Guadeloupe: Overview

RENTAL YIELDS

Last Updated: Feb 05, 2008

Yields are good in Guadeloupe

Properties in Guadeloupe are relatively cheaper than other Caribbean islands, apartment prices in Grande-Terre and Basse-Terre are around US$1,880 – US$2,475 per sq. m. The average price of a 120-sq. m apartment is around US$226,000.

Apartments measuring 120 sq. m generate yields of around 7.3%. Smaller units have yields at around 6%. Rent for a 40-sq. m apartment is US$500 per month while a 120-sq. m unit can be rented at around US$1,380 per month. Rents in the islands are predominantly seasonal but these figures are for long-term rentals.

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TAXES AND COSTS

Last Updated: Sep 11, 2006

Rental income tax is surprising low in Guadeloupe

Guadeloupe’s tax system exactly mirrors that of France.

Rental Income: The effective rate of tax on gross rental income accruing to non-resident foreigners is likely to be around 5.6% on an income of €1,500/month and 13% on an income of €12,000/month, according calculations provided by Anthony & Cie.

Capital Gains: EU residents and residents of France now pay 16% on the net gain, after inflation relief, and after deduction of acquisition and improvement costs. Non-residents of an EU country pay CGT at a rate of 33.3%, subject to any applicable double tax treaty.

Inheritance: French private international law uses the standard double rule on inheritance: the law of the deceased’s domicile applies to moveable assets, and the law of the location of the property applies to immoveable assets.

Residents: French residents are taxed on their global income at progressive rates from 5.5% to 40%.

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BUYING GUIDE

Last Updated: Sep 11, 2006

Transaction costs range from high to very high in Guadeloupe

Round-trip transaction costs in Guadeloupe, as in France, are high. Total costs for old properties (more than 5 years) can range from 16% to 27%. New properties without previous sales have the highest costs at 27.6% to 44% because of the 15.4% VAT. Notary fees for old properties are fixed at 8%, but range from 2% to 5% for new ones.

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LANDLORD AND TENANT

Last Updated: Sep 11, 2006

Guadeloupe's laws are pro-tenant, as in France

Guadeloupe follows French tenancy law, which is very pro-tenant.

Rent: Though the initial rent can be freely agreed, the rent can only be revised once a year, and not more than the increase in the (new) INSEE rental index. In combination with a highly restrictive contract structure, this means that rentals of old apartments have tended to drag well behind new rentals and prices.

Tenant Security: An unfurnished property contract has, as a minimum, a three-year term, though furnished property contracts may be for one year. In both cases, even when the contract ends, the owner can only recover the property if he or a family member intends to live there, or he intends to sell. In addition, eviction through the legal system takes a long time.

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ECONOMIC GROWTH

Social unrest lead to cheaper properties

The populations of Guadeloupe and Martinique are not much different, but Guadeloupe has 50% more land mass

“The perception of difficulties is higher than in Martinique,” says Douglas Rapier of Atout Immobilier. “Guadeloupe has had more independence movement. They are more cognizant of the history of slavery, so social unrest is higher.”

Almost all local housing built in the DOMs is subsidized under the Loi Girardin, which allows 40% of a DOM-located property purchase cost to be written off against future tax payments (the parallel incentive in metropolitan France is the Loi De Robien). Such incentives have spurred an entire industry of financial consultants advising on ‘defiscalisation’.

GDP per capita in 2006 was around US$21,780 (a misleading figure, as this still includes the richer St . Martin and St. Bart’s). There is high unemployment at 25%, which has led to a certain amount of political and inter-racial tension.