The recent clarification of Capital Gains Tax rules is tempting HNWI’s (High Net Worth Individuals) back into the French property market according to Leggett Immobilier.
Chief Executive, Trevor Leggett, explains that when President Hollande first came to power he had toyed with the idea of ending tax breaks for the wealthy and of introducing a marked increase in CGT. However, two things have calmed the fears of wealthy buyers. Firstly, the recent announcement that the exoneration period will go down from 30 years to 22 years from September 1st 2013 and secondly that there will be a special temporary reduction to “aid the fluidity of the property market” – a tax allowance of 25% has been introduced for one year only which will apply to sales between September 1st 2013 and August 31st 2014.
“There is no doubt that the recent tax clarifications are tempting wealthy buyers back into the market. I read last week that Knight Frank are reporting a 16% increase in French property searches for the first five months of 2013 and are forecasting an increase in the demand for prime property from overseas investors this year. Well, I’m delighted to confirm that visits to our Prestige property website have doubled over the same period. These visits are also converting into sales – our Prestige team are on course for a record year with particularly strong figures in the Rhone Alpes, Provence Alpes Cote d’Azur and Aquitaine.
In addition to this increased demand I saw that the highly respected research team at Savills told the Wall Street Journal that new European lenders are coming into France at the rate of one a week. This lead the newspaper to report that “France is one of a select few countries where lenders are daring to tread once again“.
Mortgage rates are at historical lows, starting at 2.10% for a loan up to 80% of the purchase price and wealthy international buyers can sense that there are some excellent deals to be had. Indeed just last night I had back to back phone calls from two of our agents on the Cote d’Azur and in the Midi Pyrenees saying that offers had been accepted on prime properties from within our prestige portfolio”.