Effortless property investing... It's a fully managed buy to let!

In brief...

leasebacks work in a very simple way.

• you buy an apartment, and then simply agree to, 'lease it back' to an on-site management company, for year round rentals (you buy it freehold, so you own the apartment from day one). The management company is already appointed for the development, and everything is administered for you from the outset.
  
  

• it is leased back for a fixed period, normally between 9-11 years, after which you can either: exit the lease or renew it with the management company. At this point you should be able to negotiate your rents upwards.
  
  

• in return for allowing them to market it for year round rentals, the management company will pay you a guaranteed yield (guaranteed rental), normally around 5-6% of the price paid for the apartment. This will increase periodically in line with the INSEE Cost of Construction index, published by the French government. 
  
  

• as an extra bonus, if you buy a new build apartment (off plan), the government will waive the VAT for you. This is a huge saving as VAT in France is 19.6%. 
  
  for example, the price of your apartment is 100,000 euros, the VAT saving means that you only pay 83,612 euros. That means that you buy at 16,388 euros below market value, and in effect means 16,388 euros instant equity.
  
  

• usually (subject to status) 80% funding is available, and all mortgages on a leaseback are repayment mortgages. This means that, over the years, both the capital, and the interest will be paid. The benefit is that at the end of the term, the loan will be fully repaid and the profits yours to keep.
  
  

• in addition to this, you can benefit from zero capital gains, so 100% of the profits will be yours to keep (see the tax page for how capital gains works in France)

frequently asked questions

is a leaseback similar to a time-share?

Not at all. With a leaseback, you own the freehold to your property and are merely allowing others to use it for a set period.

can I effectively forget about it after I buy?

In some respects yes, leasebacks are normally financed with repayment mortgage, if it ran over a fifteen year period, your apartment would be fully paid for and your capital gains bill would be zero. Your annual accounts are provided for you and you have no maintenance or tenants to worry about. You would also of course benefit from 15 years capital growth. 

who is responsible for paying all the bills during the Leaseback period?

The upkeep and general maintenance is the responsibility of the management company. All the utility bills etc are paid for by them, and your rents are paid net of all these charges. The only extra charges are usually what is called a 'tax foncière' (local rates) and annual accountancy fees. The tax fonciere is not payable for the first two years and only represents a small annual tax, normally around 200-400 euros per year. By law an accountant must be appointed to fill in your annual tax return, normally fees are between 300-400 euros per annum.

who is buying leasebacks?

They are very popular indeed. Both seasoned and new investors alike, are snapping them up. This is because they are very easy to buy, and very easy to manage afterwards due to the fact that somebody else looks after it for you! 

what type of investment is it?

It is a medium to long term investment, and is an excellent 'pension' style investment

what type of finance is available?

Leasebacks are normally financed on a  repayment basis rather than interest only over either 15 or 20 years. As a non resident in a good financial position you can expect to qualify from 75% - 80% LTV.

is there a limit to how many I can buy?

No

can I sell whenever I like?

Yes. You own the freehold to the property. Bear in mind though, that you are in a lease contract that runs for a minimum of 9 years. If you wanted to sell after say 5 years, the new owner would remain in contract for the rest of the 9 year term.

You would also have to pay back a portion of the tax benefit that you received at the outset.

can I visit whenever I like?

Yes. Some leasebacks come with a built in 'free' allowance for the owner which is typically 2 weeks per year. However many also simply allow you to go whenever you like at a discount from the public price.

is my rent guaranteed?

Yes it is, for the term of your 9 year lease. After that you can either renew another lease (normally at an increased rate considering we are 9 years further on). Or you have the option to exit the lease and manage the property yourself.

who will look after my property during the Leaseback period?

The management company.

are they reputable?

all companies involved in this government sponsored scheme must be well established. The leaseback schemes that we deal with all have a major organization looking after them.

why is a leaseback discounted?

The French government has given tax breaks to developers in order to encourage them to build 'Residence de Tourisme' developments. By allowing your property to be used for year round rentals you are greatly contributing the the French tourist economy. It is only fair the you receive a benefit for this.

would I get more rental yield if I managed it myself?

Quite possibly. However, the management company do an enormous amount of work on your behalf. If you managed it yourself you would be responsible for all the maintenance for your property, including emergencies, change-overs, finding tenants etc etc. Unless you lived there, you wouldn't really have time.

Your rental yield would also not be guaranteed.

how much cash would I need to buy a leaseback?

A leaseback would cost 20-30% of the purchase price and 5% costs (legals etc), a total of 23-33% of the advertised purchase price.

where do I sign?

You can of course go to France and sign your deeds in the Notaires office, alternatively you can sign by 'proxy' here in the UK. When you are ready to sign, we will provide you with a list of authorized notaries near your home. Simply make an appointment and they will do the rest.

a leaseback sounds fantastic, is there a downside

Yes there is. Good leasebacks in good locations with favourable contracts are very popular indeed, and often sell out within a matter of hours. Therefore you must be quick. 

why should I buy a leaseback through Leaseback Investments Limited?

We really know what we are doing! We're one of the first companies to bring leasebacks to the UK five years ago and we have an excellent team here to help you.

After choosing a development that you like, we will take you through the buying process step by step. From organizing your deposit transfer, to arranging your mortgage, even setting up your bank accounts in which to receive your rents. We are always at the end of the phone, and we mediate the entire process between you and France..

We have also built great relationships with our French partners and only work with the best suppliers. When it comes to property abroad, it pays to know who you're dealing with.