Landlord’s guidebook

Before rushing headlong into seasonally letting your property, it’s important to ask yourself the right questions.

Am I prepared to let strangers into my property?

If you decide to let out your property, you have to be prepared to make certain concessions. Effectively, you will be sharing your property with your tenants, which means:

• Not leaving your belongings in the apartment and/or ski locker. It’s no longer sufficient just to put bolts on your apartment’s cupboard doors.

• Accepting the need for flexibility in terms of arrival days and times, and not always being able to decide to spend the weekend in the mountains at the last moment.

• Accepting that your apartment, due to more frequent use, will show signs of wear and tear more quickly than before. You should therefore expect to have to make more frequent repairs and updates.

Is my property ready to let?

If you decide to let your property, it is important to find out about the resort and learn what your potential clientele expect so you can adapt your property to suit them if necessary.

Your property’s geographic location in the resort is also important as clients are increasingly seeking proximity to shops, doorstep skiing…

Some key information relating to Val Thorens.

• Large surface areas are increasingly sought after.

• Some services such as a TV, Wi-Fi, dishwasher… are now essential.

• Apartments without enclosed sleeping areas are suitable for 2-3 people but any more than that and it risks becoming more and more difficult (except for very low-priced apartments).

• Some residences have a real party reputation. If your property is situated in one of these residences, it will mostly be let to groups of friends – usually young people – so you are advised not to spend too much on decorating.

When can I expect to let my property?

Rental periods differ depending on the resort in which your property is located. It is important to know them and perhaps to adapt your personal stays around them.

Some key information relating to Val Thorens.

• The winter season is very long (mid-November to mid-May), coming to a total of 24 potential rental weeks.

• The clientele is very international in the winter (70% from abroad), the high season therefore is not limited just to French school holidays.

• There is a summer season but the prices are very low and there are few clients. It is difficult to compete with the low rental prices offered by large groups such as Pierre & Vacances and you should remember that because of the resort altitude, it’s not unusual to have to heat apartments in the summer.

What return can I expect from letting my property?

When you calculate the rental income that your property could provide, you mustn’t forget to deduct charges (management charges, EDF, local taxes…) and mortgage loan repayments if you have one.

Buying and selling a property in the mountains represents a sound financial investment, but a long-term one! 

Furnished tourist lets must meet minimum habitation and comfort requirements.

Benefits

A well-equipped apartment (good quality bedding, equipped kitchen, comfortable bathroom…) in a good location (peaceful and at the foot of the slopes) that has been decorated well (evoking a mountain atmosphere) will be a priority rental and treated more respectfully by tenants (subject to less damage).

Subsidies

In light of this, the Leisure Lettings Renovation Operation (known as ORIL in French) was started by the town of Saint Martin de Belleville in 2003.

You can increase the value of your property and enjoy the concomitant subsidies (6,000€ for the first 20m² and 150€ for each additional m²) by transforming your apartment into a comfortable and pleasant holiday destination.

For further information on this renovation programme, visit www.renovationlesmenuiresvalthorens.com.

Quality label

Since 2013, in order to promote renovated properties, and with the goal of clearer descriptions for clients, estate agencies and private landlords have all marketed their properties using the same label (the Belleville Vallée accommodation quality label).

It is an objective category system on a scale of 1 to 5 snowflakes.

• 1 snowflake: standard > simple and functional

• 2 snowflakes: standard plus > partially renovated

• 3 snowflakes: comfort > comfortable and renovated

• 4 snowflakes: comfort plus > spacious and well-equipped

• 5 snowflakes: luxury > top of the range and exceptional

The décor, style and harmony are then categorised into three colour categories: Bronze, Silver and Gold.

Specifications

“ORIL” refers to general renovations that improve the rental property, see specifications on the benchmark document stating all of the criteria required in order to obtain the subsidies.

www.renovationlesmenuiresvalthorens.com/cahier-des-charges.pdf

To list your property, click here to have access to the quality label criteria and don’t hesitate to contact us for further details.

If you choose to let your property through an estate agency, you will have the choice between several contract options. This choice will depend on the number of weeks that you want to let your property, the income you expect to receive and your planned personal use of your property.

Mandate agreement

This agreement is a partnership that the agency signs with the landlord for the duration of 1 year (in accordance with the Hoguet Law) often with tacit renewal.

With this rental contract, you can occupy your apartment when you wish to and receive regular rent payments throughout the season.

