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Why the Investment
Leaseback System
?
What are the
Benefits?
More
about the Leaseback System
The French Leaseback
System outlines the acquisition of a fully furnished freehold property developed
for holiday purposes which is leased back to the management company, for a
minimum of nine years.
The VAT portion of the property price is refunded as an investment incentive
from the French government and the owner receives annual guaranteed returns.
The French government was originally worried about the lack of house buying and
tourism in certain areas of France and introduced the leaseback scheme to
rectify the situation. This is why a lot of leaseback developments were in the
less popular areas of France for tourism, like Normandy and Paris, but now the
system has spread through all of France.
A concept where owners can add a holiday option into their investment scheme.
1
Financial Incentives:
2
Annual rent is guaranteed, whether your apartment is let or not
3
Rental return is index linked to inflation and is net of all running charges and
costs, except property tax
4
The the management company pays maintenance and community charges, insurance and
utilities
5
Hassle Free:
6
No maintenance or management costs
7
No exposure to fluctuations in rental demands
8
No need to find rental tenants
9
Holiday Stays:
10
A
myriad leaseback options are available to suit your personal needs: holiday
stays with reduced annual income; full annual income without holidays; and a
combination of the two
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Why the Investment Leaseback
System ?
With an
occupancy rate of 92% in 2004, the Investment Leaseback System is
THE
reference in Europe on the close-to-home tourist market. This performance is
unrivalled and reflects the spectacular and long-term success of this concept.
The European leader's guarantee of a
hassle free investment.
The property is managed for you and pays you annual rent for your apartment. The
management company is the pioneer of the leaseback concept with the creation of
the first car-free ski resort in Avoriaz in the 60's and has been the market
leader for 38 years.
The result of merger between three complementary activities - property
development, marketing to investors and tourism management - has attracted
14,000 owners wishing to invest in upmarket property assets,
while enjoying a
VAT rebate,
secure management and holiday stays. Your investment is secured by the proven
financial strength of the management company and its ability to pay returns
during the leaseback period.
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What are the Benefits?
- Your property is maintained to
very high standards
throughout the leaseback period.
-
Long-term security
thanks to prime locations, superior architecture and quality infrastructure,
coupled with a minimum nine year leaseback contract, renewable for a further
nine years.
- The support of a European network for the re-sale of your property to a
worldwide market.
- The possibility to holiday in other resorts throughout Europe at
preferential rates.
- The acquisition of a house or apartment within a
meticulously planned development
with
a host of exclusive facilities: swimming pool, sports areas, kids' club,
restaurants and bars.
- An investment concept that associates two sources of know-how, two guarantees
for
safe and long-term investment:
the acquisition of an upscale property designed, built and managed by the
management company.
- The possibility, for private investors, to invest in holiday property with
unique market conditions:
quality of the resort, secure management, VAT rebate and holiday stays.
- This vision and competence in the tourist sector, combined with property
market know-how are all guarantees of a
secure and
long-lasting investment.
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More about the
Leaseback System
The Leaseback System is a scheme
unique to France
which enables you to afford your dream home and to cover a lot or all of the
mortgage repayments. You will receive a
guaranteed rental income,
averaging between 3 to 5.5%, from a large management company, who will rent out
your property for 9 years, sometimes more.
At the end of the
agreed period, you get your property back, good as new, having received 9 years
of rent, and with 9 years capital appreciation. The other main advantage of this
scheme is that when you originally buy your property, the VAT of 19.6% is paid
on your behalf at the Notaire. So you don't have to pay the VAT, which
represents a
19.6% saving.
Each apartment or villa brought in this way gives the buyers certain weeks of
the year when they can use it themselves for no cost. Each development has its
own idea of high and low season and you must get agreement on this at the start.
As the owner of the property, you are entitled to sell it at any time during the
leaseback period but because you would be selling with the residue of the lease
term, this would be reflected in the selling price. Also a proportion of the VAT
discount you received when you purchased the property would have to be refunded
( 1/20th for every year before 20 years have expired).
While all the utility bills are the responsibility of the management company,
the "taxe
foncière"
is still your responsibility as the owner. The upkeep and general maintenance of
your apartment is the responsibility of the management company too and they have
to return your property at the end of the 9 years in perfect order.
In summary the leaseback scheme is an excellent long term investment with
very little risk,
it does make sound financial sense.
Tax and mortgage conditions vary depending on the country in which you reside
and invest.
Rental returns depend on the acquisition formula you choose.
Please contact us for the specific conditions that apply to you.
1. The index is "Cost
of Construction"
in France.
2. VAT rebate depends on whether the property is a new-build or a refurbishment.
3. VAT is
amortised
over 20 years in France.
4. Preferential rates apply to the "pure
investment" acquisition formula
as there is no cost for holidays (excluding administration fees) if a formula
with holiday stays is chosen.
For more information about the Leaseback System in France, please feel free to
contact us
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