Leaseback - Investment Property

We used to call it leasebacks, buy-to-let, or investment products, the French buy them in the same way that we buy pension plans. In fact that's how I like to describe them - in simple terms they are freehold "property pension plans".
Generous tax-breaks are available to investors who buy into freehold residential tourist hot spots. Paris, the Cote d'Azur, and some of the top French ski resorts all have very attractive buy-to-let properties.
What's in for you? 19.6 % VAT is refunded from the French Government within 3 - 6 months of purchase and in return you receive a guaranteed rental yield of up to 6.5% NET.

France takes it's 74 million tourists a year very seriously indeed. It's in the number one position in terms of world tourist destinations , so the French government came up with some investment incentives. The aim was to meet the needs of an ever-increasing accommodation demand triggered by the growing flow of tourism.

The Leaseback (Buy-to-Let)

A leaseback plan is a scheme where you buy a property then grant a management company the right to use it for short-term tourist rentals, this is usually over a minimum contracted period of 9 years.
You receive in return major tax breaks from the French administration as well as a guaranteed rental income for the duration of the contract. Anyone can buy a leaseback property - there are no restrictions for non-residents.
In return for a leaseback contract to a management company the buyer gets a net guaranteed return of up to 6.5 % net depending on the location.
These returns are net during the term of the lease, which means net of the running costs, as well as index-linked.

The French banks usually lend 80 % of the property value. By using leveraging, you can invest a relatively small amount and yet reap the gains on a large amount. These are purely investment products for people who want to build up a property portfolio, or property pension plan as I prefer to call it.
The advantages are that the investor can accurately calculate his financial commitments over a minimum of 9 years.

Leasebacks do not suit everyone, because use of the apartments by the owner is strictly limited. Some schemes offer 2-4 weeks free occupancy per year, while others allow you to use it whenever you like but you have to pay the full market rent, less 20%. These schemes are particularly popular with overseas expatriates.

If you decide to sell it before the 9 year leaseback contract has ended, you will have to find a buyer willing to take on the lease.
On the other hand, these properties are all freehold and in exchange for a 9 years (or more) leaseback contract, most of the mortgage will have been repaid, you have saved 19.6% VAT, the apartment is handed back in good decorative and furnishing order, and you can then move in and enjoy it.

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