Finance Options for Your French Hotel Development or Purchase

Posted on 30th June 2023

France is a land rich in history and culture, offering a wealth of opportunities and experiences for investors and holidaymakers alike. The French property market has traditionally been strong, and property investment remains attractive with low French mortgage rates.

Investing in a French hotel can present an exceptional business opportunity, offering tangible assets, a chance to capitalise on France’s thriving tourism sector, and a way to diversify your investment portfolio.

Tourism in France

France enjoys one of the biggest tourism industries in the world, attracting many holidaymakers. For those driving through to wider Europe and stopping for a hotel break on the way, to a luxury hotel or chateau holiday, mixing with the rich and famous in Monaco and Cannes or enjoying wine and scenery found in Burgundy and Bordeaux, to the cosmopolitan delights of Paris, Nice and so much more. It is easy to see why investing in hotel property or building on the many development sites that France offers in its wealth of towns, cities and villages.

France is a popular destination for those from Europe, and its close proximity to the UK makes it a country that not only attracts visitors in its own right but as the gateway to many other destinations.

Diversification

Hotels in France provide an alternative asset class that can offer diversification from more traditional investment routes like equities and bonds. They also represent a relatively stable investment with potential for high returns, especially in high-demand regions. Investing in a French hotel can also serve as a hedge against inflation, as hotel prices can be adjusted annually or even more frequently, depending on demand.

International Prestige

The hospitality industry in France is world-renowned. As a result, owning a French hotel carries a certain prestige, which can potentially enhance an investor’s reputation in the business world. It opens doors to a global network of contacts, from fellow investors to high-profile guests.

Finance Options

Acquiring a French hotel requires significant capital, but there are a range of financing options available. One of these is a bridging loan, a short-term financing solution designed to ‘bridge’ the gap between a debt coming due and the main line of credit becoming available. Bridging loans are particularly useful in property purchases, where the process can be lengthy due to regulatory requirements and paperwork.

If you’re interested in purchasing a hotel that’s on the market now, but your funds are tied up in other investments or due to be released at a later date, a bridging loan can be an effective solution. The loan is typically secured against the property being purchased and can be arranged relatively quickly compared to other types of loans.

Bear in mind that while bridging loans provide the advantage of speed and flexibility, they usually come with higher interest rates compared to traditional loans. Therefore, a robust exit strategy is essential. This might be a long-term mortgage secured on the property, or the sale of another asset.

Using the services of an expert and specialist broker for these bridging loans gives you the benefit of expertise and lending knowledge specific to the French property market. They negotiate with suitable lenders to access the most favourable lending terms. As such, they can access a more comprehensive network of potential lending sources more readily available than a direct approach often achieves.

Whether you buy an up-and-running hotel, land ripe for development or renovate a run-down or derelict chateau, village or hotel, there are many property investment opportunities throughout France to add to or kickstart your property portfolio.

The Benefits

Foreign nationals purchasing property in France must be aware of and comply with several tax considerations, such as an annual tax on the property market value. Yet France offers a generous property leaseback scheme that guarantees rental income and tax incentives making French buy-to-let property investment a financially sound option. When you also consider the comparatively low property prices found in France compared to elsewhere in Europe, now could be the perfect opportunity to extend your property portfolio.

Stamp duty and capital gains tax may be payable; however, a double tax treaty prevents double taxation, which still remains post-Brexit. France also rewards long-term property investment removing the CGT and social taxes liability after 30 years of ownership.