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Everything you always wanted to know about France - from France |
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France - Make your dream come true.
What is a Leaseback?See also Leaseback FAQThe leaseback scheme in France enables people to buy their holiday home or an investment property in France and to finance most of the mortgage costs with a guaranteed rental income (typically yielding 3-7% of your initial investment) from a management company who then rent out your property for the period of the lease, typically 9 years.
The advantage is that the French government give you back the VAT which is paid on the new development, this is currently 19.6% of the price. But check your arithmetic, if the selling price is 100,000 euro then the price on which the VAT was calculated is 83,600 euro. You will get back 16,400 euro which is 16.4% of the price you paid. You get back about one sixth of the total VAT inclusive price not one fifth. In some cases the buying price you are quoted is with the tax already recovered for you by the contractor.
You are the freehold owner of the property and you can negotiate to have use of the property for holidays for selected weeks of the year, this depends on each individual scheme. The property is purchased fully furnished and fitted. Your property is managed and serviced by the property company who lease from you and you have no further costs or charges for the period of the leaseback.
The French government has introduced "Residence de Tourisme", or Leaseback plans to increase the quantity of holiday accommodation available in many popular regions to provide accommodation for more tourists and to increase the tourist revenues for France.
You get an investment property which you own absolutely freehold. Most leaseback plans give you the use for several weeks of the year and you receive a fixed rental income guaranteed for the rest of the year. The VAT tax incentive is a real discount off the market value of the property giving a VAT refund on the whole property from the French government. The current rate of VAT on all new property is 19.6%.(this refund represents a 16.4% discount of the market value normal selling price)
How it worksThe leaseback properties offered in France have been given a "Residence de Tourisme" status. This means that a purchaser can buy the freehold of the property, with a mortgage if required, and then lease it back to the developer or a rental company for a pre-determined period (usually around 9 years) at a fixed rental. Most leaseback properties include pools which can be accessed free of charge. Other facilities such as sporting, skiing health spas, may be charged for. During off-season periods the extra facilities may not be available although the property can still be used. The leaseback property will be in a complex, or group of properties which qualify for the Residence de Tourisme approval. An investment in a leaseback proeprty must be considered only as an investment and not a way to own a sunsidised holiday or retirement proeprty.A property purchased through a leaseback plan usually has options for the purchaser to make use of the property for a few weeks of the year at no cost. Each development has its own definition of High and Low season weeks and at the time of your purchase you would define how many weeks you wanted to keep for your own use, normally this is up to six weeks but is dependant upon each scheme. The owner of each property often has first choice of which weeks to spend at the property and can specify at the beginning of each year their preferred weeks. In order for the rentals company to guarantee the rent for 9 years it is most important that the development is in a location which has a strong demand for vacation rentals and offers excellent facilities. These are the same criteria for a good capital appreciation for a property. See Leaseback FAQ There are over 2,000 features and articles on this site about French life and living in France. Do browse through our website and please use the advertising links, they help pay for the site. I do try to reply to all mail - Contact Me - most is about property or living in France. I publish comments in this newsletter which I believe are of interest and may help find answers for people wanting to come to France. I hope readers will go to the adverts which help support our overheads. |
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