Property for sale in France ~ RealPoint

The French Leaseback scheme

What is Leaseback ?

The French leaseback scheme was introduced by the government to en

One way to invest in property in France is to buy a leaseback property which benefits from a government-backed VAT-refund incentive, designed to encourage investment in tourist residences. Through freehold ownership of an apartment or cottage that is leased back to a management company for a minimum period of 9 years, investors benefit from guaranteed annual returns from their fully managed and maintained property with relatively low up-front costs and no ongoing maintenance or running charges.

Realpoint Property have a number of leaseback properties available. Use our search page to find your own leaseback property in France.

What does leaseback mean?

Investors buy the freehold of a property outright but lease it back to a management company who specialise in the tourist management, maintenance and rental of these properties for a minimum 9-year period. In return owners receive a guaranteed annual return, irrespective of occupancy of the property, NET of all communal charges, maintenance and running costs.

Realpoint Property work with the leading leaseback companies in France so you can be sure your investment is secure. For many of our products the management company is also the developer with considerable infrastructure and a very clear vested interest in the quality construction, location and ongoing maintenance of the properties.

Please contact us to learn more about the specific companies we work with and the wonderful properties on offer in France.

Why was leaseback introduced?

In the late 1960s, following the increasingly large number of tourists visiting France (which continues today as the most visited country in the world), the French government recognised the need to encourage investment in the construction of tourist residences, and offered an incentive to investors by refunding the VAT on the purchase price of properties built for leaseback purposes.

Realpoint Property work with the pioneers of the leaseback concept who created the fist car-free ski resort in Avoriaz in 1967.

Realpoint can offer a wide variety of leaseback properties throughout France with various options depending on the management company offering the leaseback scheme. It is considered one of the safest ways to invest in property, and with the sound financial reputation of France, your investment is secure. It is worth noting that French banks were largely unaffected by the worst of the affects of the credit crunch.

What are the benefits of leaseback properties?

VAT refund

The French government will refund the VAT (currently 19.6% for new build) to investors over a 20-year period which represents a significant saving on the purchase price to investors. The VAT rate for new build properties is 19.6% and for refurbished properties it varies between 11-14%).

Instead of investors reclaiming the VAT from the government on an annual basis for 20 years, one of our leading partners will pre-finance the VAT in advance. Should owners decide to sell their property within this 20 year period, they would owe the French tax authorities the proportionate amount of VAT pro rata. The second buyer would then be able to reclaim any outstanding portion of unclaimed VAT.

Low Risk

Investors are guaranteed annual returns of up to 4.5% (depending on the management company and the amount if usage) which is also index-linked to the French Cost of Construction Index. The return is provided irrespective of tourist occupancy protecting investors from fluctuations in tourist demand or downturns in the property market.

Low Stress

The management company will completely look after the management of your property and you will not need to worry about any maintenance, repairs or upkeep costs of the property, communal areas, facilities or finding rental tenants throughout the whole lease period.

Quality Maintenance

Realpoint Property only work with solid reliable management companies when offering leaseback property. These companies will maintain your property to very high standards throughout the period of the lease as they have a vested interest in keeping the properties in immaculate condition for their tourist clients.

Most companies will completely refurbish after the first 9-year period at their own expense.

Guaranteed Return

Companies selling leaseback properties will 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.

The leaseback companies that Realpoint Property have been around for some time - one of our best partners has successfully provided its investors with guaranteed returns for over 37 years and with 54,000 owners and 6.6 million tourist clients, it is Europe’s market leader in the development and management of tourist residences and is listed on the French stock market.

Through our partners we can offer:

• mortgages with typical duration of 15-20 years
• exemption from French Capital Gains Tax after 15 years ownership; and
• the full VAT savings based on 20 years ownership

Potential Capital Appreciation

Property in France continues to offer very good growth.
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. These factors all contribute to the demand for leaseback properties and the capital appreciation that results.

Increase in Annual Rental Income

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 index. For the last 10 years this has averaged around 2.5% and currently stands at 4.8%.

Limited French Tax on Rental Income

Non-resident owners of French property are liable to French income tax of 25% on their rental income, 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.

Note: We are not tax advisers so you must seek independent qualified advice for verification which may depend on your circumstances.

Excellent Financing

Subject to some income level criteria, French banks will lend up to 100% of the purchase price of the property when a leaseback option is taken, as they value the property including the 19.6% VAT. Euro-interest rates are currently low – typically 3.4% for a variable mortgage (as of November 2008).

Most of our partners are able to offer the mortgage shortly after paying the deposit, and can defer all payments until completion of the off-plan property. This means you can finance the purchase of your French property for a small reservation deposit, often only 2%.

Through our partners, Realpoint Property can offer you full advice and support for your mortgage application.

This is freehold property - you can sell your property whenever you want

As the freehold owner of your apartment, you are entitled to sell your apartment at any time within the lease period, owing any pre-financed VAT pro rata. The new investor would observe the remaining term of the lease, which can be adapted to suit his/her usage needs, and may reclaim any outstanding portion of VAT

Resales

Many of our partners not only build and then manage their properties but also sell and re-sell the real estate to investors. These partners offer a very efficient re-sales network in place that has been working for years where investors may sell their properties through the large networks that our partners have established whether during or after the lease period. For popular properties there are often waiting lists from clients.

Where do I find French Leaseback property ?

Realpoint Property can offer a wide variety of leaseback properties throughout France with various options depending on the management company providing the leaseback scheme. Realpoint Property work with the pioneers of the leaseback concept who created the fist car-free ski resort in Avoriaz in 1967. We have a number of leaseback properties available in many areas of France. Use our search page to find your own leaseback property in France.