If you’re a Briton with some cash to invest, you’ve probably considered residential property. However, you can’t have missed the moans and outcries from landlords everywhere at the introduction of the controversial new Stamp Duty surcharge on rental properties and the government policy of tapering off mortgage tax relief for landlords from April 2017. As a result, understandably, domestic buy to let sales fell by 60% in 2016. To deepen the wound, Chancellor, Philip Hammond’s early Christmas present to landlords was news that the government were banning letting agency fees for tenants. These costs will inevitably be passed onto landlords. Letting agents will not be able to absorb costs of obtaining references and checks.
Whatever you think about the policy changes, buying in France just got even more attractive. The historically “steep” notary fee in France is now little different to stamp duty on a buy-to-let in the UK. In France, many buy as an SCI, and if you do so, out go any discussion about mortgage tax relief. All the mortgage is an expense of the SCI and taxed favourably. Since many choose to rent to short term holiday makers, who pay by a debit or credit card upfront, there’s no need for the admin and checks of creditworthiness that have to be done as due diligence when vetting tenants for your buy-to-let. To boot, French lenders are happy to calculate rental income into the loan approval process, and there’s no hike in a mortgage with a property bought with the idea of renting it out. By contrast, the Bank of England from January 2017 is implementing tough rules around the criteria that lenders must apply to landlords looking for mortgages. The end result is that mortgages for buy to let properties will make bank finance harder to get, and more expensive when you do.
Martin Vander Weyer said in November 2016 Spectator Money that the investment philosophy can be summarised in a few simple guidelines. It’s a great article, and I encourage you to read it in full, but I hope he forgives me for paraphrasing a little here. His guidelines can be broken down simply into:
- Take an active interest in your asset portfolio;
- Take a long term view.
- Have a bit of fun with the top slice of your money.
At Pebbles we have some high net worth clients who are doing just that. Buying in Nice might not offer the best yield to value return, but offers so much more for those who don’t care to be sensible and practical all the time.
Shouldn’t 2017 be about having a little bit of fun? Buying that UK buy to let might be safe, but the figures may no longer stack up for all the risk and effort. You probably have no need nor desire to use that standard buy to let in-between tenants. Yet, popping over to use that buy to let in Nice in between tenants, now that surely has appeal. Especially when you have full-time management to take away all the headaches, and rental income into your bank account. Then there’s the dream. You might be still at the 9-5 slog (if you’re lucky) but you can still keep a long term view towards retirement. Our canny property buyers and owners figured this out a long time ago, but for 2017, we’re letting you in on the secret. Investing in Nice has a lot to offer.