This month we’ll be covering all things property related. We’ll be talking about property administration, property taxes and even hearing from one of our own clients about their property experience in France. If you own a property in France that you rent out annually or seasonally, you may want to keep an eye out over the next month and keep on reading.
We’re going to be kicking off our property month with a blog detailing the important information and obligations related to holiday lets and property rentals. In this resource document we’ll be covering the nitty gritty of rental, from what information is required on your contracts, to deposits, insurance requirements, taxes and tourist rental.
1. Property Rental Contract
In France, it’s an urban myth that a lease isn’t required for holiday and seasonal rentals. A written lease is actually mandatory for seasonal or holiday rentals, as is a description of the premises provided to potential tenants. The contract must be in writing, in French, signed by both parties, and contain the price charged for the period in question. Legally, it must be produced in as many copies as there are parties and signed by each of them.
The contract itself must contain the following information:
The period and duration of the rental;
The precise identity of the parties (owner and tenant);
The address of the property; and,
Its main characteristics.
Drawing up an inventory of fixtures and fittings when the keys are handed over to the tenant is advised, as well as when they are returned. To be valid and indisputable, these documents must be complete, detailed and signed by both parties at the point the contracts are signed - the same way that you’d process a lease for a long term tenant.
2. Damage Deposit
There are actually no legal rules on damage deposits, however as a general rule, most holiday rental owners determine the amount of their security deposit using a fixed price (e.g. €400) or a percentage (e.g. 15% of the total rental cost). There are multiple ways you can manage your deposits and how you do so is up to you as the owner. This can be done in cash when your guests arrive, you can charge and then refund the deposit online, or you can opt for pre-authorisation. There is no ‘right or wrong’, it’s just what works best for you.
3. Official Reports
Depending on the age of the property and its location, you may need to have a certain amount of studies done. The most common is the energy performance certificate (DPE). To check which studies your property may be eligible for, you can follow the official government website guide here. You’ll need to answer a few short questions regarding your property occupancy and lease dates and voila, all relevant documents / studies you need will be clearly detailed for you. Top tip for non French speakers - this website is of course in French, but the site service-public website also has a drop down arrow on the page itself to read it in English.
Please note that there is in fact no obligation to take out further insurance for a furnished tourist accommodation intended for seasonal rental. However, as a property owner you are obliged to take out insurance for your home, and this “multirisque” insurance generally covers not only damages due to causes from water and fire, but also your liability towards neighbours and third parties. With this being said, you must inform your insurer that you will be renting the property. You can also set a requirement that your tenant also takes out insurance. If you choose to add this requirement, this obligation must be included in the rental contract.
An important note for all of you property owners with a chimney in your property - legally you must have this swept annually for your insurance to be valid. In order to prove that you’ve had this completed, you just need an invoice from the chimney sweep as proof that it’s been done.
5. Declare your tourist rental to the Mairie
In order to be a law abiding property renter, you must contact your local town hall (Mairie) to inform them that you will be renting your property as a furnished holiday let. Your declaration can be completed easily using the online portal here. You’re required to fill in a three part declaration process and you’ll need your basic property information available to do so.
It’s important that you don’t confuse your declaration with classification. You are required by law to declare your tourist rental in the Town Hall, however your classification remains optional. But what actually is classification we can hear you asking… keep reading and you’ll find out.
Classification status is related to furnished tourist accommodation and it indicates the level of comfort and service to the client. It can also be used as a marketing tool and is ranked using ‘stars’. It also allows you to benefit from certain tax advantages, so it’s worth looking into.
7. Taxe de séjour
That brings us nicely onto the topic of tourist tax. Tourist tax is payable by your holidaymakers. This is an additional cost to the rent, but it is up to the owner to collect it and return it to the local authority. So, it’s your responsibility as the owner to be the sole contact for your tax collector. If your holidaymakers don’t pay - that means it's up to you, the owner, to pay - so best make sure they don’t forget. To avoid collecting the wrong amount, make sure you obtain the correct rates and procedures from your local town hall for your property.
8. Declare your income to the French tax authorities
You’re required to declare the income of your property rental to the French tax authorities. This entirely depends on how you are set up to rent and can be a little complicated. If this is something that you’re struggling with, don’t hesitate to get in touch and we can help you figure out the right amount and way to declare your income.
We hope after reading this as a property owner you feel more comfortable with the requirements related to renting your property out to holiday makers. Coming next is a blog entirely focused around Fiscal Options for property rental which will help you decide what fiscal status you’ll want to rent under. Keep an eye out! Speak soon.