Buying an Apartment in Paris: Q&A with Leggett Prestige Real Estate
By Diana Mosher
To visit Paris is to fall in love with Paris. Many people start planning their next trip to the City of Lights even before they arrive home, and just about everyone dreams of coming back for a longer stay. During my week in Paris earlier this year with ASID NY Metro, several designers in our group were dreaming out loud about having a Paris residence. I decided to investigate.
According to Joanna Leggett, Marketing Director and Partner at LEGGETT Prestige Real Estate, an international real estate company with expertise in Paris, this is a good time for Americans to buy investment properties in France. “In Paris, Americans are seeking the most prestigious addresses in prime areas with easy access to the Louvre and shopping at Versace, Dior and Armani on Avenue Montaigne. They’re looking on the two islands Ile de la Cité and Ile Saint-Louis. The 6th, 7th, 8th and 16th Arrondissements are popular too,” says Leggett. “We just sold a beautiful apartment in the 7th for 2.7m euros to some American buyers.”
Dominique Petit, a top real estate agent in LEGGETT’s Paris office, adds, “We did see a huge increase in American buyers last year. In fact they were our fourth most active nationality even overtaking the neighbouring Belgians. In all, we sold 61 properties across France to Americans. The primary reason was the strong dollar compared to the euro. At the start of the year a lovely €500,000 apartment in central Paris would have cost $600,000, but by the summer this had dropped to $520,000—and Americans were certainly cashing in,” said Petit.
Read my Q&A with Joanna Leggett and Dominique Petit here:
Joanna Leggett: Paris is very competitively priced compared to other “world capitals” such as New York, Hong Kong, London, Singapore, Sydney and Vancouver. A recent report, “The European Cities Index” listed Paris as the top of 142 cities in terms of being attractive to property investors. London and Berlin were ranked in second and third places.
However, it is not easy to find the right apartment in Paris, as demand from locals is so strong. Using an “on the ground” real estate broker is essential. Most prime locations are to be found in the centre, but for an off-the-beaten-path property you could try Saint-Mandé, Vincennes and Fontenay-sous-Bois (94), Fontainebleau (77) or Saint-Leu-La-Foret (95) all of which are popular with international buyers, and have good links into the centre.
Q: Are there other reasons Americans are drawn to Paris?
Dominique Petit: For sure, the success of Emily in Paris has also helped stoke demand. A swathe of “guided tours” sprang up and even the Paris tourist office has a dedicated “Follow in Emily’s footsteps” page.
Emily lives on the Place d’ Estrapalade in the glorious 5th Arrondisement. The average price of an apartment is around $15,200 per square metre, a veritable bargain compared to the average $2m it costs for an apartment in Manhattan.
Our websites are also experiencing an uptick in visits. New York has seen the biggest increase with 40% more visits to our frenchestateagents.com site. Our LeggettPrestige.com site is up 113% and across the board we are up by 16% on new requests from American buyers.
Q: Do you also handle rental listings? Does it make sense to rent first?
Joanna Leggett: No. We are a national agency covering all of France, but only for sale transactions. We don’t suggest that Americans rent first. The sales market is hot and once they find the right property, in the area they like, they need to act quickly. Paris is a small city and it is easy to identify your preferred area, so there’s no real benefit in renting first.
Q: Who is the typical American buyer in Paris?
Joanna Leggett: Our experience shows two types of buyers. There are those becoming residents and spending more than six months of the year here. Like most Parisians, many of these will leave the city in August to take an extended vacation. The second type of buyer is the second-home owner who will use their apartment as a base. This enables them to easily visit the rest of France or other European cities.
Q: Does Paris have co-op apartments for sale as well as condominiums?
Dominique Petit: Apartments—or “appartements” en Français—are what you would call condos in the US. There is no distinction in vocabulary between a rented apartment or an apartment where the owner is the occupier.
There is no ownership structure in France equivalent to a New York co-op. Apartment owners own their apartments plus sometimes an individual annex such as a parking space or a cellar (“cave” in French). The cellars were used historically for storing wine, but are more likely these days to be used for general storage.
