In this article, we discuss buying property in France in combination with a bail commercial en résidence tourisme. What are the main conditions for renting to an operator in France?
What is a bail commercial and tourism residence?
A bail commercial is similar to a commercial lease in Belgium. You rent your property under strict conditions to an operator of (recognised) tourist accommodation. In practice, however, you also sign a commercial lease with this operator simultaneously with the purchase of the new construction project. In this rental agreement, you then allow the operator to sublet the property for short periods and offer at least 3 additional services. Think: check-in and check-out of customers, breakfast, cleaning of the rooms, etc.
What are the advantages of this approach?
Apart from the fact that the operator takes on the letting of your property, the motives are mainly tax-inspired. For instance, you can enjoy VAT deductibility (partial or otherwise), both on the purchase and on the costs. In addition, you may fall under the régime du micro entrepreneur (micro-BIC) with a flat fee deduction of 71%.
Often, the duration time of this type of trading lease is a stumbling block for potential investors. The duration period is fixed at 9 years. Unlike an ordinary bail commercial/trading lease, you have no option to unilaterally terminate the lease on a three-year basis. As owner and operator, you can of course terminate the agreement early if mutually agreed.
Another stumbling block is the compensation to the operator on termination or non-renewal of the commercial lease. This compensation is based on the operator's lost profit and can amount to 2-3 years of rent.
The rent can be fixed or variable, payable by month, quarter, semester or year. You can also agree that the operator offers you a rental guarantee, but this is not mandatory.
As the owner, you are obliged to furnish the property. In practice, however, you should follow the detailed guidelines of the operator.
In general, renovation works are borne by the owner. Maintenance costs are borne by the operator.
Can you make use of your property yourself?
In principle, you can use your property yourself for a fortnight a year. There are often conditions attached, such as that you must notify the operator within a certain period.
However, to continue enjoying the tax regime, you will have to pay rent to the operator. This rent is a minimum of 75% of the public rent. However, the rent payment can be offset against the rent paid to you by the operator.
Decision: lease to an operator in France
The purchase of real estate combined with a bail commercial is first and foremost an investment that you can make occasional use of yourself. Are you looking for a second residence that you can visit regularly with your family? Then this option may not be for you.