To rent or to buy when you are an expat, that is the question
By Jon Chinn (Legget Immobilier)
Buying a house or an apartment in Lyon
The advantages of buying a home in Lyon
– it’s your place and you can do what you want with it. You can customize and renovate it, adding value to your home (for example eco-renovation, which also has tax benefits).
-long term security and peace of mind for you and your family as you are the owner.
-financial stability: you know how much your housing will cost you as your monthly mortgage repayments are scheduled for 10-25 years in advance.
-interest rates for borrowing are currently very low in France (about 1.5%), making buying financially attractive, sometimes cheaper than renting.
For example, a 3 bedroom apartment near Part Dieu that costs 400 000 euros works out at monthly mortgage repayments of 1364 euros based on 100 000 euros of investment (25% of the total) and an interest rate of 1.8% over 25 years; if you rent the same property it will cost you at least 1400 euros a month and this cost will rise over time. The more you can invest, the lower the monthly mortgage repayments.
-a purchase in the right location (Lyon city centre for example) guarantees you capital gains and an increase in personal wealth when you sell, as prices rise every year.
For example a T3 was recently sold in the 7th for 310 000 euros after being bought for 210 000 euros in 2010 – an increase of 48% over 8 years (a return of 6% per year, much more than is possible from bank accounts or life insurance).
Disadvantages of buying in Lyon
-extra responsibility: you become a co-owner if in a block of flats, participating in decisions affecting other owners; you are responsible for maintenance and repairs.
-you have to pay land tax (taxe foncière).
-the initial deposit is a large amount: 5-10% of the total purchase cost.
-buying is a financial commitment; you need to have enough money for your retirement and unexpected needs as well as the mortgage repayments.
This Is Lyon has selected some apartments, houses and residences for sale in Lyon. Right here
What about renting your home in Lyon?
Advantages of renting:
-less responsibility and flexibility: it’s easy to move around or move on as the notice period is only 1-3 months.
-you pay less up front (usually the first month’s rent and 2 months’ rent as a security deposit).
-repairs aren’t as costly as when you are an owner: the landlord is responsible for most repairs that are required.
Disadvantages of renting:
-to secure rented property lots of paperwork including guarantors is required. This is particularly difficult for expats, without a guarantor in the country. Some owners only rent to civil servants. French property law favours the tenant so owners are very careful about whom they have as tenants, making it very difficult to find a place to rent when you are in competition with lots of other people.
-it’s not your place, so there are restrictions on what you can do inside (and outside). You can’t customize or renovate it; the owner has no obligation to make improvements.
-compare the monthly rent you pay with mortgage repayments for the same property if you bought it and you could find that you are losing out! Contact an estate agent and they can do this for you.
-rents increase every year and you can’t do anything about it or predict the amount.
-legally, renting is a fragile situation because you rely on your owner and only have a short-term agreement. You could be forced to move at relatively short notice (6 months).
It’s definitely worth looking into buying if you know you are going to be around for a while as there are real advantages. An estate agent or mortgage broker can help you work out the difference in cost of a particular property between renting and buying.
Thinking about buying property in Lyon but don’t know how to go about it ? Here are some valuable tips about the local market and the city from our expert.
If you are looking for an apartment in Lyon, you will either go through a real estate company called “regie” or deal with the owner directly.
This is a snapshot of the current Lyon property market however it’s a dynamic and fast-moving industry.