Should we invest in old apartments in Lyon?
Located at the confluence of the Rhône and the Saône, the commune of Lyon is a geographical, commercial and cultural crossroads that offers many opportunities for housing rental investment.
With a growing population of 1.6 million, a very dynamic labour market, a favourable business climate and a variety of investment opportunities, Lyon is undoubtedly one of Europe's most attractive and fascinating cities.
Lyon is also one of the top 3 student cities in France. The city currently has 150,000 students, a number that according to the University of Lyon could reach 200,000 by 2030.
Investing in old real estate in Lyon is therefore a sure value because you will not have any trouble finding a tenant among the many students, young executives or expatriates.
The price per square metre being between 5000 and 7,000 euros, the acquisition of an apartment (T2 or T3) on the outskirts or a small studio in the city center will allow you to make an investment without input and generate an optimal rental return.
Does an investment in law require a contribution?
Introduced in 2015, the Pinel law was intended to encourage new rental investment in « Tensile zones », very dense urban agglomerations where it is very difficult or expensive to find rental housing. Following the success of this scheme, the Ministry of Housing decided to extend it to dwellings acquired in VEFA (sale in the future of completion) and to old dwellings (to be renovated).
The Pinel scheme gives entitlement to a tax reduction which will be calculated on the basis of the purchase price of the property and its lease term.
Today, this reduction is about 21% for an initial commitment of 12 years, 18% for a commitment of 9 years and 12% for a commitment of 6 years. However, it should be noted that rates will be lowered from 2023 onwards.
To make an investment without contribution, you just have to make a 100% real estate loan from your bank and then repay the interest thanks to the income collected on the rental and tax deduction granted by the Pinel scheme. The tax ceiling is limited to 300 000 € per year for an acquisition of up to two goods, i.e. around 5500 euros per square metre.
Is it profitable to make an SCI for a real estate purchase?
The Pinel Act applies to any person domiciled in France for tax purposes and taxable on income. It is possible to invest as an individual or through an ICS.
A civil society real estate (or SCI) is a simple legal structure that allows managing a multi-unit asset. It consists of at least two partners who share profits (land income) and debts according to their respective contributions.
An ICS also has many advantages, including partnering with a family member to increase their borrowing capacity and access bolder investment projects. It also allows for the sharing of expenses related to the holding of one or more immovable property.
