Many British buyers are drawn into investing in France with expectations that they will earn a yield of around 7% - 10% on their property. France has around 60m visitors a year and demand remains strong. But British holidaymakers are becoming far more choosy about the quality of accommodation. A swimming pool is now a must!

Stephen Smith, co-author of Letting French Property Successfully, says: "The key is to write a good description of the accommodation and, above all, tell the truth. If you say you have a sea view but you have to stand on the toilet to see it, it will generate negative feedback from clients." 

Mr Smith says a number of factors affect the amount of rent you will be able to achieve. The most important is whether or not there is a swimming pool. The highest rentals come from being close to shops and a bar - not necessarily a restaurant - and having well-equipped kitchens. 

One of the most popular options for independent owners is to advertise through the Chez Nous brochure. This lists more than 3000 properties with more on the internet, and is sent free to potential holidaymakers in the UK. Chez Nous does not check availability or take bookings, nor does it inspect the properties published in the brochure. Owners organise everything directly with a client.  

Esther Grounds of Chez Nous says the demand for this service has grown considerably in recent years. "Chez Nous appeals to homeowners who want us to have a hands-off approach," she says. "If you want to be independent and manage the telephone calls and bookings this works." 

But it's not cheap; a small black and white advert in the brochure costs £350 plus VAT, a colour ad is £420 plus VAT. Internet advertising only is £225 a year. Ms Grounds says the market for people providing holiday accommodation in France has become more competitive in recent years. 

"Five years ago owners found placing one advert in one place was sufficient," she says. "Nowadays they are finding one advert is not enough and are marketing their homes across a range of outlets."  

But if the idea of going-it-alone does not appeal, home owners can alternatively pass their property on to a tour operator, which will take on the hassle of advertising and organising bookings for a fee or a commission. Bowhills is one such company, but spokeswoman Ann Flello says they are only interested in properties with pools. "People who take their holidays in France are becoming more and more demanding," she says. 

"They all want a pool and in most cases the accommodation must be equipped to the standards of their own home." For inclusion in their brochure, Bowhills agrees a net weekly rental with the homeowner to which they add an undisclosed mark-up. Flello warns that some areas are already over-subscribed. "In the Dordogne, for example, supply possibly exceeds demand and we are sensitive about taking on properties in that region," she says. "On the other hand Languedoc has been opened up by low-cost flights to the region."  

Stephen Smith emphasises that all rental income generated from property must be declared to the French tax authorities under the terms of the France-UK double tax treaty. "Even if a property is rented out to a favourite aunt, the income must be reported," he explains. 

Tension grows as locals baulk at British invasion. There are signs of growing tension between the British who are snapping up cheap property to renovate and French locals who often find themselves priced out of the market. In Brittany graffiti urging "Brits out, stop speculation" was recently daubed on the offices of a notary who handles house purchases for UK buyers. 

Local people claim British buyers have pushed up house prices in the area by as much as 50% over the past few years. Some also complain British families moving into the region are putting young children straight into French schools with no knowledge of the language. This, they argue, is holding back French children in the same classes.  

A report on a popular French TV documentary programme showed one British couple who had still not managed to master the basics of the language after living in France for more than a year. 

Miranda Neame, who also featured in the documentary, is editor of French News, a monthly newspaper for British ex-pats. She has lived in the Dordogne for more than 30 years and says tension is brewing. She says the French have seen British people moving into the area buying cheap property and turning them into beautiful homes. They now want to do the same, but find property prices too high. 

"The French love what the Brits have done to these old houses and the beautiful gar dens they've created. But not only are these houses too expensive for local residents, but there's a dearth of property around. I think this is going to be a problem. Not just here but also in places like Brittany." Prices in the Dordogne have risen steeply over the past decade. The town of Eymet has an estimated 500 British residents out of a total population of 4,500. 

There are said to be 20,000 Brits altogether living in the Dordogne with the number increasing to a staggering 100,000 during the summer months. While some businesses argue British homeowners and tourists bring money into the area others fear for local culture as the markets and shops cater for the foreign clientele. 

Cheddar and Stilton feature on the stalls in local markets. There are pubs, cricket clubs and even the Dordogne Ladies club. Ms Neame says permanent residents are more accepted then second-home owners. "Local people don't like to see property lying vacant for months at a time," she says. "Although it's worth remembering a lot of these local villages were dying before the British came along and bought up property." 

Ms Neame points out anger is not just aimed at foreigners. Wealthy Parisians buying weekend homes to escape the stresses and strains of life in the big city are also a source of resentment.  

