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SECOND HOMES

Tax hikes of up to 60% for French second home owners

Towns and villages through France are raising property tax rates for second-home owners, with many areas voting for the maximum 60 percent increase.

Even though France’s taxe d’habitation (householders’ tax) is in the process of being phased out for most French residents, second-home owners are still required to pay it.

This year more towns have voted to increase it, and others have recently gained the ability to add a surcharge for second-home owners, with French daily Le Parisien reporting that the residence tax “continues to soar.” 

Municipalities in zones tendues (areas with a housing shortage) have the ability to choose to increase taxe d’habitation by up to 60 percent for second home owners.

From 2023, several new areas – including Nantes – will join the list of zones tendues, meaning they will be able to vote to increase taxes for second-home owners.

This year, large cities such as Bordeaux, Lyon, Biarritz, Arles and Saint-Jean-de-Luz saw their city councils vote to increase the tax at the maximum 60 percent.

READ MORE: Why some French cities are increasing taxes for second-home owners

Some areas have still not chosen to apply the increase, but those looking to buy a second home in France should beware that these municipalities could vote to increase the taxe d’habitation in the future.

In 2020, cities on average voted to increase the residence tax on second homes by 248.50, in comparison to €217 in 2017. This year, that amount is expected to be even higher.

On top of the taxe d’habitation, second-home owners also have to pay the separate taxe foncière property tax, which is itself rising sharply in many areas.

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MONEY

Cutting back and applying for benefits: How the weak pound has impacted Brits living in France

In recent weeks, the pound has become weaker when compared to other currencies, namely the euro. This has made life more complicated for Brits living in France. The Local asked readers to share their experiences - and advice - for others who find themselves in the same situation.

Cutting back and applying for benefits: How the weak pound has impacted Brits living in France

While the pound is still low when compared to other currencies, it has recovered somewhat since its drop after the British Chancellor’s mini-budget.

As of October 5th, the exchange rate was £1 to €1.14. For British people living in France who receive income in pounds sterling – whether they be pensioners or others with financial interests still in the UK – the drop in the pound’s value has had negative impacts.

The Local reached out to readers to hear how they have been affected by the exchange rate. Many offered their tips for navigating the current economic landscape.

Many readers found life still affordable, but expected to be more severely impacted in the future. Retiree A. Wood, who lives in Haute Vienne, said that “The recent drop in the value of the pound will not immediately affect me. If it remains low for more than a year then maybe I will have to do some calculating.”

Pensioners especially said that life in France had become “more expensive” and “costlier” for them, but being aware of price rises and managing the changes “with care” were plausible solutions for the time-being.

In general residents of France are better protected from inflation than many other European nations, thanks to government initiatives such as energy price caps and fuel rebates, but prices for many everyday items such as food have been rising steadily.

One respondent, Nigel Harrison, a retired former business consultant, said that weak pound has “not made life unaffordable, but worrying.” 

Meanwhile, some readers, all of whom are also retired, said that they were starting to feel more serious impacts of the exchange rate.

Retired librarian and micro entrepreneur, Pat Hallam, who has been living in Paris for the last two years, said that she receives her career pension in pounds, which she later transfers into euros by way of her French bank account.

She explained that she already works to supplement the cost of life in Paris, but now she expects to have to take on extra work.

She expects to also “cut back on things like socialising, eating out and culture.”

“Explaining this to friends will be hard, and it is what makes living in Paris a pleasure. I know the cost of living would be cheaper in other parts of France, but I’ve spent the last 2 years building a life in Paris, my dream destination. I would be very disappointed if events across the Channel forced me to move away, or even back to the UK,” she said.

READ MORE: The best banks for non-EU citizens living in France

Pat is not alone – Tom Baker, who is retired and lives in south-west France – said, “All my pensions are from the UK and the drop in exchange is definitely felt, coupled with the loss on transferring the money to France as I have five pensions.”

Baker explained that having his income drop has been particularly difficult “as a 74 year old with two young sons aged seven and 10” and amid “the present financial climate the cost of everything is spiralling.” 

Many readers said they would try to live on savings while waiting for the value of the pound to rise again, which has also posed its own problems, as many British bank accounts have begun closing the accounts of non-UK residents. 

John Stanley Mumford found himself in this situation, he said: “I have a pension in pounds. I will live on savings until the value of pound goes up! But, Barclays bank is to close my account as I am a French resident, so basically I’m stuffed!”

READ MORE: Banking giant Barclays to close all accounts of Brits living in France

Non-pensioners have also felt the impacts of a weak pound. One respondent discussed the dilemma of attempting to sell their UK home, and worrying about whether they should leave the money in pounds or transfer it to Euros afterwards. Others worried about their UK savings accounts.

Respondents did offer helpful advice for others in similar positions – ranging from tips to try to hold out for a better exchange rate to recommendations for how to become thriftier – like getting rid of unused streaming services and cutting back generally. 

Tom Baker said he recommends transferring funds “perhaps every three months to reduce the cost of transfer fees, which since Brexit have really increased.”

He also said that he checks the daily rate “for a week or 10 days before the transfer is needed to try and get a better each rate.” Others said if possible – wait until the pound recovers.

However, for those unable to hold out until the pound is stronger, several readers recommended apps and international banking services, such as Wise and Revolut as handy ways to find better exchange rates and avoid high fees when transferring between a UK bank and a French one. 

Finally, Pat Hallam counselled Brits living in France to consider applying for welfare benefits if necessary. She said even if you’ve never considered it, “either out of pride or because you didn’t think you were eligible, maybe now’s the time to look again.”

She also recommended tracking energy use more carefully via a smart metre: it “takes three months’ use before you can start comparing consumption but it helps keep track of your energy use.”

READ MORE: Living in France: How to cut your household energy use by 10% this winter

Many thanks to everyone who took part in our survey and shared their experiences and tips.

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