What is a French Leaseback Property?
Lease back often referred to as leaseback proprties are a safe way to invest in property
in France. With a minimum of risk, guaranteed rental income and no property management
headaches, where else can you find a good investment opportunity that even lets
you use the property so many weeks each year?
With prices of leaseback properties starting from around £39,000 and mortgage funding
available for up to 80% of the purchase price, this can prove to be an ideal alternative
from the UK buy to let scene. You can view over 150+ lease back properties
in our database at any given time.
Leaseback property has been around for two decades in France, and was introduced
by the French government to increase the quantity of quality holiday accommodation
available in areas capable of attracting more tourists.
With the downturn in pensions and other more traditional methods of investing, more
and more people are turning to bricks and mortar, and leaseback schemes have helped
take the hassle out of owning buy to let property.
French Leaseback Scheme
The leaseback scheme enables you to purchase freehold a property which you then earn
a guaranteed rental income from. When leaseback schemes are sold, there is a pre-selectionned
property management company to whom you "leaseback" your property for
a period which usually ranges between 9 and 11 years.
During the period you leaseback your property to the property management company,
you have the peace of mind of owning property and benefiting from a guaranteed income,
yet none of the hassle related to letting out and maintaining the property! This
is one of the reasons why the leaseback scheme is so popular and that there is not
enough supply to meet demand.
You can usually use your property for a certain number of weeks per year for holidays
although this differs from scheme to scheme.
Guaranteed Rental Income
The guaranteed rental income tends to range between 2.5% and 6% per annum depending
on the property, whether you will be taking your holidays in it and where it is
located. Different property management firms offer different rental incomes, but
in general the less you use your property the higher your yield will be. This is
normal when you think about it, as the property management firm cannot guarantee
to pay you rental income if you are always in your property!
What's more, the French government agrees to offset the payable VAT (TVA) on the
purchase price against that charged to the short let customers of the rental management
company. This means that you will receive back a sum equivalent to the VAT on the
property at the rate of 19.6 % on new build property. This normally takes some months
to come through, but some developers will advance the VAT for the government and
reclaim it back directly.
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