How do we go about renting our almost finished property?

[Lorraine]

Hi, we need some advice. We have just about finished renovating our property in the Creuse and we have decided to rent it out for a few years, can anyone who has rented out long term before give us some help on how to advertise, how much to charge, and how much tax we will need to pay etc etc.  

Thanks Lorraine.

[danny]

We found that the best method was to use local estate agents. They charged us 5% of the annual rent. They advised us on the appropriate rent to charge, etc.

 

A quick tour of your local estate agent windows plus a review of the local newspapers should give you a good idea of what your property will rent for, unless is is unique.

 

As for the tax that you will have to pay, that very much depends on the profit you make and the taxation bracket that you may fall into. If you let the premises furnished, very little of the income will be taxable. Interest costs, tax fonciers etc are allowable costs, if the income is less or more that certain amounts then estimated costs or actual cost are the order of the day.

 

We found that a quick discussion with the local tax inspector sorted out all of our questions.

[Nick Trollope]

TBH, I'd use a Notaire (as well as an Agent) - common sense suggests that you should use a Notaire to draw up the contracts anyway. Values tend (unsuprisingly) to be set by the market, so, as the other poster has said, ask the Agent/Notaire (or both). Any prospective tenant will want to negotiate on the rent anyway.

Be aware that "long-term" (in France) means 3 years - minimum (from your point of view at least). Most of the rights rest with the tenant and there are plenty of horror stories about, although I'd suggest that "informal" rental agreements are of the cause of these problems - do a search (now that it is working!) for "problem tenants" in this forum.

All income from property in France must be declared in France and tax paid in France. There are no social charges payable as you are not French resident, but there may be "tax", but this depends on your circumstances. Tax rates are lower here than in the UK, broadly speaking.

As regards advertising, I'd leave that to your Agent - noone is going to ring a UK number to rent a house in France (unless they want to rip you off!). There is always a demand for good rental properties, but be aware that remote holiday homes move much more slowly that town or village properties. Also be aware that the property will be "out of bounds" to you during the period of the rental and as such, you may wish to think carefully about whether you want to rent the property at all. It is very difficult to make money from rental - our "portfolio" we regard as our pension fund. By the time we have paid for them, we can sell them and retire on the money, not the income - in truth, we lose money each month, but once the inflation-based increase in the value is taken into account, it should work! I hope!

 

[Lorraine]

Thank you, I thought it would have been much higher than that for an agent.

[Lorraine]

Hi, that has given me 'food for thought'. What happens if a tenant messes up 6 years of hard work and ends up staying for 3 years to really finish it off!! I just dont want the place to sit empty for 9 months + each year as the garden gets over grown etc. How come you lose out each month? Also we are the same as you the place is part of our pension fund.

[Panda]

Hi

I'm not sure that consulting a notaire for each and every letting would be practical, it certainly wouldn't be for us.  We chose our agents carefully and they handle everything, they draw up the contracts and check the renters references etc. handle deposits, state of the properties before and after renters etc.  Not really sure how having a notaire in this loop would help, aside form drawing up the rental contract, if the agent is good they have good contracts, no need to reinvent the wheel. 

We also take every insurance possible we have cover for non-payment of rent, recovery of debt, cover if the agents fails to rent the property etc.  We have had pay outs on all three so they were very much worth taking for us and only cost a small percentage of the monthly rent.

So in short, find a good agent and they will advise you on all of your questions, we are all mere amateurs.

Panda

[suein56]

[quote user="nicktrollope"]

It is very difficult to make money from rental - in truth, we lose money each month [/quote]

We rent our house here in Morbihan, we know our landlord is very careful with money in that he would not continue to rent out the house if it was not going to make him money, so how do you possibly lose money renting out your house? I am genuinely puzzled. Do you ask a very low rent or  spend a huge amount on maintenance?

Sue [8-)]

[Panda]

I too am puzzled by that, we get about a 12% return on our investment per annum, we pay some tax etc but it's not a huge amount as we have registered the appartments under the 'robien' regime (which allows a good rate of tax relief when you agree to rent for a minimum of 6 years and only charge a certain amount per square metre per appartment).  Perhaps Nick has a very high mortgage on the property.