Apartment blocks can vary from a shiny new off-plan development (like this one) to a 17th century architectural gem (like this one). There is a growing trend among new property developers to do more to generate a sense of community through including shared services and spaces such as cycle repair, children’s play areas and community event space. This is still relatively new and not as widespread as shared laundry areas in the US.
Management of the apartment block is by a resident’s committee, elected every year, which appoints and liaises with the professional property management company (known as the “syndic”) who handle all aspects of building management on the committee’s behalf. The fees for common or shared areas (elevators, corridors, gardens, courtyards, etc.) are split proportionally between owners within the same building.
The % share of common costs attributable to an owner is declared in the sales contract they sign when purchasing the property to ensure full transparency. Any potential buyer can also request the previous year’s accounts and minutes from the Annual General Meeting of owners to see if any maintenance works are planned they might need to pay for if they purchase the property and to see how much the current owner pays in monthly fees.
Q: Once purchased, are American buyers allowed to sublease their Parisian apartments?
Dominique Petit: The rules around subletting apartments are the same for US buyers as French buyers, but they vary depending on the type of residence. If the property is the owner’s primary residence (defined as occupied by the owner at least eight months a year) they can sublet the apartment for up to 120 days per year and with no individual stay over 90 days.
This type of subetting agreement is aimed at tourists (national and international) and is known as “meublé de tourism.” This cap on the number of rentable days applies to all of Paris and its suburbs and all French towns with a population of 200,000+.
For owners in Paris—and in other large French cities—seeking to let their apartment via a platform such as AirBnB, they are required to register with local authorities to obtain a permit number. AirBnB will only accept for publication properties with this permit number.
One other thing to check is whether or not the Homeowners’s Association (“Copropriété” in French) accepts AirBnB type sublets in their rules. Some do and some don’t. You will also need to register this business activity and pay French tax on any income generated.
Q: What are the rules for subleasing a secondary Parisian residence?
Dominique Petit: The rules around secondary residences are far stricter. There has been a long-term campaign by authorities in France’s largest cities to protect the local housing market from speculation by investors seeking to generate fat returns from tourist rentals. As a result, it is theoretically possible to do this; but, without going into detail, the costs involved make it prohibitively expensive and time consuming.
The rules in smaller towns and more rural areas are not this strict at all. Indeed many of our US buyers run successful tourist accommodation businesses in properties they own. However, what about our potential city dwellers… is there no way a US buyer can generate income from their second home in Paris? All hope is not lost. There is a solution which is known as a “bail mobilité” a rental contract targeting itinerant workers in town for between one and 10 months but not looking to stay permanently. Some businesses look for these types of rental contracts for their employees to avoid paying high hotel fees.
This solution is a good compromise for a US buyer who wants to generate some income from their second Paris home, and does not mind having a little less flexibility about when they use it. As an added bonus, this type of contract is not subject to local rental caps. Contracts are for furnished apartments only, from one up to 10 months maximum and they can’t be renewed with the same tenant.
Q: Are the rules different for investment properties?
Dominique Petit: If a US buyer is looking for a purely rental investment, then there are no major differences between a French or US landlord. The Paris rental market is heavily regulated. So, if you’re looking for a quick buck we would advise against it.
But, the upside is that the Paris property market is relatively stable compared to more volatile less-regulated markets like New York, London or Hong Kong. So if your investment goal is long-term growth, Paris is a good bet. However, if you plan to use your Paris apartment as an investment, Leggett International Real Estate offer a comprehensive bilingual service for non-resident and resident international buyers of French new-build properties including
Property search and management of acquisition process from A to Z:
• Financing options if a loan is required or currency transfer and payment administration for cash-buyers
• Property management for those looking to monetize their investment by renting out their new French home
• Tax expertise to ensure any French tax obligations and procedures are taken care of.
Would you consider apartment living in Paris? If you take the plunge and need help furnishing and decorating your new residence, let me know. We can visualize all the possibilities together. Schedule a 30-minute design consultation today!
