The question of whether to invest in new or existing property often comes up. The press and property blogs regularly address the issue. We asked ourselves what the situation is today, in the wake of the Covid-19 health crisis? What impact has it had on the property market? Are the answers to this question still the same? We've taken a look around for you, and we'd like to offer some advice too.
Tight rental market and investment
It's an inescapable fact of life. Despite the construction of new homes on the market, there is still a lot of demand that cannot be met. Finding a place to rent remains complicated, even very complicated in some regions. The health crisis has not helped matters. Many programmes have fallen behind schedule, and this slowdown is having an impact on the market.
With demand at such high levels, investing in rental property remains an attractive proposition. The current health crisis has already shown the extent to which property remains a safe haven. More people than ever are looking to invest their money in property. So, new or old?
Investing in new-build property: low costs and tax relief
The new-build property market prices are generally higher than for existing homes (with the exception of lake views and highly sought-after areas). On the plus side, there are a number of advantages:
- The condominiums are new and designed to keep costs to a minimum, so you won't have to contribute to any major maintenance work in the near future;
- Notary fees reduced to around 3 % make the overall financial operation more attractive;
- the tax exemption possibilities are attractive: controlled rents, easier to find a tenant.
Let's take a concrete example under the Pinel Law
Type of property : T2
Purchase price, including agency fees: €190,000
Lease term: 9 years
Rent control: €11/m² on average + tenant income taken into account.
Tax allowance: €3,800/year for 9 years - i.e. an allowance of 18 % of the total acquisition cost
Investing in existing property: attractiveness and availability
Choosing to buy an old property may be a simple matter of preference, but you should be aware that an old property also has its advantages:
- prices that are often more attractive;
- immediate availability, enabling you to collect rent as soon as you sign the deed of sale;
- tax relief through home improvements that are deductible from property income.
You can also benefit from local and national grants for improvement work, and there are no means-testing requirements. In any case, investing in old property seems just as attractive as investing in new property, given the state of the rental market and the fact that demand cannot be met despite the arrival of new buildings.
Deciding whether to invest in a new or existing property is ultimately a question of budget and priorities:
If you're looking for a low-maintenance property and want to save on tax, look to new build.
On the other hand, if you want to invest in a property at a more competitive price per m² and benefit from almost immediate rental income, then older property will certainly be better suited to your project.
The best way to invest and make the right choice is to be accompanied by a property professional, who will be able to guide you towards the property best suited to your project. At La Maison de l'Immo, we're here to help you with all your property projects. Would you prefer new or old property?
*Resources on grants for home improvements:
National aid : https://www.lavieimmo.com/fiscalite-immobiliere/le-budget-de-maprimerenov-sera-double-l-an-prochain-49130.html
Local aid : https://www.lavieimmo.com/fiscalite-immobiliere/travaux-un-nouvel-outil-recense-les-aides-locales-auxquelles-ont-droit-proprietaires-et-locataires-49006.html
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