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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 the 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 price of the furniture pack is included in
the overall purchase price.
Euros mortgages on leaseback property in France are
available up to 80% LTV, sometimes 100% LTV, subject
to status.
A leaseback scheme generally runs 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 this rental income
is guaranteed and based on the number of weeks
available for rent per annum.
The initial lease for a leaseback property in France
is 9 to 11 years, with the option of renewing the
lease. 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 several
regions of France: dual season locations in the
French Alps with the benefit of winter and summer
rental, in the Vendée
region, on a golf course open year round, in Provence
and in the Languedoc.
Our hand picked selection of 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. It is for the
first twenty years a holiday scheme and buyers into
the scheme should realise that a leaseback property
may 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
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.
It is important to select a leaseback development
managed by a long established and successful holiday
management company (called Gestionnaire). Their track
record financially and in terms of occupancy levels
will be key factors in the performance of the scheme
and in the renewal conditions of the lease on
termination. 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.
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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