Buying a leaseback in France

The Euromortgage Shop,  Friday, 15 September 2017

France Beautiful village in Auvergne 

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 underdeveloped communities.

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 cost index(INSEE).

The functioning:
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.

French village in the countryside
Search for French property and real estate for sale in all regions of France. Fermettes, gites, houses, B&B’s for sale by owner. Houses for sale in Gironde, Dordogne, Landes, Calvados, Manche and Orne 
Brilliant book. Buy It.

Bee hives in Provence It used to be a bit easier. You bought a house in France, and if it turned out to have hidden problems, you just sold it again. There were buyers in abundance. Of course, you did not mention the issues. The new owner had to discover them for himself. Selling your house and buying something new did cost a lot, but if you thought it all out well, you could make a nice profit at the time. 
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