Frequently asked questions
Read this first!
The tax and legal information on this website is of a general and informative nature. The legal and tax situation of each individual client will be different. Each client is therefore responsible for his or her own legal and tax position in the home country and in France. ParisScarabee Househunters does not accept any liability for this.
So if you wish to invest in French property, we advise you to seek professional advice on the legal and tax implications. You may do so with (tax) advisers in France and in your home country. We will be pleased to introduce you to experienced advisers in France on these matters with whom we have good working relationships.
Questions about buying
The compromis de vente has a formal legal status and it has many forms. It records what is being sold, by whom and to whom, and under what conditions. The compromise de vente must by law contain a long list of documents, guarantees and legally required technical checks, so-called "diagnostics". Only when the compromise de vente is complete, it is legally valid and all parties involved may sign it. After both parties, you and the seller, have signed this contract, the seller is legally obliged to deliver the property to you.
This is the legal cooling-off period that you have as a buyer. This period is 10 days after you have signed and received the compromise de vente. All days count, including public holidays and weekends. After all, according to French law you can also think on those days! Sometimes you will receive the contract immediately upon signature, sometimes you will receive it later: in the latter case, the date on the postmark will be the start date of the cooling-off period. In these 10 days you can still cancel your purchase without further explanation of reasons. There is no penalty for that. You only have to send a registered letter to the seller in which you say that you are cancelling the purchase. Of course we help you with that, if necessary. This right to withdraw from the purchase is intended to protect you as a buyer from impulse purchases.
The compromis de vente binds both the seller and the buyer. As soon as both parties have signed this contract, and the legal 10-day cooling-off period for the buyer has expired, they can no longer get away with it without penalties. That is why they often include resolutive conditions in this agreement, for example about the buyer obtaining a loan. If, for any other reason, either party wishes to leave the agreement, they must go to court to resolve the case and resolve their dispute (Tribunal de Grande Instance). If you as a buyer no longer want to buy, you usually pay a fine, which is usually 10% of the purchase price that you have agreed.
The promesse de vente gives you as a buyer more freedom to step out of the agreement. A promesse de vente binds the seller, but does not give him real assurance that you will actually buy the property. If you later cancel the purchase, he does not have any sanctions. That is why most sellers today prefer a compromis de vente. If you change your mind at a promesse de vente, you do not have to pay the seller an indemnity.
This is the final contract with which the seller delivers the property in Paris to you. The French notary draws up this contract. He must ensure that all clauses are correct. Once you and the seller have signed the deed of delivery, you are the formal owner of your Paris apartment.
The seller of an apartment is legally obliged in France to provide formal proof of the exact area that he is selling. The law in which this is laid down is named after a certain Mr. Carrez. The measurement of the surface must be done by a competent authority or company. The law provides specific definitions of what does and does not "count" in the surface. For example: floor space with a headroom of less than 1m80 does not count for the Carrez surface.
A mistake to your disadvantage means you get money back
If after the purchase it appears that the surface you have acquired is more than 5% less than what the seller claimed, you are entitled to a correction of the purchase price. This is the difference in m2 times the price that you paid per m2. With an average selling price of 9,500 Euro per m2, a difference of a few m2 can make a big difference! You can execute this right up to 1 year after the purchase. Providing proof that the measurements are correct is not that difficult, but the procedure for actually getting your money back takes a lot of effort and time. That is why we advise you to make your own estimate of the surface before concluding the purchase. If something is not right, you can better post it.
The time that elapses between your first viewing of an apartment in Paris and your reception of the key varies. But we can indicate some broad outlines. We usually need two months to find an apartment for which you want to make a bid. If the seller accepts the offer, it will take another two months before you can sign the preliminary purchase contract, Compromis or Promesse de vente, together with the seller. Usually, the final purchase agreement (Acte authentique) can be signed a month later. At that moment you will receive the keys of your new flat. So as a rule of thumb, you should reckon 5 to 6 months between the first viewing of a flat in Paris and the actual key handover. This term can vary. For example, the buyer may not accept your offer. Then we have to look further. Or you need a little longer to obtain a mortgage. Some searches take longer because it concerns a very specific type of apartment. Sometimes the notary needs a little more time to sort things out. And if you want to thoroughly renovate your new apartment, you should count another 3 to 6 months to do so. You can only start renovating your flat after the final deed of sale has been signed.
