Leaseback Investment Property in France has been around for 20 years and was introduced by the French government to increase the quantity of holiday accommodation available in popular holiday areas, catering for holiday lets.

You purchase a freehold Investment Property in France on which you then earn a guaranteed rental income from. You lease your Investment Property in France back to a property management company for a period of between 9 and 20 years.

During this period you benefit from a guaranteed income, but without the hassle.

If you are buying for investment is annual rental income more important than annual capital growth?
If you are buying for investment, how many years are you intending to own the property before you sell it? Leaseback is not a good option for short term investment.

You can usually use your Investment Property in France for a certain number of weeks per year for holidays, although this differs from development to development.

The guaranteed rental income tends to range between 2.5% and 6% per annum depending on the Leaseback Investment Property in France , 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 Investment Property in France the higher your yield will be.
The French government rebate a sum equivalent to the VAT on the property [19.6 % on new build property]
French residents will also benefit from a range of other tax advantages on offer.
Leaseback Investment Property in France will more commonly be apartments or townhouses, from studio apartments to two bedrooms. Larger properties tend to be rarer and when they are available sell very quickly.

The developments are usually sold “off-plan” which is very frequent in the French property market. Potential purchasers will be able to consult detailed plans and building specifications before buying.
Studios rent very well in large cities such as Paris, Lyon and Marseille, but a larger Investment Property in France can be popular in family holiday areas.

The properties will be furnished by the property management company or, there will be a set furniture package which is purchased by the owner.Check which will apply on your Investment Property in France.

The properties are generally and decorated to the same finish throughout the residence, so you do not get any choice.

Around 5% deposit is necessary to reserve a Leaseback Investment Property in France . The deposit is transferred to the French Notaries escrow [protected] account to secure the reservation whilst contracts are arranged. Proof of transfer must be faxed to within three working days to secure the property. You should start looking for a suitable mortgage at this stage. Foreign investors can often delay this to around 3 weeks, to allow time to get the contract checked by an avocat. Sometimes a developer may insist on this delay being shorter particularly if the development in completely sold out and it is the last Leaseback Investment unit available.

Once the reservation has been made, you will be issued with the completed contracts [ in French] which must be signed and sent back as soon as possible as reservations are not complete without the signed contracts. Do get an experienced French solicitor solicitor to advise on the contracts and also on such matters as French inheritance law and purchase structure.

You must receive your mortgage offer before you can complete on the Investment Property in France . If you are unable to obtain finance your deposit is fully refundable providing that the conditions specified in the contract have been fulfilled.
Many French lenders are wary of lending on leaseback investment property in France. Because of the long lease, and also certain TVA repayment rules, a leaseback is not easy to sell on on the open market for the term of the lease, meanig that a lender cannot easily recoup their loan. A specialist French mortgage broker will advise you.

Once you have obtained your mortgage offer a copy is submitted to the notary who is then able to prepare the final documents which will allow you to close your purchase and become the owner of the Leaseback Investment Property in France .

HOW MUCH YOUR RENTAL INCOME WILL BE

On a Leaseback Investment Property in France priced at 100 000 Euros INC VAT, the excluding VAT price of the property would be 83 612 Euros.
If the property was being sold with a 5% yield, the annual rental income would be 4180.60 Euros. The rental income is usually paid quarterly in arrears.

Some developments will allow owners to use the Leaseback Investment Property in France during the lease period. When the personal occupation is in the form of some “free” weeks use, these weeks are normally to be taken in specified periods which are set out in the lease contract. Sometimes there will be an administration fee charged to owners when they reserve the property for their free weeks use. This is normally less than 75€.

When there is a discount available this will normally range between 10 –25% depending on the management company and the season.
At the end of the lease contract it is the aim of many owners to renew for at least the same period of time as to be in a position to keep the full VAT refund and to avoid capital gains tax liability [ payable until you have owned the property for 15 years]

If you do not wish to renew the lease contract , you should serve the appropriate notice as set out in the lease contract.

If you want to sell it during the lease period this can be done and the new owner would have to honour the remainder of the lease. After the lease period then it can be sold as a normal property through a local estate agent, hopefully with your Leaseback Investment Property in France having increased considerably in value.