A leaseback plan is a scheme whereby you purchase a property and then grant a management company the right to use it for short-term tourist rentals, usually over a minimum contracted period of 9 years. In return you receive major tax breaks from the French government and a guaranteed rental income for the duration of the contract. French banks may lend 80 % of the property value, even 95% in some circumstances. Leaseback arrangements are only available on certain developments.

Tax-breaks are available to investors who buy into freehold residential tourist properties. 19.6 % VAT is refunded by the French Government within 3 - 6 months of purchase and you receive a guaranteed rental yield of up to 6.5% net.

A leaseback contract with a management company guarantees a return of up to 6.5 % net, depending on the location. During the term of the lease, the returns are net of the running costs, and index-linked increases.

Use of the apartments by the owner is strictly limited. Some schemes offer 2-4 weeks free occupancy per year, while others allow you to use it whenever you like, but you have to pay the full market rent, less 20%. If you decide to sell it before the 9  year leaseback contract has ended, you will have to find a buyer willing to take on the lease.

You pay a percentage of the purchase price on signing the contract, with several instalments paid at varying stages of construction. The advantages are that the property is maintained, is ready furnished and, depending on the location, can be rented for a longer period.

So where’s the catch? The return from rental income is only around 6% net, but by financial gearing, the actual return on investment could be around 20-25 % cent, taking into account potential capital growth over ten years or so.

While the information given in this factsheet is accurate to the best of our knowledge and belief, no liability is accepted by Go-to-France.co.uk for any errors it may contain. You are advised to check all information and take professional advice before entering into any agreement.

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