VINGT Paris

VINGT Paris owner Susie Hollands in New York Times article on Paris rental market

From New York Times Text: Jean Rafferty,
Image: Benoit Tessier, Reuters

Many people buy a pied-à-terre in Paris to use for a few weeks a year and to rent the rest of the time. Most of them don’t realize, however, that they are breaking the law. Now, the city government is trying to address the problem with a more direct approach to enforcement.

Mayor Bertrand Delanoë ordered an agency last year to warn property owners that renting out residential apartments for less than a year at a time violated French law. The move was intended to address the lack of affordable housing in the city center. Those who ignored the warning, he said, would be prosecuted.

Only about 25 letters have been sent since enforcement began last autumn - most of them in response to complaints made by neighbors. And only a handful of those cases have gone to court.

But the rental industry in this most-visited city in the world is concerned and, as more owners slowly become aware of the issue, confusion is growing. A few have pulled their properties off the market, others have deleted addresses or other identifying details from Internet listings. And dozens of rental agencies have banded together to try to save their lucrative business.

“No one seems to know what this crackdown means, but I feel my business will have to change,” said Susie Hollands of Vingt Paris, a property advisory and management company.

Crackdown on Private Landlords - Paris moves to free up housing in the city centre

Recent moves made by the City of Paris to apply laws restricting the rental of apartments in central Paris may have significant effects for thousands of private owners, in Paris and abroad.  According to the Prefecture de Paris, nearly 38,000 apartments in Paris are being rented for short stays and moves to prosecute some owners of these properties have begun.The reasons cited for the application of this law is to alleviate the chronic shortage of affordable housing in the city centre (see our posts about this from 2006).   Bonapart Paris's Owner, Susie Hollands and well known blogger about French life and property, Tony Tidswell, held a meeting with François Plottin, Chef du Bureau, at the Mairie de Paris’ Direction du Logement et de l'Habitat in Paris on Wednesday, 19 November and Thursday 26 November 2009.

Hidalgo : "Jeudi noir défend une cause juste"
envoyé par LEXPRESS. - L'info video en direct.

Report on L'Express on the housing shortage in Paris.

It is technically illegal for any owner of a property in Paris not classified as commercial to re-let their property for any period of less than one year. The sole exception is for student rentals, where the term can be no less than nine months.    Property owners are obligated to make sure their apartments, and the rental activity, comply with the law, in order to satisfy the legal aspects Paris has set for retail rental "commercial activity" and we are assisting our owners to regularise their situations  Any apartment advertised for short-term rental can be considered as having been rented, and therefore scrutinized under the law, by the authorities.

Non-Resident tax return - rental income

 I've just written to our owner's to remind them to look out for Tax d'Habitation and Tax Fonciere bills which usually arrive at this time of year. It's best to chase these up at the local Tresor Public, if you are able to put in place an automatic payment, so much the better and you can forget about it. Property taxes are low in Paris but just in case you feel like you got lucky as you haven't received anything, please don't just write it off! If your Tax Habitation or Fonciere is not paid, the "Fisc" will have no hesitation in freezing your bank account. Imagine the chaos caused by your direct debits for everything from the internet subscription to your electricity bouncing (resulting in your tenants losing power during their stay and the ancillary very long and boring re-instatement of the standing orders).

Montmartre is moving!

A common problem with buildings in Montmartre is due to a curious phenomenon relating to carrieres (this means quarries).

The beautiful fin de siecle architecture scattered over the Butte and especially around Lamarck Caulincourt are on the hill where they originally got the stone for building Paris. The hill of Montmartre is just a thin veneer of rock over an underground quarry, a Swiss cheese of caverns and tunnels, and fortunes are spent pumping the caverns full of a mixture of concrete and clay. Initially the miners quarrymen left columns of stone to hold the whole thing up, but water has seeped in over the years, eroding away the columns, and surface subsidence has occurred.

Syndic : Le ras-le-bol des copropriétaires - go get 'em!

Consumer magazine (a bit like Which? but more aggressive - it needs to be, this is France), 60 Million de Consommateurs are featuring SYNDICS (co-owner association appointed management companies) as their bete-noire this month.

Excès tarifaires, comportements arrogants, contrats irréguliers... les copropriétaires se retrouvent trop souvent en position de faiblesse face à leur syndic. Il existe pourtant des moyens de se défendre et, au besoin, d'en trouver un meilleur.