Yes. The transfer of ownership of immovable property may also legally only take place in France in the presence of a competent (French) notary. Part of the preparatory work can take place without calling in the notary. Although from ParisScarabee Househunters we prefer to work with the notary from the very beginning, it is possible that we have the 'compromis de vente' drawn up by a real estate agent. The most important reason for this is usually time pressure.
Of course. Only if you do not have anyone yourself, we do know a good notary. It is more convenient to use a notary in Paris than a notary elsewhere in France. The regulation of real estate in Paris is very specific and different from other locations in France. It requires local knowledge and experience to handle this properly.
The notary charges a percentage of the selling price for his help with the entire transaction. For an apartment of 500,000 euros and without a mortgage, he charges around 5,350 euros. He can make a proposal for deviating from this price or for additional work, usually at an hourly rate.
The average price you pay for an apartment in Paris end of January 2021 was around 10,730 Euro per m2. In the 19th arrondissement, you might find something for 8,400 euros per m2, but you pay between 10,000 and 25,000 Euros per m2 in the more sought after arrondissements. Prices have been rising steadily in the past years, showing an increase of 34,3% per m2 since 2016.
The search to find the apartment can take 1 to 12 months. This depends, among other things, on your criteria, budget, and your availability and decisiveness. Also a few months after the search, after you have signed the "compromis de vente", it takes at least 1-2 months for the real transfer of ownership to take place. The notary needs this time to verify all data. He must also examine whether the city of Paris can still exercise certain rights on the property, and whether there are no other claims or mortgages on it. During these 1-2 months you usually cannot enter your apartment. The seller will not allow that. You can therefore only start renovating and moving once you've really received the keys to your new house.
You pay transfer tax and additional administrative government costs. An example: If you buy an apartment of more than 5 years old, for a price of 500,000 Euros, without a loan, you pay almost 6% of the purchase price as a transfer tax (and additional costs) in France. Including notary fees in this example you will pay approximately 35,250 Euros in transfer costs (approximately 7% of the purchase price). With a purchase price of 160,000 euros, the total of transfer costs (notary (2,530 euros) and transfer tax and additional costs (9,850 euros) is approximately 12,400 euros, which is more than 7.7% of the purchase price.
In Paris, it is common for the buyer, therefore, to pay the costs of the seller's broker. These costs are separate from our ParisScarabee Househunters fee for performing your search. The asking price shown in property advertisements is often "FAI", "Frais d’agence inclus". This means that the seller's brokerage costs are already included in this price.
The amount that the Parisian broker charges for his mediation on behalf of the seller depends on the asking price. It includes French VAT (TVA). The seller negotiates the rate with the broker. After all, he gives the order to sell. The usual or standard rates of a selling broker in Paris are: at a price of 0-200,000 Euros: 10% of the selling price; at a price of 200,001-400,000 Euros: 7% of the selling price; at a price of 400,000-800,000 Euros: 6% of the selling price; with a price of 800.001 and more Euro: 5% of the selling price.
Without a broker often the same asking price
Sometimes the selling broker reduces his commission to make a quick sale, but that is not imperative. If the seller does not engage a sales broker, it is customary that he nevertheless raises the asking price to the amount including brokerage fees. This is, in fact, regarded as the "market price". The seller puts the sales commission in this case in his own pocket. That explains why some apartments are offered for sale with or without a broker for the same price.
Questions about ParisScarabee Househunters
One of the apartments that we bought ourselves in Paris is located in a so-called "Art Nouveau" building from 1907. This building is beautifully decorated with ceramic tiles by Alexandre Bigot, a famous Art Nouveau artist. Typical for Art Nouveau is the use of motifs from the plant and animal world, such as leaves, branches, fruits and animals that live on plants. And above the main entrance of the building he applied a special beetle: a "scarab". In Egypt the scarab is the symbol of the cycle of life. But the word scarab has a second meaning. It also describes a jewel: a pear-shaped gem cut in facets. The name ParisScarabee Househunters was born: our mission is to help each of our clients to find a unique apartment in Paris, a jewel to live in!
Paris real estate agents are used to selling only properties from their own portfolio, and not from supply from the entire city. They do not act as your purchasing agent. They want to sell their own products to you. That is why they are not independent. And although there are excellent brokers in Paris, there are also very many who speak little or no English. Some just as easily ignore the hassle of working with a foreigner. There is more demand than supply on the Parisian housing market. So if you drop out, another buyer will come to whom they have less work.