Panda

[Danny]

Hello Lorraine,

We have rented our property via a local agent and via adverts in local newspapers/online. The agent charged a month's rent 'finding fee' (split between owner and tenant) and provided the contract. He was there at the beginning and end of the contract for signing, inventory etc. He didn't 'manage' the let as such so there was no monthly charge. It suited us fine as it was the first tenant, we were unsure of our french, didn't know the system etc. The last two tenants we have found ourselves by advertising in Paruvendu (both tenants searched online so a website ad is a good idea rather than just a printed one). We went to our local tabac for the contract (they are about 16 euros and he holds one copy - he photocopies it twice and sells the copies for about 3 euros so we used these... a strange procedure but apparently the norm!). We basically followed the format of the initial contract the agent filled in and all seems well. You can add your own stuff onto the basic contract if you want, and request certain references etc as appropriate.

Of course, if you are not in France, you would need to go via an agent for most things (doubt a notaire would be necessary but perhaps a good idea if you are not permanently here and want to be well-covered?), so they can field calls, etc for you. Also, if you are not competent in french this will put prospective tenants off - this is not a sweeping statement, just what I have found to be the case - people generally don't have the time or inclination to work out what you're trying to say if they have a long list of people to call up and arrange viewings!

Please do not think that you garden will be better maintained for having tenants living there. I would much rather mine (albeit tiny) had been left empty for a year rather than having the last tenants' dog use it for the whole time (v. large dog, v. small garden = poo poo poo). If you have a fabby house and garden and want it to stay that way I would stipulate no kids and no animals, but this will definitely limit the reponses you get. Our property is small and unfurnished so barring massive mistreatment can be re-decorated without too much hassle. If you have renovated the house yourself it would be heartbreaking to see it treated anything less than lovingly.

Hope you find the perfect tenant!

Jane

[Katy]

Hi

We are very interested in the insurances taken out for protection as a landlord. We let flats here and have had some problems. Can you give us some idea of prices of insurances and recommend the agencies you use please?

Thanks

[Panda]

Hi

The insurances are part of our 'Mandat de Gestion' which is the agreement with the letting agency, the rate we pay for the insurance is 2.20% this covers:

Loyers Impayes (non payment)

Protection Juridique (the legal process to reclaim the unpaid rent and evict if necessary)

Inoccupation (the property not being let, max for this payment is 3 months and it pays out 90% month 1, 75% month 2, 50% month 3)

This is on top of the 5% we pay as an agency fee for the management of lettings and ,for us, worth every penny.  We have had a non payer and they did everything (bailiffs, legal process etc.), we lost nothing and the tenant was evicted.  The appartment then took 2 months to relet and we claimed on the inoccupation insurance and got a percentage of those two months rents so it really has paid for itself already.

We could do let them ourselves, our french is good enough but long term letting in France is not straight forward and we want as much cover as we can get. 

Our agency is Notre Dame in Poitiers but I imagine the above is available everywhere.

Panda

 

[Katy]

Thank you Panda for the information. It will be very helpful. Our lets are in Ruffec. Not sure if there is a suitable agent there. It will obviously be wise for us to have an agent close to our apartments. We are assuming yours are in Poitiers. At present we use an immobilier in the normal way to find new tenants for us. Do all agents offer  'Mandat de Gestion' or is it just letting agencies only. 

Thanks

[Nick Trollope]

To answer a couple of questions about losses; Quite simple really, the income generated doesn't cover the expenses - including the mortgage repayments. But, the mortgages are a fixed term and the difference is rather less than the equivalent cost of a pension - and rather less risky, I'd suggest/I hope! Once the properties are paid for, we can a)live off the income, b)sell up (no CGT by this time) and live off the proceeds ....

We charge market rates and use a Notaire exclusively (better service and cheaper).

 

[Panda]

Hi

Our properties are not actually in Poitiers but the local agent we use kind of subcontract the letting element to this larger agent.  In fact it is the larger agent from whom we receive statements etc.  the local agent simply manages the tenants as far as finding them and rent collection etc.  Most french agents have a letting element as of course it is still a very large part of their business.

Panda