Comer Needs Advise

Simon,

Fair enough, I was just surprised after all i have heard about Cannes to hear it being called a dive - its like a lot of similar resorts that can be seedy like Puerto Banus

 

[asdfg]

Re: Buying Property to Let in Cannes - New Comer Needs Advise

You omitted to mention your obligation to make a rental return to irish revenue See [broken link removed] in general and How are foreign rents taxed? in particular

 

[paddyd]

Re: Buying Property to Let in Cannes - New Comer Needs Advise

You're right Simon, I'm was very subjective, and was thinking like a tenant, rather than a Landlord.
For a landlord, there are not many places that have such a short-term rent shortage; so if you can afford it, its well worth a punt for sure.

Also, check out the web for the Palais schedule for 2007. I know that Canne has lost a few of its bigger Festival Clients this year and last year, including the biggest one, 3GSM, which dwarfs the film festival. Its moved to Barcelona following years of complaining from the exhibitors!

 

[gaga]

Re: Buying Property to Let in Cannes - New Comer Needs Advise

Hi Mike, I locate high-end property on the Cote d'Azur for clients, so I have a reasonable level of expertise here. This is not a pitch by the way, as 1 bed buy to lets are not my thing, I'm just sharing a little of what I know.

The property market in Cannes is exactly the same as the market in Dublin, it is all about location, and in terms of the corporate rental market, which is the market you seem to be aiming for, it is also about the quality of fit out. So.......

1. Location: You will not have a hope in hell of achieving the rent you have quoted unless you are in "La Banane" and are no more than a 10-15 minute walk from the Palais Des Festivals. In fact I doubt if you will be even able to rent to corporates at all unless you fulfill these criteria. "La Banane" is a small banana shaped area right in the centre of town. Stretching from just past the Hotel Martinez in the east to the Town Hall in the west and from a couple of streets north of the Rue d'Antibes to the sea in the South.

2. Budget: Property in "La Banane" goes from 9K per sqm to 25K per sqm, so basic entry level for this market will be at least 300K. If your budget is less than this, then forget it.

3. Rental: As far as I am aware there is oversupply in this end of the market, so optimistically, if you have a great apartment, ideally located, I would expect 60% occupancy during festivals and 40% during other periods. I would expect a rental return of somewhere between 3.5 and 7% maximum, depending on apartment type, luck, prayers etc.

4 Legal: You need a Notaire not a Lawyer. Lawyers are a waste of money. Check www.notaires.fr for English speaking ones in Cannes. Notaires fees (Frais Notaires) are set by the government and will amount to between 5 and 7.5% of the purchase price. These fees include the stamp duties and mortgage taxes etc, the notaires themselves make less than 1%.

5 Agencies: Unless you know the French market (which you obviously don't) or speak fluent French, do not even think about trying to find private sellers directly. Use an agent, they charge the seller and not the buyer so it's not costing you anything.

You will have to bear in mind that no agency in Cannes will give a damn about your purchase, so unless you are sitting in front of them and they have the type of apartment you're looking for, they won't help. They won't keep you up to date with new properties on their books, they won't send you info and they will never call you after you leave Cannes. The reason for this is that if they get a nice apartment in "La Banane" it will sell easily, so they won't have to do much work to get rid of it, and they certainly won't really want to involve some foreigner who'll have to arrange for flights and time off work to see it.

6. Tax As an apartment owner you will have to pay Tax Foncier which is a local tax based upon the notional rental value of the property and is set on Jan 1st each year by the local "Marie" or Town hall. You will also have to pay Taxe d'Habitation which is like a council tax and is payable by the occupier of the property or by the owner, if the property is not rented out long-term.
Income Tax: As long as your rental income is below 76K per annum then you are judged to be a micro enterprise, and you will receive a 72% deduction in order to calculate your tax base. As a non-resident in France you will then be taxed at 25% of the tax base as long as the tax base is below 8106 Euro.

Example Rent = 20,000 (-72%)
Tax Base = 5600 (Taxed at 25%)
Tax Payable = 1400

These are rough figures based upon last year's tax laws. See an accountant to get full details.

7. Overall Investment Property prices have risen rapidly on the entire Cote d'Azur for the last 7 years, so rental returns will be quite low in my opinion while capital gains should be high. The best apartment to buy for rental returns are studios and one beds, the best to buy for capital appreciation are 2 beds which rose by 22% for example in central Cannes in 2006, while other types rose by 9%.

In my opinion this type property is unlikely to be self financing through rental returns for at least 5 years, but should be very strong as an overall investment.

All of the above are my opinions and are based on my experience, you need to get qualified legal and financial advice before buying.

I hope this helps.

 

[MikeM]

Re: Buying Property to Let in Cannes - New Comer Needs Advise

Thanks Gaga for the detailed information. Very much appreciated as you have compounded my thoughts in terms of where I would need to purchase and the costs involved.

My head is telling me that to make a success of a buy to let in Cannes I would need to look at short term lets. The costs of the ideal property and the personal management required given I have a day job is making it unattractive.

Thanks again for the details,
MikeM.

 

[stanbowles]

as sbody with half an interest in buying in france / cote d'azur as well remerci to gaga for his v.thorough and informed post ... stan

 

[cordiez]

Re. 4 Legal: You need a Notaire not a Lawyer. I entirely disagree. Good luck if you are trying to find a notaire that speaks your language! Here is an interesting website on how to choose the right French solicitor: [broken link removed] See also: http://www.solicitor.fr