Renting your property out in the South of France can be a little daunting if it is your first time, especially when you are relying on the rental income to pay your mortgage. Here we will explain the various steps involved for maximizing your return but for a more comprehensive explanation of the services we provide just visit our property rental management in France page.
The VAT rebate for property in the south of France
Firstly, under the rental management system proposed by Avecoeur you will be eligible for a rebate of the VAT included in the price of your new property because it provides a minimum of 3 out of the 4 services indicated below.
-Provision of sheets and towels
-Check in and check out
Additional requirements are for the management company to be French and registered with a professional license with the appropriate insurance policy. The benefits here are two-fold: Firstly, this policy protects consumers to give them peace of mind that they are renting through a bona fide French management company which actually manages the properties being advertised and that their deposits are held appropriately. Secondly it gives owners the knowledge that their rental income is protected against theft by an unscrupulous management company.
To comply with the VAT rebate regulations Avecoeur creates invoices on the owner’s behalf to send to guests and manages the invoices from suppliers, where all information can be accessed by owners through our accounting software. Full management of these accounts for owners by Avecoeur means there is nothing for owners to do as these accounts are passed onto the French chartered accountant to submit every quarter.
An important point to know is that most regular French estate agents don’t provide the required rental mandate to owners nor do they provide the required invoicing and accounting services to qualify for the VAT rebate. If you are ever unsure about the management company then check with the accountancy firm they work with to ensure they are legitimate.
For more information on VAT rebate compliance please visit our VAT rebate page.
Hidden rental management costs for a villa or apartment in the South of France
Choosing the right rental management company for your apartment or villa in the south of France can be difficult as there are a good number to choose from and many more if it is not important to qualify for the VAT rebate. Whether you are looking to rent your property out on the Cote d’Azur, Provence or further west along the Mediterranean coast, typically, a French property rental agent will charge 20% ex VAT for their services, however, you will need to factor in these additional costs:
-Commission to the rental platform such as booking.com which can be as high as 20%
-Visits to check on the property, to accompany handymen/electricians/plumbers, pick up post and to replace broken items after check outs.
-Accounts must be filed every year and taxes collected and disbursed to the appropriate tax authorities, regardless of whether you have elected for the VAT rebate or not. If an agent offers this service it will usually be an additional charge
You can see that quite quickly when you take into account all these charges you could easily be paying out a total of 40% or more of the rental income to cover these services. Avecoeur works differently. In order to ensure that all properties under our management are maintained to the highest standards and to give owners full peace of mind, Avecoeur undertakes all these services for a fixed commission of 35%. When this is compared to paying for all the additional costs using a different company we believe that we represent good value.
Rental tariffs and occupancy of a rental property along the French Mediterranean Coast and Provence
The main season in the South of France for rental is of course the summer season which runs roughly from the beginning of April to the beginning of November (7 months) and the high season weeks are July and August (particularly the 3rd week of July to the 3rd week of August included). The weeks from early November to late March do also get rented out, particularly if it is located near the beach, but bear in mind that the price is about one third of the price of the high season summer weeks so only make up a fraction of your yearly rental income and are usually consist of long weekends rather than week long bookings. When calculating rental returns for properties located on the Mediterranean coast or Provence we tend to not include income from the winter months and just see it as a bonus.
Depending on the quality, location, amenities and rental tariff, you can on average expect to rent out your villa or apartment for about 18 weeks over the course of the year. It is usually recommended to have Saturday as your check out day during July and August and to rent for a minimum of a week however outside of July and August we recommend allowing bookings of 2 days or more, with no specified check in/check out day, since outside of the school summer holidays many people only want to rent a few days at a time. You therefore end up with a mix of weekly bookings and short stays throughout the summer. Ultimately you can expect a typical rental yield of between 3% and 3.5% NET if you don’t use it (or only use it last minute when it is not rented out) or about 2% to 2.5% if you use it for a couple of weeks in the summer high season or 4 weeks in the low season.
Set up and running costs of a villa or apartment on the French Mediterranean coast
The set up costs include: Furnishing and decorating your property which usually also includes selecting and fitting a kitchen since kitchens are rarely provided when buying a new villa or apartment. If you have the time you can do this yourself or if you prefer then Avecoeur offers this bespoke service and you can find more information on our Furnishing and decoration service page. We also provide a snagging list service too to ensure the new property handed over to you is completely finished and to spec.
If you have the extra space in your villa or apartment then providing equipment for your guests like bicycles is a nice touch and if located near the beach then paddle boards, snorkelling equipment and other seaside activity equipment is also a bonus and helps to obtain the all important 5 star reviews you are looking for.
The running costs will typically include the co-ownership charges, utility bills, taxe fonciere, taxe d’habitacion, and home insurance. Bear in mind that you will also have small repairs that will not be covered by your tenant’s deposits and over time some furniture or decorations may need to be replaced due to standard wear and tear plus we recommend you re-paint the interior of your property every 5 years or so.
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