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About French leaseback
Why
buy leaseback in France
What
is a leaseback
How
do they work
Why buy leaseback
in France?
Leaseback property in France offers an excellent
investment scheme with the safeguards of a
professional letting management company. The
leaseback scheme provides the security of knowing
that your property is in the hands of a reputable
holiday management company engaged in a long term
lease contract to let and maintain your property. The
upkeep of your leaseback property in France is
paramount to the success of their business, so they
can attract customers and rent the property as often
and as much as possible within the terms of the
contract.
The substantial incentive of leaseback property in
France is 19.6% VAT refund. This is a real benefit,
as the VAT is often pre-financed by the developer,
meaning an immediate saving for the buyer on the
property purchase price. In addition, leaseback
property in France is sold fully furnished and the
furniture packs are VAT free.
Euros mortgages on leaseback property in France are
available up to 80% of LTV.
A leaseback scheme can run for a maximum of 20 years,
but there is a degree of flexibility. The initial
contract is for between 9 and 11 years, and once this
period is over, you can choose to sell the property
or renew the contract for a further 11 or 9 years up
to 20 years in total. You can also choose to sell the
property mid contract to another investor providing
they take over the leaseback contract with the
holiday company.
Once the leaseback contract has come to the end of
its term, you have a property which has been kept in
top condition in a popular location and which has
achieved capital appreciation. If you decide to
sell before the end of 20 years, you may have to
refund a proportion of the VAT to the French
government, but, with inflation currently low in
France, this will be a relatively small amount to
pay.
As many people have limited holidays, it can be ideal
to know that you benefit from a number of weeks of
personal use of your leaseback property in France and
that you will return to the property to find it clean
and ready to occupy.
Location and professional property management are key
to the success of a leaseback property in France.
Once these conditions are met, the French leaseback
scheme offers the assurance of a sound long term
investment.
What is a leaseback
property in France?
French leaseback property is purchased freehold. The
French leaseback scheme is designed to encourage both
investment and tourism. Under the terms of the French
leaseback scheme, the purchaser of a new property is
entitled to a VAT refund. (TVA in French). The refund
of the 19.6% VAT is a major incentive when buying a
leaseback property in France and an immediate
financial benefit in reducing the property purchase
price.
The purchaser signs a lease with the holiday
management company appointed by the French developer
who will pay you rental in return for use of your
leaseback property. In most cases a rental income is
guaranteed, depending on the number of weeks to be
rented per annum.
The initial lease for a leaseback property in France
is 9 to 11 years, with the option of renewing the
lease with the same holiday management company for a
further period up to 19 years. It is possible
to sell on a Leaseback property in France before the
end of the lease term and without VAT refund penalty
providing the buyer is able to take over the
leaseback contract.
French leaseback schemes can offer personal use of
the property for periods of between two and fifteen
weeks depending on the particular leaseback
development. In cases where the leaseback property in
France is purchased purely for investment, it is
possible to opt for no weeks of personal occupancy.
Leaseback properties in France range from studios to
substantial apartments or villas.
We currently offer leaseback properties in desirable
dual season locations in the French Alps with the
benefit of winter and summer rental and in the Vendée
region, on a golf course open year round.
We feel that our leaseback properties in France offer
the combined benefits of attractive immediate
purchase price reduction due to the Vat refund,
reliable rental income and maximum personal
enjoyment. With high build quality and
excellent maintenance our selection of leaseback
property in France is based on high build quality and
professional maintenance. This ensures good resale
potential after nine or twenty years.
Leaseback property in France - How does the scheme
work?
The French leaseback scheme
is a government initiative to encourage and promote
both investment and tourism in France. It is a
national scheme overseen by the French ministry of
tourism and offers the assurance of government
regulated contracts and financially bonded
developers.
Under the leaseback scheme, the buyer agrees to
lease the property back to a holiday management
company for year round rental. This is usually for a
period of 20 years, and in return the buyer receives
a refund of the vat included in the purchase
price.
Leaseback schemes are a popular way to purchase a
property in France because they allow the purchaser
an amount of personal occupancy whilst benefiting
from an immediate saving on the purchase price. In
most cases the annual rental income is
guaranteed.
Due to the financial advantages, leaseback schemes
have “mushroomed” in France. We feel it
is important, however, that buyers understand the
background to a leaseback development. Buyers into
the scheme should realise that a leaseback property
cannot and will not meet the same requirements as a
property purchased for one’s personal and
family needs. When buying a leaseback property you
are buying into a holiday rental environment with
regular changeovers, perhaps noisy neighbours, and a
different day to day living.
In addition, the success of a leaseback development
rests on two elements: its location and the long term
performance of the rental management company.
A development in a very rural area, which only comes
to life in the summer months, may not be the best
long term investment as far as resale potential is
concerned.
How well the development is rented during the first
lease will determine whether the management company
renews the lease, and whether it will carry on
guaranteeing an annual income, and at what level.
Again it is in the interest of the management company
to perform well, but buyers must remember that there
is no obligation on the part of the management
company to renew the lease. Hence the necessity to
choose a location with good amenities and a good
tourism track record. From a leaseback owner’s
point of view, the standard of maintenance carried
out by the rental management company on both the
property and its shared facilities is also a key
factor. It will be in the interest of the management
company to see to this for the duration of the first
lease. However, should the management company not
renew the lease, owners need to be aware of the
options available as far as letting and upkeep are
concerned.
The leaseback scheme serves a very specific purpose
which is to promote and develop tourism. A leaseback
property may not be the most suitable buy for someone
looking for a traditional family home with the
flexibility and identity such ownership would bring.
On the other hand, if you are looking for an
investment opportunity without having to manage or
maintain it yourself, then a leaseback property could
be an ideal way for you to invest in French bricks
and mortar. It is worth looking at all the leaseback
opportunities available before deciding whether a
leaseback property is right for you.
Patricia
Fevrier, founder and Managing Director of the new
build property specialists A Place in France,
FrenchEntrée New Build Zone
Sponsors.
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