Should I buy abroad in the French Alps or let an apartment in central Manchester on Airbnb?
November 27, 2018 - 3 minutes read
Posted by Claire Parker
Letting a property on Airbnb and buying a home abroad are two popular options if you have some spare cash to invest. However, just like every other major decision you’ll make in life each has their upsides and downsides.
A quick search online for each will reveal plenty of horror stories. You have the Norfolk couple who let their barn on Airbnb to be called back to find 50 American servicemen and women having a mad party. On the other hand, you might find the British holiday homeowners who lost thousands on purchases in Cyprus.
Both are daunting prospects, best approached with plenty of care and research. Fortunately ‘horror stories’ are few and far between. There are 168,000 active Airbnb listings in Britain and Brits account for 33% of luxury property sales in France. For every sensationalist newspaper story, there are hundreds of people who have a worthwhile experience.
Here’s Xentum’s breakdown of the two options:
Buying a home abroad in the French Alps
The exact implications of buying a home abroad vary between locations. For instance, the house buying process is incredibly different in France to Bulgaria. Brexit brings an added twist of uncertainty.
Even within the French Alps, where you decide to buy will impact the price of your property. If it’s close to an esteemed ski resort with reliable snow, it will cost more than something in a less known location where the skiing might not be so extensive. Looking to buy somewhere slightly unknown could mean that you’re able to find a better value property without the touristy trappings of established alpine resorts.
As it stands, EU nationals – including Brits for the time being – can buy homes in all member states and live in them year-round. However, in typical Brexit fashion, what will happen after we leave is unclear.
If you chose to move away from France and outside the EU, for visa reasons things are a little more complicated. Some countries actively restrict foreigners from buying property and you might need to apply for some kind of residency permit.
When buying abroad, it’s smart to use a local property agency. They will have detailed knowledge of the local market and can help buyers negotiate better contract terms. Otherwise, if you prefer a do-it-yourself approach, have a search on Zoopla, A Place in the Sun or Prime Location.
If you invest in an established property market like France, getting a mortgage from a UK high street bank is relatively simple. However, buying somewhere the property market is less established is more tricky. Your best bet would be to use a specialist broker who can help find the most suitable mortgage for you.
You should be aware that exchange rate fluctuations could push up repayment costs and these brokers are not covered by the Financial Conduct Authority.
Property investors are finding that letting a property on Airbnb can be more lucrative than using the standard longer tenancy model. Changes to tax rules introduced in September 2017 mean that landlords can no longer deduct mortgage interest, along with other costs, from their annual tax returns.
New rules, however, can work in your favour if you choose to let on Airbnb.
Renting on a short term basis could mean that you apply for tax relief in the form of the government’s ‘micro-entrepreneurs’ scheme. This means you would receive a £1,000 allowance.
What’s more, short term lets yield a higher rent because prices on Airbnb are much higher than average rents. A two bedroom property in central Manchester can generate £2,300 a month. However, remember when letting on Airbnb that you run the risk of your property being empty for much of the month.
To maximise your rental income, try to make sure your apartment is available at popular times – when there’s football games or large concerts, there’s much higher demand
Getting started on Airbnb is incredibly simple. Once you’ve created an account, click on the ‘List Your Space’ icon at the top of the page and fill in the required information. You can decide whether you’d allow potential guests to make a booking instantaneously, or if you’d prefer to receive a booking request before you decide whether you would like to host them.
Uploading good pictures of your property is essential. Make sure you get photos that really make your property stand out. Photos that show views over the Manchester skyline including the Beetham Tower are guaranteed to attract attention.
Airbnb makes money by taking a cut of every booking. It takes 3 percent of the booking from hosts and between 6 and 12 percent from hosts.
Whatever your scenario, a good read of Airbnb’s extensive terms is essential before you start – a riveting read indeed.