Renting out your property in the French Alps
As well as an incredible lifestyle investment, buying a ski property in the French Alps can also be a great way to generate rental income.
New for 2021, this guide outlines how to rent out your property in France and how to be eligible for the French property VAT rebate scheme which allows new-build property owners to save 20% VAT if they decide to place their holiday home on the rental market year-round.
Renting out a property in France: How can I prepare my ski property for rentals?
If your property is still in the building phase, it’s best to consult an expert who may give you advice relevant to your particular property. Saying that, here are some general tips to help you prepare to rent out your property in the French Alps.
- Ensure your property’s living room and dining room have the right capacity for the number of beds you will have
- A cabine or room with two sets of bunk beds is a great way to encourage family stays, though the bunk beds should be full length in case they do need to host adults
- However, it’s not always best to pack in more beds in small spaces like mountain corners. Depending on your particular property, the value of having additional sleeping space may not warrant the extra beds as properties with sufficient space, bathrooms and privacy may be higher valued by clients
- When choosing double beds, opt for two singles which can be made into a double to offer guests maximum flexibility
- Installing a lockbox is a fantastic option to reduce check-in friction and offer guests flexibility when entering and departing. It may also reduce the cost of creating key copies as fewer sets may be needed.
- Ensuring that your home has a comfortable working space and fast WiFi are important these days, as many visitors will take their work with them to the mountains
- Go and stay in your property first! This is the best way to ensure that your home is comfortable, practical and ready for rentals.
The conditions of the new-build VAT rebate programme
When renting your home in the French Alps whilst taking part in the property VAT rebate scheme, there are regulations that must be followed and their exact rules will be determined by the management agency that you partner with.
For guests, you must:
- Provide 3 out of the 4 hotel-like services, choosing from breakfast, linen, cleaning or check-in
- Issue invoices and receive those from suppliers (this may be managed by your rental management company)
- Provide a furnished property
- Offer your property for rental year-round
Furthermore, in order to be eligible for the property VAT rebate programme, you must sign a contract of at least three years with a rental management company.
Staying in your French Alps property
Can I stay in my property in the French Alps?
Yes, you may stay in your own property and still reap the benefits of the VAT rebate scheme but we advise speaking with your rental management agency to understand their guidelines. Your agency may suggest a limited number of weeks of which the homeowners may occupy a property and when doing so, you may be asked to pay for the three services and, depending on your contract, you may be asked to pay commission during your rental period.
Can friends and family stay in my rental property in the French Alps?
When your friends and family stay at your property, they must use your home as any other guest would. This means that they should use three services and pay a nightly rate. It’s important to note that both your agency’s commission and the state’s 10% vat will apply to their stay.
How much does it cost to rent out a property in the French Alps?
Upfront and running costs of renting out a property in France
When you own and rent out a property in the French Alps, you will need to take into account the one-off fees and running costs outlined below:
- Interior designer fees
- Furnishing your property
- If you are not on-site, someone to set up your property (for example, unpacking boxes, setting up TVs, placing crockery and utensils in their respective places, and so on)
- Utility bills
- Property tax
- Condominium fees
- 10% VAT on the nightly rate of rentals
- Wear and tear over time
There are other costs which may be invoiced to you, however, they are payable by guests including:
- Tourism tax (the amount will depend on the resort you own a property in)
- Service fees including linen, cleaning, check-in or breakfast
How much does rental management cost?
A rental management company may charge between 25-30% (+ VAT) of the nightly rate that guests pay. This fee should cover:
- A rental contract which should be submitted to your accounting team
- Advertising on marketing platforms
- Management of direct bookings
- All communication with guests including assistance prior to booking, at the time of booking and during the guests’ stay
- Management of suppliers including the cleaning and check-in team
- Management of providing toiletries, linen and a welcome basket for your guests
What isn’t included in a rental management company’s commission fees?
It’s important not to confuse property management with rental management. Oftentimes, agencies may assist you to perform various tasks in your property such as checking the post, handling handymen, ordering replacement items and placing them on site, but these may be charged as extra either through ad hoc fees or as monthly payments.
Can I reclaim VAT on any services I use?
You may claim back VAT on all services relating to your property, providing they have been offered by a French company, as long as you are adhering to the VAT guidelines. This includes utilities, rental management, handyman services, and so on which are charged at 20%.
You may not claim back VAT from the 10% due on the nightly rate.
Pricing: How much should I rent out my French Alps property for?
How do I establish a nightly rate?
Your rental agency will be able to advise regarding the value of your nightly rate based on market comparisons. Winter, ski-season pricing is normally based on varying tiers of seasonality, with key weeks including Christmas and New Year, winter break in February and the Easter holidays
It’s important to bear in mind that properties may take two to three seasons to reach their full potential. When properties first join the rental market, they do not have reviews or return bookings so the nightly rate and occupancy will start at a lower point and gradually work its way upwards.
What is the difference between winter and summer pricing?
Winter is peak season in all of the French Alps resorts, though some resorts may enjoy busy summer seasons as well. You may expect summer pricing to be in the range of the low-period weeks during the winter months.
Should I set a minimum number of nights that my guests can stay for?
During the winter you or your agency may require a minimum of seven nights’ stay, with check-in and check-out on a designated day. Note that not all agencies work this way though, with some agents offering flexibility to maximise bookings with more turnover.
During the summer, agencies may be more flexible regarding minimum stays with three to five nights being the norm.
Key terms and points to consider when renting out your property in the French Alps
The industry has many terms and norms linked to it which homeowners may not be familiar with prior to renting out a home in France. We explain them here:
Your chosen agency will likely commercialise your properties on various booking channels including Airbnb, Booking.com, Homeaway and Expedia
Booking Channel Fees
Each booking channel will charge a fee of the nightly rate, with the exact cost depending on the channel. Most channels will charge around 16% of the nightly rate, though agencies sometimes counter these fees by inflating the guest price accordingly.
Your property must be furnished year-round.
This is the rate which the guest pays for your property before any additional costs are factored in. Normally, agencies will only charge a commission from the nightly rate. VAT is also only charged on the nightly rate.
The mandatory services which must be provided; agencies may choose to offer between linen, cleaning, check-in or breakfast. Guests normally pay in full for these services, unless a homeowner prefers to reduce the service fee for the guest by contributing towards the fee.
The number of people a property sleeps, which doesn’t always coincide with the number of bedrooms due to extra sleeping spaces like mountain corners and sofabeds.
Adult guests must always pay tourism tax on each night of their stay. The amount, which depends on each resort, may be checked via the “taxe sejour” website. It’s important to note that Airbnb will pay the taxe de sejour directly to the state, whereas other booking channels and direct bookings must be declared and paid by the management agency or homeowner. Declarations may be due either monthly, as is the case for Val d’Isére, or twice per year as in Alpe d’Huez.
You are liable to pay 10% VAT, non-refundable, on the nightly rate of reservations.
Disclaimer: The advice provided by Athena Advisers is for general information only, and we recommend speaking with legal advisers and your rental management agency for more details. Athena Advisers may not be held liable for the VAT regime, including the right to any deductions, nor may Athena Advisers be held liable for any tax reassessment carried out against the owner.
FRENCH PRIVATE FINANCE
Athena Private Finance and its French-focused company French Private Finance make accessing mortgages, development finance and other financial services easy for our international clients. Their skills and experience enable investors in the French Alps to move quickly along the purchase process, increasing the investor’s chances of being able to secure their chosen investment.