Guaranteed investment opportunities

France takes tourism seriously. It is one of the world’s top destinations in terms of numbers. The French government came up with a number of investment plans two decades ago in order to enhance the development of programs, thus aiming at meeting the needs of an ever-increasing accomodation demand triggered by the growing flow of tourism.

What is a lease-back ?

A lease-back plan is a plan where you buy a property then grant a management company the right to use it for short-term tourist rentals, this usually over a period of 9 years.

You receive in return major tax breaks from the French administration as well as a guaranteed rental income for the duration of the contract.
Anyone can buy a lease-back property -there are no restrictions for non residents.

The buyer pays the asking price for an apartment, in some cases less the VAT; In return for a lease-back contract to a management company the buyer gets a net guaranteed return. These returns are net during the term of the lease,which means net of the running and insurance costs, as well as index-linked. ..
Everything is covered, from management fees to city tax, water and electricity charges, heating and air conditioning , even down to replacing the furniture. In terms of returns, property price rises may seem modest against those occuring on the stock market on the short term, but when financing is used the return potential is much higher. A tourist property will come into its own over a medium to long-term period.

The lease-back programs are located in the best locations in terms of capital-gain potentials and mostly on the French Riviera, Central Paris and ski resorts.

A lease-back contract may provide for you to occupy the property yourself free of charge for a period of 2 to 4 weeks per year.
If you do not want to do so you can allow others to occupy the property on your behalf or, or usually, surrender the right in return for a higher payment from the company.
Only approved companies can offer lease-back plan and those that do are usually subsidiaries of leading French companies of major size , status and scope. The guarantee from them is, therefore, worth having.

The plan does not have anything to do with timeshare. You buy a freehold apartment and you are the legal owner from day 1.
It is registered in your name in the French land registry. You are merely allowing someone else to use your property for part of the year in return for a cash payment.
At the end of the lease-back period, the property is yours to do with as you please. You can continue to rent it out, use it yourself or sell it or possibly to start a new lease.

By using leveraging you can invest a relatively small amount and yet reap the gains on a large amount . Assuming the bank lends 80 % of the property value, you can gear your own money by up to 5 times, thus multiplying your potential return by up to 5 times. And
banks will lend more money for longer periods at lower interest rates for property than for almost any other asset. With tourist properties , rental incomes are received monthly and so can conveniently be used to repay the loan, which is seldom the case with other investments.

There are cheap mortgages available in France for up to 90 % of the purchase price with fixed rates over up to over 20 years. The present fixed rate is hovering around 6 %.

The key to this type of tourist property investment is control. In the case of an investment property, a management company takes care of the whole maintenance and letting and it is therefore quite a hassle-free purchase for the investors living overseas;

To sum things up : Why think of lease-back in France ?

• A guaranteed return will be typically of around 5 % net of all costs, this after deduction of all the expenses of running the property. This return can be in effect, free of French tax.
• Mortgage finance is available, up to 95 % of the purchase price of the property, at around 4,5 % for a fixed rate
• You can use the property yourself for your holidays free of any charge. Additional time can often be rented back from the company.
• The French government allows you to buy the property free of the 19,6 % VAT
• Lease- back programs are available in locations where the capital gain potential is excellent.