Leaseback is designed to encourage investment in tourist residences and is an excellent way to invest in property in France whilst benefiting from a French government-backed VAT-refund incentives. Through freehold ownership of an apartment that is leased back to a management company for a minimum period of 9 years, investors (you) benefit from guaranteed annual returns from their fully managed and maintained ski property with relatively low up-front costs and no ongoing maintenance or running charges.
the benefits of a leaseback property
The French government will refund the TVA (VAT) to investors, which represents a significant saving on the purchase price (the VAT rate varies for new build properties and for refurbished properties).
Investors are guaranteed annual returns which is index-linked to the Dwellings Rent and Construction Index of France. The return is provided irrespective of tourist occupancy protecting investors from fluctuations in tourist demand or downturns in the property market.
A management company is appointed and will look after the upkeep of your property in its entirety. You will not need to worry about any maintenance, repairs or upkeep costs of your property or the communal areas or finding rental tenants throughout the whole of your lease period.
Developers selling leaseback properties “guarantee” their investors an annual return. These guarantees are secured by the financial strength of the company offering them, its ability to successfully manage, maintain and rent the property and to continue providing returns during good and bad tourist conditions over the period of the lease.
Potential Capital Appreciation
Property in France historically offers very good growth with a high demand from local and overseas investors. France has one of the fastest growing populations in Europe increaseing the demand for more housing. Strict national and regional planning regulations prevent mass building so existing and new property stock is in demand.
Leaseback properties are built for tourists and as such are situated in the best locations with the facilities, amenities and accessibility that holiday-makers expect and as such benefit from features such as swimming pools, tennis courts, sports facilities, restaurants and entertainments that a normal property does not .
Increase in Annual Returns
All annual rental income is linked to the French Cost of Construction Index, so investor’s returns will continue to increase in line with this. For the last 10 years this has averaged around 2%.
Limited French Tax on Rental Income
Non-resident owners of French property are liable to income tax though French tax rules allow investors to off-set this liability against several factors including French mortgage interest repayments, notary fees and depreciation of the property.
Investors have the option to choose a leaseback formula that includes personal usage weeks at their property which they can use at their own discretion.