Why is this French city so popular for property buyers right now?

It’s a vibrant, student city less than an hour from Paris. But there are plenty other reasons why property investors can’t get enough of Tours right now.

Why is this French city so popular for property buyers right now?
Tour's town hall and Place Jean Jaurès. Photo: Tango7174/Wikipedia

Tours may not be one of France’s most famous or important cities, and it’s perhaps this reason why it’s taken foreign and French investors so long to notice its many assets.

Only 55 minutes away from the French capital by TGV train, the capital of Indre-et-Loire department is known primarily for its wine, the so-called perfection of its spoken French and its beautiful historic centre (UNESCO awarded).

Between 2009 and 2014, all the HR and IT staff for France’ Air Force, Army and Navy relocated to the outskirts of the city, which accounts for 10,000 new homes being built in the last decade to house the ever-changing workforce. 

“Between 2017 and 2018, the number of property purchases in Tours increased by 30 percent,” Cyril Decoux, director of estate agency Avenir Immobilier, told French newspaper Le Monde.

Such is the demand for homes in the central western city of 136,000 inhabitants that per square-metre prices have increased by €200 in just two years.

In the area of Tour-Nord prices are currently at around €3,200/sqm.

According to property experts in the city, Tour’s appeal as a good location for a second home or a buy-to-let investment is bolstered even further by its large pool of student renters (19 percent of the city’s population is enrolled in higher education there).

Property prices have risen as a result of demand but the rental yield still remains high: around 4 percent annually in the good districts.

In the neighbourhood of Fontaines and other southern parts of the city, where house prices are around €1,000/sqm, the annual yield is even higher (7 to 10 percent) if it has good transport links.

In fact, a second tramline is being built in the city, with plans for it to be operational by 2025. Buying along the route from La Riche and Chambray-lès-Tours is the assurance of seeing the value of your property grow over the next few years.

As an added plus, the city known during Roman times as “Caesar’s Hill” is one of only a few places in the region that is still eligible to the PINEL tax exemption.

This measure can entitle a property owner to a tax reduction equal to 12%, 18% or 21% of the cost price of the building, with a maximum limit of € 300,000 depending on whether the buyer undertakes to rent the property for 6, 9 or 12 years.

Ambitious plans to expand operations at Tours airport from 200,000 passengers a year currently to 500,000 by 2035, turning the city into the true gateway to the Loire Castles.

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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.

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

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.