Tax-savvy ways to invest in a ski chalet in the French Alps | The Telegraph

   24 November 2023

A successful return on a property in the region can depend on anything from location to energy efficiency, reports Liz Rowlinson

Snow has already been falling in the Alps and many of us are dusting off our ski boots, hoping it will stay that way. Yet buying a home in the mountains has become about more than just the skiing. The adage “I came for the winter and stayed for the summer” has never been truer. 

Property prices boomed during the pandemic and many local and international buyers bought alpine properties as dual-season investments.

According to Knight Frank’s Ski Report 2024, the price of a ski home has increased by 19pc on average in the last five years. It also reports that the typical 10-15 weeks rental per year a decade ago is now often nearer 30.

Rental returns are becoming more important to buyers, says Guy Murdoch, manager of Savills French Alps desk. “About 80pc to 90pc of our buyers in the Alps want to rent out their home.”

Profitability but also tax efficiency are key considerations for many, agrees Chris Thompson, of the high-end rental specialist OVO Network, who advises ski buyers and owners. “This year we’ve signed on more than 40 new properties, owned by the British and French, our best yet.”

So, what are the secrets to having a successful ski chalet investment?

Go high or go low?

Choosing the right location is key: do you choose a high-altitude resort that is pretty lifeless outside the winter, or a lower resort with a vibrant summer scene?

Giles Gale, of Alpine Property Finders, says: “Premium rents in the prime high-altitude ski regions such as Three Valleys or Paradiski can usually guarantee a solid 10-12 weeks’ winter rental and top prices. Or in lower resorts, like those in the Portes du Soleil, the summer season can account for 50pc of overnight stays.”

Resorts that have invested heavily in summer tourism include Morzine and Les Gets (for mountain biking), Combloux (which has a new artificial lake) and Serre Chevalier (famous for its giant zipwire).

But ski homes with access to high-altitude slopes is a hedge against global warming, adds Gale. “For example, getting a gondola up to Avoriaz [1,800m] from Morzine or Les Gets [1,000m-1,172m].”

Being close to the lift and village centre is essential for ski-focused rentals. Ben Nathan, of the rental company Chalets 1066 in Les Gets, agrees: “We turn down a property nearly every week [for rental management] because it is too far from the village centre. But being on a bus route is a plus.”

Don’t scrimp on size

Nathan adds that the company also turns down numerous two-bedroom properties as “they just don’t rent”.

He says: “A well-located four-bedroom property will always rent out and cover its costs.” In Les Gets, this means 14-16 weeks a year, earning around €3,300 (£2,885) a week in the low season to €8,890 in the high.

Skiers now expect more space, says Mien Krooglik, of Nexalia, a developer in the Portes du Soleil.

“We allow a minimum of 13sqm per person. So for a three-bedroom property that sleeps six, that is 78sqm. People like a separate ski locker and secure bike lockers.” In Chatel, there’s a four-bedroom 143sqm chalet for sale at €1.35m, off-plan from Nexalia.

You might wish to change an extra bedroom into a television or games room for children.

“But beware of changing the garage into a bedroom and losing ski or bike storage,” advises Ben Nathan.

“Neither a games room nor a sauna is a must-have, but a hot tub will gain you twice as many weeks [of rentals] if you have one.”

The benefit of buying new

Buying a new-build home means paying a premium but gaining the advantage of getting an energy-efficient, hassle-free property in a contemporary and customisable style.

Buyers can get the 20pc VAT back on a new-build home if they rent it out. But be aware you are entering into a 20-year agreement with the tax authorities to do so, and if you stop renting it, you have to pay back a portion of the VAT, warns Murdoch.

Krooglik adds: “You can claim the 20pc discount each time you make a stage payment on an off-plan home, so the savings can fund the tail end of the project, or buy the furniture.”

She says another benefit of buying a new build is that you pay a reduced notary fee (which includes stamp duty). That means paying 2.5pc of the purchase price rather than 7pc-8pc for a second-hand property. Even if you don’t buy brand new, going modern has advantages, says Andy Symington, of Mountain Base/Knight Frank in Chamonix.

Properties with the least energy-efficient “G” rating are now banned from being rentals in France. “Avoid buying a property with a low thermal efficiency rating as it will cost way too much to upgrade. An old but charming chalet bought for €750,000 to €1m will cost €300,000 for a new roof, windows and heating system – but that won’t make it worth €1.3m.”

He says a good-quality modern chalet with three to four bedrooms within 15 minutes’ walk of Chamonix will cost €1.5m to €2m.

Be rental ready

Go for low-maintenance materials and features to make it stand out: a hot tub, summer-season offerings like a nice ­terrace or petanque court (see box).

Extensive outside areas are expensive to maintain, says Symington.

“Bear in mind you have to pay for snow clearing if you have a long drive. A snow plough can’t do gravel. Never sink a hot tub below ground – it’s an upkeep nightmare. Avoid high-maintenance finishes like glass balustrades or ­copper splashbacks.”

A good management company is a must to maximise your returns, ­suggests Giles Gale, who rents out his own ski chalet.

“There is a lot of work involved in going back and forth with guest questions and keeping them happy. A good management company will be well established on the rental portals.

Trying to save the 20pc-25pc management fee is a false economy. You will recoup this extra costs with increased occupancy and the “dynamic pricing” that many good agents can employ.”

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