The guaranteed rental scheme in the South of France
can only be used for long-term rentals (3 years minimum).
For the time being it is only being offered to us on unfurnished appartments, but we are awaiting an offer for furnished appartments as well.
The way long-term rental of unfurnished appartments work in France is quite simple and very cost-effective for those owners who don’t wish to get any personal use out of their property. It’s hassle-free (particularly with the guaranteed rental scheme) and it allows the owner to “forget”
about the property.
Such properties are offered to tenants completely empty, save for bathroom suite and a sink in the kitchen. It is then up to the tenant to get insurance, electricity, gas (where applicable), telephone, furniture, etc...
The calculation of the monthly rental and charges is done on an individual basis, so it’s a bit tricky to tell a client how much income they would get for their property until they’ve chosen one, but we normally use an average of €13/m2
(e.g. a 60m2 appartment will get an approximate monthly rental of €780 plus charges) for the Cannes and Antibes areas. This is of course only an indication.
Agency fees for long-term rental is 1 month’s rental which is split 50/50 between the owner and the tenant.
There are 2 contingencies covered by the guaranteed rental: unpaid rental and occupation.
Contingency 1: Unpaid rent monies
In the event of a tenant not meeting the monthly payments, the rental
income is guaranteed 100% up to 36 months per contract (that is, the totality of the contract), as well as the legal costs involved in evicting such a tenant. When a new tenant arrives, the counter starts again.
Contingency 2: Occupation guarantee
The company guarantees the rental income even if they should fail to find a tenant to occupy the property. For the very first occupation they would start paying the owner the rental monies after 90 days of the handing-over of the
property.
In subsequent contract, this timeframe is reduced to 30 days if the tenant has given a 3-month notice or 60 days in case of a 1-month notice.
The guarantee covers up to 12 months of non-occupation for every 3 year period.
Please note that the occupation guarantee can only be offered to clients who subscribe to this scheme upon handing-over of the property. If they decide to try short-term first and then they move on to long-term, they would not be able to get it.
The cost to the owner to have this guarantees is 10.8% per month, payable at the end of each quarter, 100% deductible in their non-resident rental income tax returns.
The company provides quarterly statements to the owner.
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