Affordable Homes in the Sun

 

LEASEBACK EXPLAINED

 

 

 

A popular way to invest in property in France is to buy a leaseback property which benefits
from a government-backed VAT-refund incentive, designed to encourage investment in tourist
residences. Through freehold ownership of an apartment or cottage that is leased back to a
management company for a minimum period of 9 years, investors benefit from guaranteed
annual returns from their fully managed and maintained property with relatively low up-front
costs and no ongoing maintenance or running charges

 

Main features of a leaseback property:

 

• A freehold, fully furnished property
• Investor entitled to benefit from the 11-19.6% VAT rebate
• Property leased to a reliable management/ tourist company for minimum 9-year period, with
automatic renewal for a further 9 years
• Investors receive index-linked, guaranteed annual return of up to 4.5% with options for
personal usage
• No running charges or maintenance costs

 

 

What does leaseback mean?

 

Investors buy the freehold of a property outright but lease it back to a management company who specialise in the tourist management, maintenance and rental of these properties for a minimum 9-year period. In return owners receive a guaranteed annual return, irrespective of occupancy of the property, NET of all communal charges, maintenance and running costs.

 

Why was leaseback introduced?

 

In the late 1960s, following the increasingly large number of tourists visiting France which continues today as the most visited country in the world, the French government recognised the need to encourage investment in the construction of tourist residences, and an offered incentive to investors by refunding the VAT on the purchase price of properties built for leaseback purposes.

 

Popular leasebacks

 

leasebacks remain poular throughout France particuarly so in the the French Alps and Pyrenees as well as on the popular coatal holiday resorts. There are also some exceptional bargains to be purchased as leasebacks near the end of their lease and owners wish to realise there asset after 20 years of receiving a good income. For the new owner this means they have 2 options:-

 

• Renew the lease with the management company and negotiate the time you will require for yourself so you receive an income and usage ( The new lease is normally between 9 and 11 years)

 

• Take on the property yourself and let it out through an independent agency. This would give you greater flexibility on usage and allow you to redecorate to your own taste. ( Annual communual charges will be applicable and would imagine these would be around €15 to €20 per sq meter)

 

Take a look on these pages at some of our favourite leaseback properties

 

Properties start from as low as €36,000 freehold