With its wealth of theatres and cinemas, world-class museums and historic monuments, Michelin-starred restaurants and lively nightlife, not to mention its sophisticated shops, beautiful parks and architecture, Paris remains an attractive place to invest in from an economic, cultural and touristic point of view. But what should you bear in mind when considering a property purchase in the City of Light?
Where should you buy
To get the most out of your search, it is key to have a clear wish-list in terms of type of property and desired location. Whether you are looking for a small studio or a spacious luxury apartment, a charming townhouse or a mansion (hôtel particulier), Paris has it all. The city comprises many districts (arrondissements), and neighbourhoods (quartiers), each with its own distinctive character. Perhaps it is the elegance and sophistication of the 7th arrondissement, home to the Eiffel Tower and many prestigious properties, that appeals to you most, or maybe the intellectual heritage of the elegant 6th arrondissement, historically home to writers and philosophers. Could the mix of historic apartments and stylish modern renovated properties in the lively and fashionable district of Le Marais (3rd & 4th arrondissements) be your preference, or the artistic heritage of picturesque Montmartre in the 18th arrondissement, home of the Sacré Coeur Basilica and stunning views over Paris?
How much should you spend
Paris property prices are the highest in France, with the price of existing Parisian apartments expected by French lawyers Notaires de France to be € 9,360 per square metre by the end of June 2024. Nonetheless, according to their latest report, Notaires de France expect Paris apartment prices to have dropped by around 7.6% in the year to the end of June. This follows record highs in 2020, when the average price per square metre was over € 11,000. The number of property transactions across France (excluding new-builds) in the year to February 2024 dropped by 23% compared to the previous year – the greatest annual reduction since 2016. But due to signs of revival in the market, Notaires de France envisage that this annual drop should start to lessen in the coming months, with the property market finally reaching its “landing point”.
On the plus side, inflation is now back under control in France and some French banks are starting to reduce their interest rates, which should lead to an increase in buyers’ purchasing power. The current drop in the French property market presents a great opportunity for price negotiations by prospective buyers. Until recently, offers at or above the asking price were the norm and there was very little room for negotiation, but currently buyers have significantly more bargaining power. The average margin of negotiation is around 5%, sometimes rising to as much as 10-15% depending on the property, particularly those requiring renovation work to meet the strict energy efficiency requirements of the loi Climat.
This negotiation window for Parisian properties may, however, be brief, as Paris is hosting the Olympic Games this summer and historically property prices in the host city have increased substantially in the following year.
what if you want to use a property for Air BnB
Short-term lets of property in Paris via online platforms have taken off in recent years, to the detriment of principal residences. Consequently, there are fewer properties available for long-term rental. So, if you are thinking of investing in a Parisian property to rent out on furnished short-term lets, bear in mind that the City of Paris has taken action to preserve dwellings for its residents – if you want to rent out your principal residence, you are limited to 120 days a year and must first register online and pay the Taxe de Séjour. And if you want to rent out your second home, this will only be possible if you obtain prior authorisation for a change of use – from residential to commercial – and if you provide compensation by converting another commercial property into residential. Once again, the rental activity will be subject to registration and payment of the Taxe de Séjour.
So, buying a pied à terre in Paris for your own use might well be the preferred option.
If, however, investment returns are your key driver, you could consider letting out the property long-term, but be aware that the Paris rent control laws may limit the rental income potential.
Don’t forget that if you rent out your French property, the rental income will need to be declared in France, meaning that you will need to submit an annual French tax return. Depending on the situation, you may also need to submit full French accounts. As the French tax rules and their interaction with the income tax rules in the UK are complex, it is strongly recommended that before embarking on your new venture in France you seek the advice of a bilingual professional accountant specializing in the income tax rules of both countries.
Should you get a mortage
If you wish to finance your purchase by means of a mortgage secured against the property, it is advisable to secure pre-approval from the bank before starting your search, so that you are in a position to make a credible offer quickly. When looking at properties, always enquire about the relevant annual property tax rates(taxes d’habitation and foncière), as well as – for apartments – average co-ownership charges (charges de copropriété) over the last 3 years for building maintenance and services, as these may be significant. Check that the appropriate permissions from the co-owners and the local authority were obtained for any previous renovation or building work done to the property (or the apartment block). And if the property has been renovated in the last 10 years, check that any necessary 10-year defects insurance policy is in place.
What if i want to build or extend
If you are considering carrying out building or extension work to a property in Paris, note that in early 2025 Paris is bringing in a new “bioclimatic” town plan aimed at addressing the challenges of climate change and insufficient housing. Under the proposed plan, emphasis will be placed on low-carbon housing and restoration (rather than demolition), the provision of more social housing and green spaces, and the conversion of office space to residential use. It will be important therefore to check the feasibility of your project under the new plan before committing to it.
Once you find the pied à terre of your dreams, it is advisable to engage a specialist French property lawyer to review and explain to you all relevant legal documentation, including the preliminary sale & purchase contract, diagnostic survey reports and co-ownership documentation, so that you have the peace of mind that comes from knowing you have made an informed decision.
Buckles’ French team comprises experienced bi-lingual lawyers who specialise in French property and inheritance law. We are experienced in helping clients navigate the legal and cultural nuances of their French property transaction and, as UK registered solicitors, we are regulated by the high standards of the Solicitors’ Regulation Authority.
