Emmanuel Macron and the French Property Market.

MacronIn an environment of low interest rates, global instability and low returns on investments, investments in French property have increased over the last few years.  Will this continue following the election of our new president?

Key tenets of Macron’s property policy

  • Exoneration from 80% of the population will be exonerated from paying Taxe d’Habitation

A key policy for Macron.  From 2020, households earning less than €5.000 per month will be exempt from paying this tax.  As this is one of the primary sources of income for local government, he has promised to pay €10 billion per annum to local authorities, which is likely to be raised by increasing other taxes.

  • Reform of Impot sur La Fortune (ISF)

This tax is currently payable by those with assets valued at over €1.3m on both investments and property.  Macron will replace this with a tax on property assets alone with the aim of improving market liquidity and encouraging investment.   The value of a main residence will be reduced by 30% for calculation purposes.

  • Build new homes in areas of need

These areas include Ile de France, Aix-Marseille, the Swiss border and Toulouse.  The state will be able to use national interest in order to grant building permits in these areas.

  • Improve access to housing for young people

Macron has pledged to build 60.000 homes for students and 20.000 homes for working young people.  He also aims to create a further 30.000 council homes for young people.

  • Creation of a professional mobility lease (bail mobilité professionnelle)

The president intends to create a short term lease of between three months and one year for young people on short term contracts to improve social mobility in areas of high demand.

  • Capital Gains

No change is proposed in relation to Capital Gains.  The 22 year limit will be maintained.

  • Encouraging buy-to-let investment

The president intends to prolong the Loi Pinel which promotes private investment in property, and prêts à taux zéro (zero interest loans) in order to maintain investment in the sector.

  • Introduction of measures to renovate homes

France has a large stock of old housing which is poorly insulated.  Tax credits and grants will be introduced to assist with the energy efficiency of these homes with the aim of renovating half of the energy inefficient housing stock by 2022.

Effects of these policies on the property market

Macron’s property policy has the intention of invigorating the new-build market, improving the energy efficiency of the housing stock and encouraging access to the market.

The replacement of the Impot sur la Fortune (ISF) by the Impot sur la fortune immobilier (ISI) in 2019 is the policy which is expected to have the greatest effect on the property market.  Although the level of this tax is low, starting at 0.5% per annum calculated from €800.000 of total property assets valued at €1.3 million or more, it is likely to have two effects:

  • Existing second home owners and some investors may choose to diversify their portfolios, and sell property assets in order to invest in more liquid investments
  • Those looking to purchase investment property may choose to take out a mortgage rather than purchasing in cash.

We feel that Macron’s policy will not lead to a downturn in the market, especially given continuing global uncertainty which tends to lead to a flight to safety, in other words bricks and mortar.

Of course all of these policies will need to be voted by parliament, so until the results of the legislative elections are known on 18 June, we cannot guarantee that they will come into effect.

Lights, Camera, Action!

cinema_vox_0Photograph from Chamonix.net

Sometimes even Chamonix’s most avid skiers and keenest mountain climbers need some downtime and for families, residents and visitors alike a trip to the cinema can make for an enjoyable evening and provide welcome respite on a rainy afternoon.

There has been a cinema in Chamonix since 1908 and since 1958 it has been the family-run, independent Cinema Vox. However despite its managements best efforts and the support of the association “Les amis du cinema” (whose main aim since its creation eight years ago has been to try and boost the cinema’s popularity and profits), change is afoot and Cinema Vox is due to close when the current lease expires at the end of 2018.

The council is now advertising for investors to fund and run a new 4 room multiplex, which it wants to be ready to open in 2019. The chosen site for the new cinema is certainly original, occupying two of the infamous ‘coupole’ buildings built in the 1970s, not far from the town centre.

Here’s hoping the right people will come along and make sure that Chamonix’s film lovers continue to have a cinema on their doorstep which will offer as wide a range of films as possible, with a good mix of subtitled and dubbed versions to suit all tastes and preferences.

If it could keep some of the charm and originality of the existing cinema but add modern day seating, sound and snacks then that would be the cherry on the cake (or rather the caramel-coating on the popcorn!).


New Clowns: Same Old Circus?

Trumpeted – forgive the pun – as the sequel to Brexit and the US Presidential Elections, to what extent could the French Elections this Spring change the property market in the Alps?

Before the race has even started, there is debate as to who is still left in. The French TV channel ‘TF1’ electoral debates in March will only include those with more than a 10% stake in the polls, which rules out all but five hopefuls: François Fillon, Benoît Hamon, Marine Le Pen, Emmanuel Macron and Jean-Luc Mélenchon.

The media has so far tended to concentrate on which of these candidates are the more left or right wing, but to do so is both unhelpful, and a little simplistic. Marine Le Pen’s policies on immigration may be predictable enough, and they include, for example, an extra tax on the employment of all foreign nationals, but she is also keen to assist small businesses and to reduce the tax burden overall.

From the left, Benoît Hamon and Jean Luc Mélanchon share an anti-austerity platform, and both wish to reduce the infamous 35 hour working week. But the younger of the two, Hamon, would also like to legalise cannabis, whereas Mélanchon would rather concentrate on a new 100% tax on any earnings over 360,000€ and a 20% hike in the minimum wage.

If it weren’t for his Welsh wife apparently dipping her hands in the till, François Fillon would perhaps have been ahead in the polls, offering, as he does, an antidote to a succession of largely socialist governments of recent years. His policies will resound sympathetically on foreign ears: slashing taxes; cutting benefits; axing 600,000 state-paid functionaries and reducing taxes on all companies, both large and small. But credibility also matters in this election, and he has largely lost face with even the most sympathetic French voter.

This leaves the maverick of the group: Emmanuel Macron – just 38 years old. He rose to the political forefront as Economic Minister in François Hollande’s government, but unable to secure a party mandate, he invented his own political movement, ‘En Marche!’ – or ‘Moving Forward’, which describes itself in terms of ‘compassionate liberalism’. The policies are mixed: from scrapping the 35 hour working week and making it easier to fire employees to offering employment benefits to the self-employed.

At this point in the hustings, few candidates have put forward policies that specifically impact on the property market. However, François Fillon will abolish the wealth tax (ISF), which may help to encourage high worth individuals to invest in France. More than this, it is the policies that impact more generally on the economy as a whole that will determine how the property market develops.

Zooming in to foreign ownership in the alpine region of France, it is true to say that there are very specific influences on the property market here that rise over and above the presidential elections. They include the strength of the Swiss economy and the influx of foreign nationals across the world, whose wealth is largely immune to the vagaries of the French political system.

Following Brexit, there has been a good deal of speculation on a potential referendum on French EU membership, particularly if Marine Le Pen is successful at the polls. But let’s not forget that the French have been here before. On 29th May 2005, they voted ‘no’ to the EU constitution with a majority vote of 55%. The result? The government of Jacques Chirac simply chose to ignore the mandate (or lack of it), and pressed on with closer European integration regardless.

And it’s important not to forget that the presidency of Nicholas Sarkozy (one of the few right-wing Presidents of recent years) in 2007 was heralded as a step-change from the past. Like some of the presidential hopefuls ten years on, he had sort to unburden business and lift the economy out of its flat-line state. But he found himself strangled by political manoeuvrings, an unfriendly parliament and down-right hostile unions. He ended his term in the doldrums, and was unable to rekindle any support for a political come-back.

Will a similar fate await the next batch of candidates? For all their dynamic policies, will whoever is elected manage to see their dreams come to fruition, or will the French talent for political inertia override?