Whatever the problems, British enthusiasm for la vie a la francaise shows no signs of abating. The airport at Bergerac which gives swift access to "Dordogneshire" is increasing the size of its runways to allow larger aircraft to land from the end of this month.

Why the bubble may have burst in rush for gites.

France is awash with Brits renovating properties to enable them to offer gite accommodation - and inevitably not all of them will survive.

I have just spent 15 months living in the Gers area of south-west France and almost every British person you meet is doing up a house and planning to offer holiday accommodation. Many have enough money to do up the house, but once that is done they will be relying on the rental income from holiday lets. 

The problem, to my mind, is that there are simply too many people doing it and rents will start to fall as more houses come on to the market. Lots of those already offering gites in the area are struggling to attract bookings outside the magical months of July and August when everyone in Europe goes on holiday. 

While the low-cost airlines, which now fly in Toulouse and Pau have certainly helped to bring people into the area, there are only so many people who are looking to rent houses at £600 per week. There are also plenty of Dutch people, Germans and even Danes vying for trade alongside the local French population. 

The underlying problem is that the return on capital invested will be unlikely to provide enough money for the average family to live on. Almost everyone experiences delays in getting the property ready to rent- typically it takes most people eight-12 months longer than they think it will to bring up to the required standard. Many of those I met were spending upwards of £300,000 on their house and gite business and that's before they had furnished the property. 

There is a shortage of artisans in France, and it is very difficult to find good people to do the work. Some roofers have people waiting two years for them to start work. A swimming pool is now a must and they cost £20,000. 

Leaving aside the extra money you will need to support yourself to cover any delays, the income for most people probably won't be enough. If you are really lucky and can rent it out for 20 weeks a year at £600 per week, that still only adds up to £12,000 a year. From that you have to deduct the running costs and tax - which doesn't leave a lot to live on. Of course there are exceptions to the rule. I came across one couple who had set up a gite/bed & breakfast business near the famous Nogaro motor racing circuit -and it was an instant hit. They were sustained by the fact that the circuit received visitors throughout the year. 

The same business 80km further south would probably be struggling. Also, those who didn't have to rely on the gite, they had a pension or some form of income, were fine. The other alternative is to invest the money that you would be spending in other ways. The buy-to-let market in France is not as developed as it is here, and that might be an option. You can always rent out your UK property, and rent you somewhere to live in in France. You may not be living "the dream" but in pure monetary terms, it makes a lot more sense. 

by, Judith Larner

One afternoon at the end of August, Clive and Helen Tristram sat down and took stock of their gite business. The season had been their worst, their income plunging to just £10,000, which is half the amount their six-year-old business once earned. 'We realised then that it just wasn't worth it anymore,' says Clive.

But the Tristrams are not the only ones suffering. Thousands of British families across France have discovered that the gite bubble has burst.

Once buying a gite or two seemed a guaranteed ticket to the good life and comfortable living in France, but today many gite owners are struggling to cover costs.

And the situation has just become worse: with P&O Ferries closing all but one of the Western Channel routes from Portsmouth, and even reducing between Dover and Calais, British holidaymakers face a difficult journey to France, and so may decide not to come at all.

For Clive and Helen, the slump in the market is troubling, but at least they have Clive's income as a management consultant to fall back on.

However, for Derek and Angela, the downturn is potentially devastating. Having sold up in Britain, the couple sank a significant proportion of their cash into a 17th Century farmhouse with outbuildings in Clere du Bois in the Loire. After spending almost £90,000 creating four gites with shared pool, they opened for business in 2001. They expected trade to be slow at the start, but banked on a 14 week season. They have been shocked by the reality. 'Even now we are regularly full for just seven weeks, over July and the rest of the time is in the lap of the gods,' says Angela. The couple are down at least £8,000 on their estimated income – and there is nowhere to turn. 'All our equity was swallowed up doing up the property,' says Angela. This is it for us. We are not doing it for pin money, this is all we have and we are just surviving.'

The cause of the problem is supply has outstripped demand over the past few years thousands of Brits have headed across the Channel determined to fulfill their dream of living in France it is estimated that 150,000 live there permanently, while 500,000 own a second home.

Buoyed by the rocketing UK property market and the comparatively low cost of property in rural France, and encouraged by TV programmes describing the apparent ease of turning barns into money-making enterprises, many have chosen to fund their dream by becoming gite landlords.

