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Leasebacks work in a very simple way...
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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
020 8940 7000 or email
info@leaseback.co.uk,
we're really happy to help.
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