This advice comes from investment expert DTB Wealth Management (DTB), a Conseil en Gestion de Patrimoine (CGP), which specialises in financial and legal solutions for expats in France.
“SCPI’s are an excellent solution France has to offer investors seeking a regular monthly income,” said founder Daniel Butcher who formerly worked as a QROPs inspector at AXA. “They are real-estate-based, provide a monthly income and are a highly tax-efficient vehicle.”
An SCPI works by an individual investing in property on paper, called pierre-papier. There are around 95 different SCPIs to choose from managed by well-known market providers. Most are business orientated buildings (in London or Paris, for example), but there are also warehouses (used by such as Amazon), as well as different themes, such as healthcare (hospitals and care homes).
“There is no notaire, no tenants to deal with, no unpaid months, no insurance to take out, and no work to carry out on a building,” said Daniel. “The ‘rental income’ is paid monthly or quarterly.”
According to Pierrepapier.fr, the monthly income is based on a global performance of 5.6%, the capital investment has grown by around 1.2% each year.
“This is a great alternative to assurance vie for income generation as assurance vie can have constraints such as high market volatility, global uncertainty and the fonds euros, which gives returns barely above 1%,” said Daniel. “Most SCPIs have been running for decades; 2019 was an exceptional year with a thriving €8.5 billion net inflow.”
One of DTB’s recent clients, Carol Jansen (name changed to protect identity), arrived in France at the start of the year. She was divorced, did not have a job, and had just sold both her Dutch and UK homes leaving her with around €1 million. With that money she needed to buy a French home for €250,000, save €100,000 for house maintenance, generate an income of €15,000 per year, keep some savings, and look after her 25-year-old son. She also wanted to invest in a tax efficient way, so DTB advised her to combine two SCPIs.
“We invested €100,000 in the booming healthcare sector, for 5.05% monthly, bringing in €420 net each month, and €200,000 in offices, which brings a monthly income of €1,150,” said Daniel. “The solution attracts no tax and provides a monthly income of €1,570.”
British pensioners resident in France with an S1 form (where the UK pays for their French healthcare, a system that is not threatened by Brexit) do not incur the 17.2% social charge on French-based SCPIs.
Daniel concludes: “All investments carry risk. However we believe SCPIs are ideal for expats who need a regular additional income or want to make the best out a lump sum.”
DTB Wealth Management is regulated to provide investment advice in France.
Tel: 06 72 34 48 50