The result is a wholly saturated market in which oversupply is affecting everyone from long established gite owners to beginners Reports suggest there are five gites available for every person wanting to book one. In the past five years, Chez Nous, the annual gite 'bible' for owners and renters, has seen the number of property advertising pages rise from 330 to more than 500, and is now restricting the number of gites advertised. Almost every gite owner complains of a 'flooded' market causing slow bookings and lower prices. Some are getting no one through the door. Kim Armstrong, whose husband works full-time in London, started trying to rent out her three-bedroom gite in the Dordogne last summer, but has not, had one single booking. She has dropped her £1,100 per week starting price to £800, and now will take anyone for £20 per person per night.

Ruth Reid, an estate agent, has had gites in the Charente for ten years. This year, for the first time, she was empty in June. 'People used to book two years in advance to get a private place with a swimming pool,' she says. 'Now there is an endless supply of properties with a pool.'

Clive and Helen started their business in 1999 with just one cottage in Charroux, in the Vienne, south-west France. A few months later they acquired a second cottage nearby.

'We calculated on both gites being full for 16 weeks of the year and charging the going rate,' says Clive. 'At first there was no pressure on the price during the peak season, and at other times we had good low-season bookings.' They were so confident about the future that for the season they rented another cottage called Chez Pierre and sub-let it as a gite as well.

Two years on, however, the picture could not be more different. This year Chez Pierre had no bookings at all, and the two others just a few - many of those let out at a discounted rate. The Tristrams plan to take drastic action. 'Next year we will not let out the third gite, and we want to sell one of the cottages,' says Clive. He says one reason for the market downturn is that former gite holidaymakers have bought their own property. He estimates that at least ten of his regular customers have now bought homes in France - that's 20 weeks' rental lost. Meanwhile, Angela says many of those buying a second house rent it out at a rate that distorts the market. 'They are undervaluing the property for July and August and that makes it more difficult for people like us who are doing it for real,' she says. lngram Monk, of the long established property website FrenchProperty.com, has some blunt advice for those planning to take on a gite’don’t do it. You're jumping on a bandwagon that's long departed. People see a TV programme, and think they can do it, but by the time they do so, they are following a dream that is a few years old. There are too many gites now.

'It seems that for everyone who wants to book a gite, there's someone looking to buy one. You think you'll be the exception that you will succeed where others haven't, but that's not the case. You will simply be throwing money away.' Especially as the latest news from P&O is yet another blow to an already blighted French tourism industry. Last year visitors to France fell by 20 per cent and reports suggest this year is no better. Last year's decline was blamed on last year's heatwave and the advent of cheap flights to even cheaper holiday locations.

'France is more expensive than Spain and then there are the new destinations such as the Adriatic,' says Monk. But while tourism may have fallen, the cost of a gite certainly hasn't. Estate agent Mike Norman, of Nord Charente Homes, says that ten years ago you could buy a hamlet for £30,000 and spend almost the same again renovating it into a gite complex.

'Today you spend £250,000 to buy a property, then another £50,000 per gite in renovations. It takes about 12 years to recoup the original outlay.'

And customers have become ever more demanding. 'People expect more and more for their money now,' says Jonathan White, marketing director VFB Holidays, which has been in the self-catering business for 35 years. 'Once they were happy to have a rustic gite and go back to basics. Now they want a washing machine, dishwasher, swimming pool but they don't expect to pay any more.'

All this means that making a profit is tough. Tim Williams, who runs a course called How To Buy And Run A Gite Complex, says the return on gites has fallen over the past few years - from ten per cent per annum to between five to seven per cent. 'The ability for gite owners to raise prices has been curtailed because of the competition, yet the costs of a gite complex have risen,' he says.

Potential gite owners often overestimate the return. 'For example, if you are buying a property with gites for £400,000 ~ and the house you live in is worth half of that, then you calculate your rental income on the remaining £200,000 only " says Williams. 'The return would be about £12,000 per annum.' Monk's grim conclusion is: 'Gites are no way to make a living. To have a chance you need at least three gites, but then the workload is astronomical. , Having an annexe or a barn gives you no return at all. Colleen Snitch, from the holiday rental company Simply Perigord, has 78 homes on her books, mostly those of British second-home owners.

'You earn enough for your own holidays, to pay for maintenance and redecoration, but that's it. It will not pay back a mortgage and if you are highly geared, don't expect it to work,' she says. Clive and Helen calculated that even when they were doing well, their profit was just 20 pence per hour. Now they hope to get 200,000 Euro (about £170,000) for the cottage in Charroux and that will go some way to alleviate the pain of previous low returns. As for Angela and Derek, and anyone else struggling with half empty gites, Monk does not hesitate in his advice. 'Sell now,' he says. 'I know it sounds morally reprehensible, and in a way it , is, but if you don't get out now, it will be too late. 'Soon more and more people will realise that gites are not a good investment and want to bail out. And then it will be too late.'