The Euromortgage Shop, Friday, 15 September 2017
Leaseback is a property investment scheme that has become popular with French residents
and non-resident investors alike. The French government began promoting leasebacks in
1986 with the aim of encouraging French people to invest their pensions in property and at
the same time encourage the growth of tourism and bring much needed regeneration to
What kind of leaseback?
The most popular French leaseback is the Residence de Tourisme scheme, designed to cater
for the short-term holidaymaker by offering accommodation in a unique location as well as
providing swimming pool and spa facilities, restaurants and concierge services.
The advantages of buying a leaseback
Investors can shop around and choose a leaseback property in their favourite holiday location,
be it the Mediterranean, Brittany, the Alps or the Atlantic coast to name a few regions where
leaseback developments thrive. Having purchased the property the owner will lease the
property back to a rental management company for an agreed term, usually nine years. In
return the management company will compensate the owner with a guaranteed rental yield of
between 4-6 %. This rental yield is revised each year according to the national construction
Leaseback deals vary in relation to the rental yield and personal use allowance. Most will
offer between 4-8 weeks of personal use. You also have the added advantage of knowing that
the property will be fully insured and maintained by the rental management company during
the lease contract. At the end of the lease period the owner can normally negotiate new terms
for a new leasing contract with the management company. It is important to note that given
the nature of the commercial lease and French law, which is very protective of the tenant, it
may be difficult to terminate the leasing contract with the developer definitively. The contract
may have prohibitive clauses where the owner may not have the right to reside in the property
or must pay a heavy premium to the management company upon termination of the lease.
This is why independent legal advice is always recommended.