The first intake interview with ParisScarabee Househunters is always free. For a follow-up, whether it concerns a search for a purchase, a make-up or renovation, a project to sell or rent out your apartment, we first establish your wishes and budget in an agreement. ParisScarabee Househunters agrees the final fee for our services with you in advance. No surprises, you know where you stand. Depending on the nature of our services, we are obliged to charge you Dutch or French VAT on payments. Read all about our fees here.
We will agree with you in advance what our fee will be. You only pay this amount to us when you have the keys to your Paris apartment. At the start of our search we charge a fee of 1000 Euros. We deduct this amount from your final bill. And if you ultimately do not want to buy a flat in Paris, you will not pay us anything else: ParisScarabee Househunters, no cure, no pay. Read more about our fees for a house search here.
We work with an agreed hourly rate or with a fixed total price. Have you found and purchased your apartment with us? Then you pay 80 euros per hour excluding VAT. When renovating an apartment for which ParisScarabee Househunters has not been active, you pay 100 Euro per hour excluding VAT. Read more about our fees for assisting you with a renovation here.
We work with an agreed hourly rate or with a fixed total price. Have you found and purchased your apartment with us? Then you pay 80 euros per hour excluding VAT. When supervising the rental of an apartment for which ParisScarabee Househunters has not been active, you pay 100 Euro per hour excluding VAT. Read more about our fees for assistance with renting out your house.
We will agree with you in advance what our fee will be. You only pay this amount to us when you have sold your Paris apartment. At the start of our search we charge a fee of 1000 Euros. We deduct this amount from your final bill. And if you ultimately do not want to buy a flat in Paris, you will not pay us anything else: ParisScarabee Househunters, no cure, no pay. Read more about our fees for assisting you with the sale of your real estate in Paris.
Questions about financing and banks
We can put you in touch with local banks where people speak English. But we are not financial advisers or intermediaries ourselves. Obtaining financing takes time. If you want a loan or mortgage for the purchase of an apartment in Paris, we recommend that you take the necessary steps as early as possible. When signing the "compromis de vente" you must already have a good idea about how you want and can finance the purchase. If you do not apply for a loan, you have a head start in the eyes of the selling party. People often prefer a buyer who does not set resolutive conditions with regard to the financing of the purchase and who explicitly waives the use of a loan or mortgage.
Yes, we have good contacts with banks in Paris where people speak English and are used to working with foreigners.
That is not mandatory but you will find that it is much easier. Not only when purchasing a home, but also for your future life in Paris and in France. If you have a current account or regular checking account in France, that makes transactions much easier. Especially those with suppliers of gas, water, electricity and telecommunications. But also for the payment of your French taxes. Do you want to use direct debit? Then a French bank account is usually indispensable. You will receive a document (a Rélevé d’Identité Bancaire, or RIB) at your French bank account that opens many (sometimes bureaucratic) doors for you.
Questions about ownership
The annual tax that you, as the owner of the property in France, have to pay. You always pay this, even if you do not live in it yourself. The amount is determined by the French government. This is based on the cadastral value of your property (which can differ considerably from the market value). If you purchase an apartment during the year, the notary allocates this tax pro rata between you and the seller.
The annual tax that the occupant of the property must pay. The person who lives in the building on 1 January pays this tax in full, even if he leaves on 2 January. If nobody lives in the property on January 1 of a year, the owner, pays this tax. The amount of this tax is determined annually by the French government. This tax is increased by 100% in the city of Paris if your apartment is a second home that you use primarily for your own use. That is almost always the case.
Impôt sur la fortune immobilière
Under circumstances, if the net value / value of your real estate assets present in France is more than 1.3 million Euros, you, as a non-resident owner of French real estate, also is subject to French wealth tax.
Charges de copropriété
These are the costs of the owners association. This association takes care of the maintenance of the joint building, the common areas, the elevator, the payment of the concierge if there is one, and so on. You pay a monthly contribution for this. In exchange, you have the right to vote in the association. These association costs vary enormously per building. For example, you pay more as the building is more laborious, there is a lift and you live on a higher floor, there are fewer owners .... Often, costs of water and heating are included in the advance that you pay. For an apartment of 2 or 3 rooms you usually spend 150 to 350 euros per month. The association pays current affairs from this amount. For major maintenance you usually have to pay extra.
