French leaseback scheme attracts UK investors

Permalink: French leaseback scheme attracts UK investors
by Gill Montia

VEF, the French real estate specialist, has reported that French leaseback properties are becoming increasingly popular with UK buyers seeking properties to let.

The leaseback scheme was introduced by the French Government to promote the country’s leisure industry and the development of holiday villages.

Those buying into “leaseback” are bound by a nine or 11 year contract with a management company.

The contract provides a rental guarantee for the period of its duration and allows the investor to use the property at no charge for between one and three weeks per year. Investment returns currently vary between 3% and 6%.

The major advantage of a French leaseback property is that VAT can be reclaimed (19.6%), effectively giving an investor a discount on the purchase price of the property.

When the investment is held in the long-term (20 years) it has the potential to provide a sound return for a non-residents.

A spokesperson for VEF comments: “We have seen a huge increase in demand for French leaseback property. The safety of the French property market combined with the discounts at purchase and guaranteed rental income has made many UK buy-to-let buyers turn to France for investment”.