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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 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.
-
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
4-6% 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.
-
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, in effect this means 16,388 Euros
discount or
instant equity.
-
usually (subject to
status) 80%-100% funding is available and both
interest only and repayment mortgages are
fully available.
-
in addition to this,
you can benefit from zero capital gains 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,
a leaseback is fully managed and maintained. Of
course with any property purchase you will have
to keep an eye on your paperwork, but we have an
excellent service to help you with that.
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 foncière
is not payable for the first two years and only
represents a small annual tax. Under French law
an accountant must be appointed to fill in your
annual tax return, normally fees are between 250
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 'property-pension'
style investment.
What type of finance
is available?
Leaseback finance is excellent with a full range
of mortgages available. They are subject to
status though and 'self cert' does not exist in
France. As a non resident in a good financial
position you can expect to qualify from 80%-100%
loan to value.
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.
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 lease. After that you can either
renew another lease (normally at an increased rate
considering we are 9 years further on).
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. We only work with the most reputable
companies.
Why do I get my VAT back?
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?
Yes. 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?
The
cost of the apartment plus legal/finance fees.
Thos costs normally come to around 5% of the
apartment 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. A leaseback is designed to work as
a 'property-pension' and therefore performs best
over a medium to long term. If you want a
property to buy and sell on quickly then a
leaseback is not for you.
Why should I buy a
leaseback through Leaseback Investments Limited?
We really know
our onions and we were one of the first companies to
bring leasebacks to the UK five years ago...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.
Call us on
0161 976 5656 or email
info@leaseback.co.uk,
we're really happy to help.
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