You must insure your household belongings yourself. The building is often co-insured in the insurance of the owners association. For the household belongings and liability insurance of an apartment of 60 m2 you pay around 250 euros per year.
Gas, water, electricity
The amount of these costs depends on many things, including your own behaviour and how often the apartment is occupied. The seller can give you some instructions about this.
Communication (TV, telephone, internet)
The costs for this depend on the formula you choose. There are basic packages with all in one from around 35 Euro per month.
Yes. You can break the ownership in percentages. You can also see if a SCI, a "Société Collective d’Investissements" is worth it for you. You may save inheritance and gift tax and French impôt sur la fortune immobilière. This is complicated matter. We therefore advise you to hire a specialized legal and tax adviser for this.
Residents of the Netherlands and of many other EU countries who directly own French real estate are in principle subject to income tax in the Netherlands or in their tax domicile (for Dutch tax payers: refer the explanation in the Dutch section of this frequently asked question!). The tax treaty between the Netherlands and France provides, however, for an almost total exemption from Dutch income taxation to prevent double taxation.
Often no double taxation in other EU countries
In other EU countries that have concluded a tax treaty with France to prevent double taxation, an exemption from taxation is also usually granted. The idea behind this is that the French income is not taxed twice. We advise you to check your own tax situation (or have it checked) before you make a purchase decision.
Questions about renovating and refurbishing
For a small freshening up of a small apartment, with only some painting work, 5,000 Euros is often enough. For larger renovations, where, for example, you move walls, install new electricity, install new plumbing fixtures and install a new kitchen, the costs vary from 1,000 Euros per m2 to even 2,500 Euros per m2. The final costs mainly depend on your requirements and your taste.
That of course depends on many factors. Our experience is that it takes 4 - 6 full months. And in July and August, in Paris, virtually nobody is at work… nothing much happenes in those summer months.
Yes, and we are happy to do that for you. You conclude a separate agreement with us for this. We guide you through the renovation if you have found the apartment with our help. And we can guide you through a renovation even if you have a home in Paris that you have not bought with our help. Please click here to find out about our renovation services.
Questions about renting out
Yes, you can rent out your apartment in Paris. But, there are various rules you should take into account. First, note that your flat in Paris is considered to be your secondary home, unless you are a French tax resident. This even applies if you only have one real estate property in France.
Long-term versus short-term
In Paris, different rules apply for long-term rental on the one hand and short-term rental of second homes on the other. Long-term rental means renting to the same tenant for a year or more (or for 9 months or more to students). Short-term rental is all shorter than a year (or shorter than 9 months to students). Furthermore, a distinction is made between furnished rental on the one hand and unfurnished rental on the other.
Unfurnisched rental for the long term:
The classic long-term rental of a normal, empty and unfurnished (!) Apartment, but with kitchen and bathroom, is always possible in Paris , according to the normal legal rules.
Furnished rental for long term:
You may also rent your second home in Paris furnished. The rental period must then be at least 1 year, and at least 9 months when renting it out to students.
Furnished rental for short term:
It is allowed to rent out your furnished apartment for a period of between 1 month and a maximum of 10 months. But only to persons who have to stay in Paris with the purpose of following a study, a professional training, or doing an internship or a professional secondment. Each rental contract of this type, a mobility lease or bail de mobilité, cannot be longer than 10 months. You can not renew it with the same tenant. It must meet various requirements. More on this at https://www.airbnbcitizen.com/mobility-lease-airbnb/
Tourist rental of a second home is not permitted:
Holiday rental, like it is done in many cities all over the world, for example via AirBNB and Booking.com or simply via the broker, is basically not legal in Paris. This type of short-term rental is subject to a complicated and expensive system of permits that are very difficult to obtain. The fines for not complying with the rules are high. The chance of being caught is small but the sanctions are severe.
You may exchange your flat in Paris:
You may also exchange your Paris apartment through "Home Exchange". That is not a financial transaction. Because no rent in the form of money is paid, this is (for the time being) permitted in Paris.
The regulations for renting (second) apartments in Paris are constantly changing. For the latest reporting on this, we recommend that you always seek expert advice.
The taxation of a furnished flat is subject to special rules about which you can read more on the website of the French government.
