The French property market will be given an immediate boost thanks to government changes to capital gains tax (CGT).
Changes to the rules mean that property in France is now exempt from CGT after 22 years of ownership, rather than the previous 30 years. In an attempt to speed up market recovery, the French government have also introduced a 25% reduction on CGT for properties sold between September 1, 2013 and August 31, 2014.
The news has been eagerly anticipated amongst French holiday home owners and should encourage people, who have been thinking about selling, to put their property on the market.
In recent years property prices have been reduced in certain areas of France and we have seen a real difference in price expectations between the sellers and would be buyers. Reduced or no CGT is likely to result in sellers being more realistic when accepting offers, which is great news for potential buyers.
Last year the French property market saw a trend of fewer transactions but more at a higher value, which has continued in 2013. Areas such as Paris, the Alps and the Cote d’Azur are still attracting wealthy buyers from around the world and as a consequence banks in the main are looking to consolidate their lending in these areas to non-resident buyers.
Funding is still available for purchases outside the most popular regions though at much more conservative levels. The average interest rate is currently around 2.50%, in Euros, and some banks are willing to lend a maximum of 80/85% on loan to value depending on the individual’s financial status and property price.
France continues to be popular as a lifestyle choice or holiday destination and during my 30 years in the industry it has always remained within the top six most popular countries for people purchasing overseas property, making it a sound financial investment.