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articles > What are French Leasebacks?
Article> What are French Leasebacks?


Alan Forsyth


Article kindly supplied by Alan Forsyth


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Leaseback noun: short for sale-and-leaseback, is a financial transaction, where one sells an asset and leases it back for a long-term: thus one continues to be able to use the asset, but no longer owns it. This is generally done for fixed assets, notably real estate and planes, and the purposes are varied, but include financing, accounting, and tax reasons.

Hi, Hope you are well.

So what are French Leasebacks? Well, it is where you the Investor buy the freehold of an off-plan property outright, so you own the property. As with all new properties, the purchase price includes VAT, however with a Leaseback property the VAT is refunded back to you. As VAT in France is 19.6%, this either replaces, or significantly reduces your deposit. The property is then leased back to a management company who specialise in the tourist management, maintenance and rental of these properties for a period of 9 - 12 years. In return, owners receive a guaranteed annual return which increases with inflation, irrespective of occupancy of the property, NET of all communal charges, maintenance and running costs.

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. 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.

 

To enquire further, and receive our free copy of “7 Fatal Mistakes to Avoid as an Investor” sign up here Alan Florsyth Fatal Mistakes

 

Due to the financial advantages, leaseback schemes have “mushroomed” in France.

The success of a leaseback development rests on two elements: its location and the long term performance of the rental management company. Hence the necessity to choose a location with good amenities and a good tourism track record.

The leaseback scheme serves a very specific purpose which is to promote and develop tourism. 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.

We have been reviewing investment opportunities in France for the last 18 months - and now with mortgages improving further, we feel this is the right time to invest in the French leaseback opportunities.

 

Key features:

  • Up to 104% mortgages.....! Covering buying costs as well as purchase price!
  • 19.6% tax rebate!
  • 9 year rental agreement signed on completion
  • Possibility to use the property yourself for up to 4 weeks a year
  • Opportunities in countryside, ski resorts and city
Alan Forsyth French Leaseback


So, with the chance to secure mortgages at up to 104% of the purchase, price, and secure a guaranteed net rental income that can cover ongoing costs, it is also an opportunity that makes a huge amount of sense!

French leaseback property attracts significant tax advantages. Under the terms of the scheme, leaseback property qualifies for a 19.6% VAT rebate, for example, if the price of your leaseback property is EUR100,000, the VAT saving means that you only pay EUR83,612. Additionally you can benefit from not having to pay any capital gains tax if you keep your property for 15 years.

Another major benefit for investors who do not take any personal usage is the possibility of it being placed within a SIPP (Self Invested Personal Pension). Whilst it is dependent on the SIPP manager whether or not they will accept the property, placing property within a SIPP attracts major tax advantages.

If you are a keen skier, or looking to combine an excellent investment opportunity, with a chance to enjoy a lifestyle break, this is an excellent opportunity!

For more information on our latest French leaseback deals - with opportunities in both the city and ski resorts - email us at info@property-investment-deals.com or call us on 0115 9853969.

 

Regards Alan
To enquire further, and receive our free copy of “7 Fatal Mistakes to Avoid as an Investor” sign up here Alan Florsyth Fatal Mistakes

 

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