Leaseback

The investment leaseback system involves 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.

Financial Incentives:
Annual rent is guaranteed, whether your apartment is let or not
Rental return is index linked to inflation and is net of all running charges and costs, except property tax
The the management company pays maintenance and community charges, insurance and utilities
Hassle Free:
No maintenance or management costs
No exposure to fluctuations in rental demands
No need to find rental tenants
Holiday Stays:
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
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 managment 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 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 managment company and its ability to pay returns during the leaseback period.

The widest choice of leaseback properties throughout France, from the French Alps to Paris, from the French Riviera to Languedoc-Roussillon.

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 longterm 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.

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 managment 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 payed 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.

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.

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