Yes. Since July 1, 2019, the city of Paris has set rules that impose a maximum on the rent that you may ask for permanent rental. This "encadrement des loyers" contains detailed regulations. The rent may no longer exceed a certain limit. The prefect of the city determines the maximum amounts. The rent increases are also restricted. And when the old tenant leaves you can increase the rent for the new tenant only to a limited extent. If a tenant believes that you are requesting more rent than is permitted by the rules, he can challenge this. These new rules apply to both furnished and unfurnished rent, for all lease contracts signed from 1 July 2019. You can still get a reasonable return on renting out your Paris apartment, but it is advisable to check the regulations beforehand, so that you don't rely on false or too rosy assumptions.
Here you will find more information. In French: “Un arrêté préfectoral du 28 mai 2019 instaure la mise en place de l'encadrement des loyers dans la zone de paris intra-muros, pour les baux signés à dater du 1er juillet 2019. Cet arrêté concerne les baux soumis à la loi 89 pour les logements loués nus ou meublés. Dorénavant, les montants des nouveaux loyers devront obligatoirement être fixés dans le respect de cette nouvelle réglementation ”.
Yes, but only to people who have to stay in Paris for a study, course, education or training, or to people who are seconded to Paris for their work. In this case, short term means less than 10 months per rental contact. Short-term rental of second homes for any other purpose, such as holiday rental through AirBNB and Booking.com or simply through the broker, is not legally permitted in Paris. This type of short-term rental is subject to a complicated and expensive system of permits that are very difficult to obtain. The fines for not complying with the rules are high. The chance of being caught is small but the sanctions are severe.
Yes, you may exchange your Paris apartment through "Home Exchange". That is not a financial transaction. Because no rent in the form of money is paid, this is (for the time being) permitted in Paris.
In this situation you rent out your Paris apartment to a permanent tenant indefinitely. Your rental income depends on the location, quality and size of your Paris apartment. The average rent for this type of rental is around 35 euros per m2. The tenant pays the residents tax (taxe d’habitation), his own gas, water and electricity, and about 2 / 3rd of the costs of the association of owners (VVE). As the owner, you pay the rest plus the unforeseen maintenance costs. And you pay the rental agent or manager, if you have engaged one to rent out the property. You pay tax on rental income in France.
Your rental income per weekend, week or month depends on the location, quality and size of your Paris apartment. Furniture and linen are included in the rental. Your income per unit of time is somewhat higher than with permanent letting to a permanent resident, but your maintenance costs and depreciation are often also higher. And you can have more work on it.
Consider outsourcing the management of your rental
You can also fully outsource this type of rental. We can put you in touch with good rental agents. Their reward varies. Sometimes the tenant pays a one-off commission to the agent (usually 20%) and you pay a monthly fee (often 15%) on the actual rental income. Sometimes the tenant pays nothing and you pay 35%. Just like the rates, the service is à la carte.
The French income tax and social levies generally differ considerably from the income tax and social levies in the country where you, as the owner of a "second" home in Paris, live for tax purposes. Even if you own only one property in France, in this case in Paris, but you live for tax purposes in another country, you are normally subject to French tax in France. In France it often concerns a different tax base and a different rate than you are used to in your home country. Normally, France subjects the income, and sales gain, that you receive as a foreigner from operating your second home in Paris to French tax. The French tax system has many moments in which you are obliged to make choices in the French tax return. These choices often depend on the type of rental, for example furnished or unfurnished rental. It goes too far to explain the entire French system here. And also in France, this field is constantly changing, subject to change, and in some respects the subject of dispute between citizens and government. You must therefore keep your finger on the pulse and seek advice on the current state of affairs.
You pay French income tax and social taxes
For 2020, the French government levies an income tax of 20% income tax on the net rental income from a(n) (un)furnished second home for non-French residents. Under certain conditions you can choose to apply a so-called average French income tax rate percentage if it is lower than 20%.In addition, 7.5% of social taxes will be levied on the net taxable rental income for residents from EU countries. This rate is 17.2% for residents from most other countries.
For the deduction of costs from the rental income of an unfurnished apartment, you can choose between two regimes: (1) “real” cost deduction (various costs, but nUnder certain conditions you can choose to apply a so-called average French rate percentage if it is lower than 20%.o depreciation) or (2) a flat-rate deduction of 30% from the rental income if your rental income is not more than 15,000 Euro per year. You are bound by your choice for three years. You can deduct some costs from your rental income, such as interest on a loan, depreciation, maintenance, and the monthly homeowners association (HOA) costs.
