French rentals not as expected

Property investors in France who have bought new property are finding it difficult to achieve rental incomes promised by developers and estate agents in some areas.

Those depending on the British market have seen bookings plummet as Sterling has fallen against the buoyant Euro. Also UK holidaymakers hit by the credit crunch and rising fuel bills seem to be staying home this summer.

A number of French buyers now believe that developers and agents in certain areas have saturated the market in buy-to-let new properties without thinking, or caring, where all the new owners were going to find tenants.

Some owners have been unable to find enough tenants to cover mortgage costs and have been forced to sell, sometimes at a considerable loss.

Florence Marcelle is a typical example. She bought a two-bedroom flat in Le Mans last year for €145,000. Unable to find a tenant who would pay enough rent to cover her costs, she was forced to sell it this year for just €100,000.

Carcassonne, in south west France is one area where the market has become saturated with properties to rent. Owners of property in some new developments in towns such as Cognac and Angoulême have also found it hard to get tenants paying enough rent to meet mortgage payments.

All this points to new property in France not being the best buy at present. A report from the bank HSBC predicts the price of new properties in France will fall by 3.5% this year.

'There is no doubt that in some areas there is a glut of new properties available to rent. But if you buy in strong areas like Nice, Marseille and the south coast then rental incomes are still strong;' said Michel Blouet, a property consultant based in Provence.

Anyway most overseas buyers of French property prefer older buildings, according to a new survey, and they like to take their time before completing a purchase.

Location is the most important consideration for half of buyers, the survey by FrenchEntrée found. A quarter of all purchasers took a year or more to find their property, though a majority found what they were looking for in six to twelve months. A surprising 12% were lucky enough to find the perfect place inside a month.

A majority, more than 60%, bought older property in need of little or no work or just some redecoration. Around 22% opted for property that needed renovation while eight percent bought a 'total wreck'. Only seven percent chose to buy news homes.

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