France would be a fine thing

Currencies Direct September 25th 2008 - 3 minute read

Mark O’Sullivan, director of dealing at foreign exchange specialist Currencies Direct, talks through some of the options when it comes to buying a rental property in France.

With the credit crunch and lack of sunshine having a major effect on the usual British summer, there has been a sharp decline on the number of holidays to far away, exotic places. Many people have decided to take shorter breaks within the UK and Europe, choosing self-catering options to try to save on the amount of money they spend. For UK holidaymakers, the easiest foreign destination is neighbouring France, with 11 million British tourists visiting annually, and over half a million owning property there. With living costs there generally around 25-35% lower than the UK, with the exception of Paris, and a variety of ways to travel there, holidaying in France can be one of the easiest and more affordable holidays abroad.

With the recent announcement that Air France is planning to launch a high-speed rail service that will travel from London to Paris in under two hours, France is becoming more and more accessible from the UK. Along with the increase in low budget airlines flying to and from more destinations in France and the UK, the Channel Tunnel and ferries, France can be easier, cheaper and quicker to get to even than other destinations within the UK. This in turn has made France an increasingly viable holiday home and rental property option for British overseas property buyers.

So what is it that is makes the half a million British people want to own a property there? Aside from the initial set up and legal fees, which will work out at around 7% of the property price, you will soon be close to owning a property that pays for itself and, in a lot of cases, can be used as a holiday home for a set number of weeks a year. With a fixed rate of return on investment if using a property management company, and even more income if you choose to become more involved with the renting process, it can be fairly hassle free if a leaseback system is used.

By granting a lease to a management company, they will pay you a guaranteed rent for a period of nine to eleven years. This means there is little involvement needed with the property as they will run and maintain it, and you will receive a fixed income whether the property is rented or not. There is usually a pre-agreed period when the property is available for personal use, which can be used to generate more income if you get the timing right. During busy events such as the Cannes film festival, and during the holiday seasons and depending on the location of the property, you can rent it out yourself during your own personal usage time at higher rental rates, because of the high demand, and cut the management company out of the loop too.

French property has become increasingly popular as a result of the formation of the EU, along with holiday homes gaining “non-professional lessor of furnished property” (LMNP) status by the French government. This means newly built properties get a 19.6% VAT refund, with refurbished properties getting a refund on the works.

Although you can end up owning a property that essentially pays for itself that doesn’t mean you should forget other key elements that can earn you extra case such as obtaining the best possible exchange rates when it comes to paying a deposit, or subsequent stage payments on a new-build property. Currencies Direct offer a number of exchange services that are particularly useful such as free money transfers between your UK and overseas bank accounts, for example to transfer your pension or meet mortgage payments.

If you need to transfer money quickly, a specialist can give you the best foreign money exchange rate available right now – and guarantee it – with a ‘spot deal’.  However, if your need is less pressing and you have the time to hold out for a really good foreign exchange rate, they can transfer your money as soon as the exchange rate reaches the level you want with a ‘limit order’. You can also set a ‘lower’ level or ‘stop’ to protect yourself should the forex rate drastically fall unexpectedly. This option is ideal for when you don’t have to make an immediate payment and have a very specific budget. A ‘forward contract’ however allows you to lock-in a good rate for up to two years, with only a small ten percent deposit.

As specialist foreign exchange brokers, Currencies Direct is able to offer a number of product choices for foreign exchange. Which one is right for you will depend on your circumstances, foreign currency needs and timing. By dealing directly with the currency market they get a competitive edge in pricing foreign exchange, along with charging no commission.

So with the same interest as a high yielding savings account, why not invest your money in French property? You have the opportunity to make money through capital appreciation, plus being able to use the property for your own leisure.

Visit, or call the Currencies Direct team on +44 (0) 20 7847 9400.

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