Martinique: Overview

RENTAL YIELDS

Last Updated: Feb 11, 2008

Long-term yields are low in Martinique

Properties in Martinique are expensive, at around US$4,000 per square metre (sq. m.). A 200-sq. m house in Martinique costs around €835,000. But when rented out it is likely to achieve a gross rental yield of only around 3.1%, low by any standards. Smaller units of 100 sq. m achieve around 5.4% - better, but not stunning.

Martinique rentals are falling because so many new houses have been put on the market over the past 10-15 years. “Nine years ago when we started when you told owners that they would have to pay commission to have you rent their property, they would just laugh in your face!” says Rapier. “Now renters of old properties face a real difficulty in renting property. This is the direct result of the defiscalisation laws.”

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TAXES AND COSTS

Last Updated: Sep 11, 2006

Rental income tax is surprising low in Martinique

Martinique’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: Jul 18, 2008

Martinique transaction costs range from high to very high

Total round trip transaction costs , i.e., the cost of buying and selling a property, range from 16% to 27% for old properties (more than 5 years old).

New properties without previous resales have round trip transaction costs of 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.

LANDLORD AND TENANT

Last Updated: Sep 11, 2006

Tenant protection laws are onerous in Martinique

Martinique 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

The

After the French revolution, many of Martinique’s French aristocracy were executed, which gave breathing space to the middle-class. Partly in consequence Martinique is more dynamic and less liable to independence movements than Guadeloupe.

Martinique is getting ready for international investment. Previously, Martinique gave quite a cold shoulder to tourism, but now Martinique is moving toward high-end tourism. The quality of housing is very good.