Buying a leaseback in France
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 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.
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.
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
In France, you have two different systems to provide you with water, your well and a connection to a waterworks system. Many households in the French
countryside use both systems. They use tap water for home and garden and well water for the toilets.