However, there is no guaranteed income because your remuneration will depend on the number of actual weeks let. Also, you will be liable for the cost of charges and any visits the agency is required to make.

Please note, when you compare the advertised prices applied by the resort’s different estate agencies, there are several points to take into account.

• Know exactly how much estate agency fees are – some are advertised exclusive of tax and others inclusive of tax.

• Know which facilities are included in the advertised price because they will also be deducted from your landlord net payment (apartment cleaning / household linen / cancellation insurance…).

• Find out about the agency’s sales practices – certain agencies work a great deal with tour operators and they never pay the advertised price (between 10% and 30% discount).

The estate agency that advertises the highest price OR lower fees is not always the one that will earn you the most rental income.

Lease agreement (seasonal or annual)

The lease is drawn up for a duration corresponding to one tourist season or 1 year depending on the agreement you make with the estate agency.

With this type of contract, the agency guarantees you a rental income (sum calculated according to the quality of the property, the number it sleeps and average resort rent). This sum is guaranteed whatever happens! What’s more, the agency takes care of certain charges and minor apartment maintenance.

However, you will no longer have free access to your property.

In the current parlance, the security guarantee is known as the damage deposit.

The damage deposit is a way of protecting the owner when damage has occurred to furniture, equipment and/or household objects made available for holidaymakers’ use. Its loss can also serve as a deterrent in the event that tenants fail to behave with good manners and respect for jointly occupied residences (noise nuisance etc.).

The damage deposit amount is a fixed sum (usually calculated according to the number of beds and quality of the property), which must obligatorily be stated in the rental contract.

Payment of the damage deposit may either be required after the rental contract is signed or when the holidaymaker arrives on site. This deposit can be paid in various forms (cheque, bank card, and cash) and the landlord has the right to cash it.

In order to avoid any disputes with the tenants, it is important to carry out a property inspection between each rental period. It is also worth providing tenants with a detailed inventory of the property so they can verify that this corresponds to the actual contents.

Obviously, the tenant cannot be held responsible for any damage to the property recorded when they arrive or any damage that occurs as a result of normal usage or non-functioning equipment.

The damage deposit is usually returned at the end of the stay but if the contract specifies a delay in return, the owner is legally allowed to keep it for a reasonable duration (maximum of 2 months - 15 days on average).

Depending on any recorded damage, the deposit may be partially returned or retained in full.

Following the damage assessment, the estate agency will handle any purchases and repair work required to return the property to its former condition. The sum retained from the damage deposit will be refunded to whoever is responsible for paying for purchases and repairs.

What taxation status should I declare under?

• LMP: Professional Landlord of Furnished Property

• LMNP: Individual Landlord of Furnished Property

To be considered as a Professional Landlord of Furnished Property (LMP), you must meet the following conditions.

• Be registered with the Trade and Company Register as a professional landlord.

• Make over 23,000€ incl. tax in annual receipts from lettings.

• These receipts must be higher than the total sum of any other business revenue in your tax household.

If these 3 conditions are not met, the landlord is considered as an Individual Landlord of Furnished Property (LMNP).

Whichever taxation status applies to you, furnished property letting constitutes a commercial activity and profits resulting from it are subject to income tax in the industrial and commercial benefits category (BIC).

Return to Question 1 “What is a furnished tourist rental? Regulations and taxation” to see the advantages of classing your property as a furnished tourist rental.

Taxation being a very specialised domain, each case must be closely analysed in its own right. That’s why we advise you to contact a specialist accountant to complete and file your tax return.

Payable local taxes

The furnished property landlord is also subject to local taxation:

• Council tax (in lease agreements, this tax may be taken care of by your estate agency).

• Property tax (in lease agreements, you can request for your estate agency to pay for refuse removal).

VAT

In principle, seasonal lettings are exempt from VAT (article 261 D 4° CGI), unless you are offering hotel services such as breakfast, daily house cleaning, linen supply and front desk services.

Tourist tax

Tourist tax is required by certain towns to go towards civil spending on tourist development. This tax varies from 0.20 to 1.50€ (per night, per person) and is payable by the tenant (upon arrival). In Val Thorens, this tax is 0.90€. Private landlords must collect it and pay it to the municipal collector. The estate agency handles it for all others.

However, in Val Thorens, those not staying for the purposes of tourism and children (-12 years) are exempt from this tax.