I’m buying a new-build buy-to-let, but how should I manage my property investment?

There are 3 criteria you should consider:

• the work involved in managing a property,

• the fees charged by property management companies,

• the quality of service provided by the property management company you have in mind.

If you decide to manage the letting of your property yourself, you must be reasonably available… and have some appropriate management skills!
Where this isn’t the case, it will be better to entrust the task to a property management company, which will manage your property for you in return for a fee based on the rental income (rent plus charges). This fee will be approximately 6-8% of rental income, plus VAT.
N.B.: you should deduct these fees from your rental income every year, because they form part of your allowable deductible charges*.

Step 1 in being a property investor: find a tenant!

• Begin by calculating the rent you’re going to charge by researching the local market and ensuring that the level is below the maximum limit set by whichever tax reduction scheme you have chosen.

• Advertise the property and organise visits for prospective tenants.

• You can then select your tenant:
  
  • by checking the incomes of applicants. You can do this by asking to see recent pay slips or tax advice,
  • by asking a private individual or organisation (e.g. Locapass) to stand as guarantor for the selected tenant.
    

• You must then draw up a rental agreement and an incoming inventory.

• You are strongly recommended to take out Propriétaire Non Occupant (Non-Resident Owner) home insurance and a policy to cover non-payment of rent.

• Remember to declare your new tenant to the tax authorities: this way you will not have to pay his or her taxe d’habitation (residence tax).

Good to know : you can request a deposit equivalent to at least 1 month’s rent.



Once your tenant is in place, ongoing management of your rental property includes:

• collecting rents and issuing receipts,

• looking after insurance arrangements,

• declaring your rental income,

• maintaining the property,

• paying co-ownership charges and attending general meetings,

• keeping up to date with changes in the law.

It’s up to you to decide whether or not you want to delegate management of your property. Property management companies can:

• set the rent for you, find a creditworthy tenant and minimise vacancy,

• represent you when compiling the inventory, signing the lease, etc.,

• advise you on the maintenance of your property and manage any works required using approved tradesmen (painters, plumbers, etc.),

• collect your rent and deposits and draw up your rental agreements,

• complete your tax declaration.

A manager can also offer you insurance to cover non-payment of rent, damage to the property and vacancy. A range of service packages is available, depending on your property and your own requirements.
N.B.: some agencies pay you your rental income quarterly, so remember to find out in advance!

Your Bouygues Immobilier advisor will help you reach the right decision and extract the maximum benefit from your property investment.

* Reform of the tax scale for rental income 2006: finance law 2005-1719 of 30 December 2005.