Why French property remains popular despite higher taxes

It seems that Brits’ love affair
with property in France won’t be dented by increased property taxes. UK buyers
are still heading to France in significant numbers ‘with the residential real
estate sector proving a beacon of hope in a recuperating economy’, according to
the Daily Telegraph.

Increases in the amount of tax
property owners pay on rental income seems to have had little impact on demand
for French property, with many British buyers looking to live in their home
rather than to let it out. We look at the buoyant French property market next.

Buyers of French property not deterred by rising taxes

Ian Cragg from foreign exchange
broker TorFX says that the pound’s increased strength in 2012 saw interest in
French property remain strong. He said: “Sterling reached a near four-year high
of almost €1.30 against the euro in the summer of last year, with UK investors
seizing the moment with a record number of transactions heading across the
channel for property deposits and purchases.”

And, it is in the cities that
buyers may see the value of their French property rise in 2013. The latest
report from the FNAIM (the body that represents French estate agents) forecasts
a deflationary drop in property values across France of between 1 per cent and
5 per cent this year. However, the Telegraph
reports that FNAIM believe there will be rebound gains of 3 per cent to 8 per
cent in the major cities, led by the capital Paris.

A significant proportion of
people buying property in France do so with the intention of moving into it in
the short or medium term. Consequently, increases in the taxes on rental income haven’t had a
huge impact on demand and aren’t a deterrent to buying.

Demand for French property
remains and I expect the market to be relatively buoyant in 2013.

Author Nick
Marr