If you rent out furnished accommodation, you must get a SIRET number from the Greffe du Tribunal de Commerce. Here too you can choose between two tax regimes to determine the deduction of costs: (1) actual costs and depreciation or (2) if your rental income does not exceed 72,600 euros per year, you can apply a flat-rate deduction of 50% of the proceeds. You need to make the choice timely every year. The French authorities may in certain cases levy many other taxes for this type of rental, e.g. VAT and tourist tax. Read more about all this (in French) on the website of the French government.
We offer you our assistance to arrange the best possible rental of your apartment through a local rental agent. We then supervise the rental from the first start up to and including the lease. We will agree this service separately with you. We work for these services on the basis of an hourly rate. Read more about our services with renting out your flat.
No, unfortunately we don't do that. For this you can visit specialized rental websites.
Questions about selling
In a general sense, there is little supply in the centre of Paris and in the nice neighbourhoods, and the demand for high-quality apartments is high. So today's market conditions in Paris are very favourable for home sellers. And good quality properties always sell faster. We help you in your search and together with you evaluate the sales potential of the apartment that suits you. Real estate sales are an area in Paris with many pitfalls. We recommend that you consult a good local sales broker for sales.
The French income tax and social levies differ from the income tax and social levies in the country where the owner of a "second" home in Paris lives for tax purposes. Even if you only own one property in France, in this case in Paris, but you live for tax purposes in another country, you are subject to French tax in France under the tax regime that applies to second homes. In France it often concerns a different tax base and a different rate than you are used to in your home country. Normally, France subjects the income, and sales gain, that you as a foreigner receive from operating your second home in Paris to French tax. The French tax system has many moments in which you are obliged to make choices in the French tax return. These choices often depend on the type of rental, for example furnished or unfurnished rental. It goes too far to explain the entire French system here. And also in France, this field is constantly changing, subject to change, and in some respects the subject of dispute between citizens and government. You must therefore keep your finger on the pulse and seek advice on the current state of affairs.
You pay income tax and social taxes
For 2020 the French government levies income tax at a rate of 19% for EU residents and most other countries, plus social taxes of 7.5% (17.2% for many other non-EU countries) on the taxable capital gain. Taken together, this is therefore an income tax of 26.5% for EU residents and 36.2% for many non-EU residents on the profit on the sale of a home by persons who do not live in France for tax purposes. You must check your own tax situation before you make a decision to buy or sell. First you determine whether there is a profit on sale The profit on sale is the difference between the purchase price you paid and the price you receive on sale (with some minor corrections to both amounts). You can only deduct the costs of improvements due to renovations from the profit if they meet very special requirements, and this is rarely the case with the average renovation. A normal renovation does not count to explain the increase in value of your apartment.
Decreasing over time
The taxable amount on which 26.5% is levied is 100% of your profit in the first 5 years after purchase. This basis on which income tax is levied is gradually decreasing, by 6% per year from the 6th to the 21st year after purchase, by 4% in the 22nd year after purchase. After 22 years you therefore no longer have to pay income tax on sales profit in France. For social taxes, the basis on which the taxes are due also goes down over the years: by 1.65% per year from the 6th to the 21st year, and by 1.6% per year in the 22nd year, with 9% per year from the 23rd year.
More with larger amounts
In addition to the income tax due on the profit you make on sale, an additional amount of income tax is payable with a taxable amount of more than € 50,000. The extra rate ranges from 2% to 6%. Profits of more than € 260,000 are taxed with an additional rate of 6%.
France treats residents of France, EU and non-EU residents differently for the tax on rental income and sales profits. On the basis of recent judicial decisions, it can be said that this is unjustified in several respects. For the taxes in your own country, the situation may differ per country. We advise investors to seek professional advice about the French and foreign consequences for personal tax situation.
Yes, and we are happy to do that for you. It does not matter whether or not you have purchased your apartment in Paris with or without our help. We conclude a separate agreement with you for this. For more information click here.
General and other questions, including Corona / Covid
Until very recently, all indicators for the real estate market in Paris pointed towards increasing prices per square meter to as much as 8% in 2020. Supply was scarce and declined rather than increased, while demand continued to be strong. The number of transactions gradually decreased because there was little to buy. But how does the Corona crisis affect the Paris residential property market, that is, the housing and apartment market? We, ParisScarabee Househunters, nor many other connoisseurs of the Paris housing market know exactly what will happen. However, we’d like to share some of our considerations with you.
