Guide to Investing in Nice

Buying a property in Nice is a safe, secure investment offering consistently solid returns. Unlike other countries, France has strong legal structures that ensure your purchase is handled professionally. The potential for capital appreciation is strong in France at the moment and in Nice in particular through a combination of national and local government initiatives aimed at increasing economic growth and improving an already world class transport and communications infrastructure. There has never been a better time to enter this rising market.

Safe, Secure

Buying property in France is a secure investment, from the stringent legal checks on the property carried out by your English-speaking Notaire to the seven day 'cooling-off' period. The Notaire, amongst other things, ensures that there are no debts on the property, that the current owner of the property is the owner and has the right to sell it and that the property does not contain asbestos or termites. While taken for granted in the UK and Ireland, there are many countries in Europe that do not have these basic legal principles enshrined in the buying process. You can rest assured that the French legal system is on your side.

The Winds of Change

In 2007, the French people elected Nicholas Sarkozy as president. This has heralded great change in the way the country is being run and the policies the government is undertaking. Taxes are dropping, economic growth is increasing and confidence levels among French businesses and workers are increasing. President Sarkozy has stated his desire to turn France into a nation of home owners and has adopted several policies to further this objective, such as the introduction of mortgage interest relief and a substantial reduction in inheritance tax.

Long Term Lets

There is a deeply embedded rental culture in France that has kept demand for rental accommodation high and sheltered the market from excessive price swings that can be seen in other countries. Renting property until the age of forty or more and then taking out a mortgage for a relatively short period of time is the norm. The rental market is strong in Nice and most properties in the centre are on the market for a few days before they are rented. There are two rental options to consider when deciding to rent on a monthly basis: a short term contract ('contrat meuble') and a long term contract ('contrat non-meuble'). The former offers significantly more protection for landlords and is a good option for new entrants to the French property market.

Short Term Lets

Renting a property on a short-term basis, usually per week to holiday-makers, is a very popular option for buyers for a number of reasons. Compared to long-term letting, rental returns are higher. As a general rule, the expected income per week when rented to a tourist in the peak season is roughly equivalent to the expected rent per month when let on a long term basis. For example, a two bedroom apartment that could let for €1,000 per month on a long term contract could be rented to holiday-makers for the same amount per week in the peak season. With this in mind, twelve weeks rent is the same return as renting it out per month for a year but with the possibility of using it yourself or increasing your rental return, or both.

Nice is a very unique tourist destination: a vibrant, cosmopolitan city; a traditional French Riviera beach resort; and a gateway to the best part of Southern Europe: The Riviera, the Alps and Italy. All this translates into a longer than usual peak season, with a combination of weekend city breaks, beach holidays and stop-offs on longer voyages. The Carnival de Nice in February, the Christmas village in Place Massena in December and the Cannes Film Festival and Monaco Grand Prix in May all complement a peak season that lasts from June until September. A good rental agency 'on the ground' who can coordinate visits, market the property and clean the property is an important factor when renting on a short-term basis.

The other great advantage of letting your apartment on a short-term basis is the usage you have yourself. Simply tell the rental agency not to take bookings for your holiday period, or simply hop over on an off-peak time.

Capital Appreciation

Nice is undergoing extensive public works aimed at improving local transport and further increasing the desirability of the city to tourists and locals alike. The first phase of the Nice Tramway is about to be completed and will serve the city's northern and eastern suburbs. The Tram line will stop at the two central train stations, the bus station, the Old Town and close to the Port. Capital appreciation has greatly increased in other countries that have recently opened Tramway systems, especially in areas within a few hundred metres of a Tram stop. A Tramway project in Bordeaux was completed in 2003 and within two years of completion, prices in the city had risen by 40%. In Dublin, there was much hype about the effect the local Tram project, the LUAS, would have on property prices. The reality was a significant rise in capital appreciation in the areas within walking distance of a LUAS stop: 17% above and beyond the capital appreciation in the city as a whole over a two year period.

Nice's local government has ten major city renovation projects that will be completed in the next two years. 'Les Grands Projets' are dispersed throughout the city and, as well as the Tramway system, include a new Town Hall, a new student district and the extension of the Nice bypass road which should reduce traffic on the 'Promenade des Anglais'. The local government has plans for further Tram lines over the next few years, including a line from the airport to the port. Work is expected to commence on this phase within four years of the completion of phase one.

Finance

French mortgages are generally cheaper than their Irish, British and American counterparts, with lower European interest rates and strong competition from many French lenders. These mortgages are freely available to foreign residents and the procedure is relatively straightforward. As a general rule to obtain finance on a French property, a buyer's total debt must be less than one third (33%) of total net earnings. Mortgage terms for foreign residents are generally capped at 25 years, with a minimum personal contribution of 20% and Notaire's fees of 7.5% cannot be financed by the mortgage. However, should you decide to renovate your property, as many buyers do, the renovation cost can be financed as part of the main mortgage.

Capital Gains Tax

As a foreign resident with a French property, you will be treated quite fairly by the local tax authorities. Capital Gains Tax ('Plus Value') is currently 16% for EU residents, rising to 33% for non-EU residents. French residents pay 26% capital gains tax on properties other than their primary residence. Transaction costs such as agency fees and Notaire's fees, as well as renovation costs, can be deducted from the capital gains tax, which further reduces an already low burden.