SCPIs are “ideal” for expats seeking a low risk, hassle-free earnings, says investment specialist
Expats in France who need a regular, income-generating investment should consider taking out an SCPI (Société Civil de placement immobilier).
This advice comes from investment expert DTB Wealth Management, a Conseil en Gestion de Patrimoine (CGP), which specialises in financial and legal solutions for expats in France.
“SCPI’s are the best 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 city offices (in London or Paris, for example), but there are also warehouses (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 also grows by around 1.2% each year.
“This is the ultimate alternative to assurance vie for income generation as assurance vie has 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 and 2019 was an exceptional year with a thriving €8.5 billion net inflow.”
One of DTB Wealth’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 didn’t want to pay any tax either, so DTB Wealth Management 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 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 added: “SCPIs are ideal for expats who need a regular additional income or want to make the best out a lump sum.”
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