Current situation (Q1 2021): slight increase in prices
After two strict lock-downs in which real-estate agents had to refrain to on-line viewings and contacts only, and a brief period in the summer when free movement was possible, the year 2020 in Paris nevertheless ended with an average price increase for residential real estate of 1.8%. That is less than in 2019, when the price increase was still 8%. At the start of 2021, although there is a 19.00 (or 7PM) curfew in place, physical viewings of homes and real estate transactions, for example at the notary, are possible. So despite Corona, the Parisian real estate market is definitely alive and kicking.
Developments on the demand side are diverse
We believe that the underlying trends in the Paris housing market remain the same as they were before the Corona crisis. We expect the housing shortage in Paris to continue to be great. Brexit has consequences. Businesses and residents from the UK, French and expatriates, will move to Paris, resulting in an increased demand for housing and apartments.
On the other hand, potential buyers are likely to be more cautious with a purchase now that the economic outlook is generally less rosy. It can also become more difficult to borrow money for a mortgage. And more expensive. Interest rates on mortgage loans were historically low and banks were very willing to lend on favorable terms. This willingness is likely to decline as banks need to maintain their buffers. They will estimate the risk of payment problems from their customers higher than before the Corona crisis. This can have a negative effect on the demand side.
Residential real estate a “safer haven”
Based on the experience during the 2008-2013 financial crisis, we expect the value of residential real estate in Paris to be less volatile than many other types of investments. That means that the value of houses apartments in Paris varies less extremely. The loss of value will therefore be less than in other investment categories such as equities, bonds and commercial real estate. Perhaps there could be a downward impact on rents if tenants lose their income. For example, because they lose their job. But there will still be a demand for living space. People who are unable or unwilling to buy must rent. In our view, residential real estate in Paris is therefore still a relatively safe investment category. Especially if it concerns a first or second home.
Our medium-term outlook: Demand will stay bigger than the offer
Of course, there is also a life "AFTER" the Corona crisis. The extreme swings on the housing market in Paris are temporary. Social and commercial life will start again. Then there will be a deluge of transactions yet to be settled. There may be a substantial catch-up demand from potential buyers. The offer of houses and flats may also increase immediately after the crisis.
We expect that it will take at least a few months, perhaps one or two years, after the start of social and commercial life in Paris, before it becomes really clear what the (medium) long-term effects of the Corona crisis are on the prices of residential real estate in Paris. This also determines in the medium to long term at what yields or prices it is attractive to re-enter the Paris residential property market. Buyers are likely to take a somewhat wait-and-see attitude. But if the sellers of real estate do not bring their properties on the market, the prices per square meter of a house or apartment in Paris will still remain relatively high. Houses and apartments with an outdoor area, a garden, terrace or balcony will - even more than before the pandemic - get more expensive.
Residents of Schengen countries and of many other countries, including the USA, are allowed into France, whether they have a secondary residence in France or not. You must provide a proof of vaccination older than two weeks or present a negative PCR test of less than 72 hours old (situation as per July 28 2021). There stil are many countries whose residents are not allowed to enter the Schengen zone or France. Residents of those countries will be flatly refused access into France should they try to travel there. The EU reviews the measures and the corresponding lists of countries regularly. Also, France may take a different stance. Look at websites of your own country to find out what the most recent updates are. Also, each individual must check what their own country states about traveling and leaving the home country.
For the most recent information of the French government on the Corona virus, look ere: https://www.gouvernement.fr/info-coronavirus
If you think exemptions for travel do apply to you, you can download the required forms here: https://www.interieur.gouv.fr/Actualites/L-actu-du-Ministere/Attestations-de-deplacement
Yes. We continue to work and we abide by the rules. Visiting apartments with real estate agents in Paris is allowed (situation as per July 28, 2021), wearing a facemask inside. Renovations can continue and notaries work. We keep a very close eye on the rules, as they change almost daily. Contact us to see what the current options are.
Please contact us for more information. We are available by phone 7 days a week from 9 a.m. to 10 p.m. You can also send us an e-mail or WhatsApp message.
Telephone and WhatsApp:
In The Netherlands: + 31 6 11 24 35 12
In France: + 33 6 47 41 83 52