Le palmarès des abus les plus scandaleux. Nos juristes ont décrypté cent contrats de syndics envoyés par nos lecteurs. Ils ont relevé des clauses abusives, des prestations indûment facturées ou des tarifs exorbitants dans 96 d'entre eux. Pauvres copropriétaires...

Sadly these are all too common complaints. One rarely hears of an owner who is happy with their Syndic, at least in Paris. This issue will apparently advise on how to find "une perle rare" - a good syndic....

Hopefully it will also priovide some help for one of our readers who wrote in recently.

The Annual general meeting of the property and... mice infestation

I read of an interesting problem recently on Jean Tacquet's "Survival Kit for Paris" newsletter that I am sure he won't mind if I share with you. It sums up the frustrating business of dealing with one's Syndic (the management group in charge of the running of the co-owned apartment buildings in Paris).

It's a Parisian pastime to moan about the Syndic and how inefficient, overpaid and downright corrupt they are. This particular problem is quite heartbreaking because the owners must have shelled out around 10,000 euros a m² and are now faced with the problem of some unwelcome visitors along with their short term rental guests. And no end in sight...

"We recently bought a nice apartment for very short-term rentals in a really premium location, facing the river and the Ile de la Cité. Everything went fine and business was good until the building, and especially the apartments facing the riverfront, got invaded with mice. The building manager was immediately informed of this and we have been told that the matter was being handled, but we have seen no changes in our apartment.

France’s top plumber is… English

I know tons of good (Polish, Russian, Czech, Croatian......) plumbers in Paris so I can't say I was surprised to read this in the great blog Frogsmoke.

"The French won’t like it when they find out that the plumber they’ve just named as the best in their country is from Manchester, UK.

President Nicolas Sarkozy will present the prestigious title Meilleur Apprenti de France - the Best Apprentice in France - to Oliver Watson, oblivious to the fact he doesn’t even live in France. Oliver, aged 26, beat 6,000 French plumbers to the honour.

He said: “They don’t know I’m English yet because all they have is my name, so when I’m shaking hands with Sarkozy I’m going to say: `I’m an English lad, you know’.“

After claiming France’s top plumbing honour, Oliver has moved back to Manchester."

Using an "SCI" to purchase a property in France

A common way of buying a property in France is through the use of a Société Civile Immobilière, or SCI. The use of this method has benefits for French residents, as well as foreign residents.

An SCI is a property company. Although it can be used to minimise succession tax by gifting shares to your children during your lifetime, they are usually used by a group of unrelated people to purchase a property as co-owners. An SCI is meant to be non-trading. Taking professional advice is essential before deciding to go ahead and for the actual set up of the company.

When buying the property, the Promesse de Vente can be signed by one person and later the SCI can be substituted as the purchaser on the property. If you do decide to use an SCI, please be aware that your French bank account must be opened in the name of the SCI. It takes 4 to 6 weeks to create the company so don't wait too long before starting the administrative process. You can apply for the mortgage, if needed, as soon as you have draft bylaws of the SCI.

French system of Capital Gains Tax

Sam Okoshken is an American lawyer practicing in Paris and has given a few pointers on Capital Gains Tax;

"We anticipate some refreshing legislative policy changes under President Sarkozy’s initiative. However, the set of tax rules that will probably not change appreciably, as they have recently been revamped, are the capital gains rules affecting sales of French real estate.

What’s the rate?
Let’s start with the capital gains tax rate. What rate do you pay if you sell your French property? It depends on where you reside: the rate is 16% for residents of EU countries (except France ), 27% for residents of France (the sale of your principal residence in France is totally tax-free), and 33.33% for non-EU residents, such as US residents. Americans must also report the capital gain to the US, using US capital gains rules, but they can write off the French tax against the 15% US tax.

French Tax declaration for rental income - non-residents

If you own property here in France and derive rental income through it, it’s necessary to file a Tax Declaration for a non-resident. The law says to file, and it is especially necessary if the funds are deposited in his French bank account. If the property is financed, there would probably be no tax to pay. Interest and expenses are fully deductible.

Bonapart would strongly advise you to file and if you would like us to recommend a Tax specialist you can put your house in order with them now and avoid excess preparation time (and therefore fees) accumulating at a later stage.