French Leaseback Property Boosting the Market
June 1, 2010
The France investment property market has remained stable despite the recent recession in many countries around the world and has been continuing to attract investors and second home buyers alike. One of the reasons for this is because of the Leaseback scheme.
France is undeniably the most visited holiday destination in the world. With the continuous growth of the tourism industry, the requirement for rental properties is always in great demand with a lack of quality accommodation to satisfy the demand.
Because of this, the French Government launched the French Leaseback property scheme in 1986. The scheme aims to help fulfill the ever-increasing demand for rental properties from tourists and especially in hot spot locations like the Alps which has a very high demand for good property like 5 star French ski property for example.
The idea behind the leaseback program is relatively simple: a buyer purchases a property and then allows a management company to rent it for a specified specific period of time (normally 9 – 18 years, or 9 years renewable) in exchange for a guaranteed rent within that specific period of time. The investor also has the benefit of a specified amount of personal usage from the property themselves, normally a few weeks a year out of season.
Two Types of French Leaseback Property:
1. The property is rented without the furniture, which is called “murs nus”. It is the responsibility of the property management company to place furnishingin to the housing.
2. “Loueur Meuble” which means that the property is fully furnished at the time it was rented by the management company.
Not all properties can be qualified for a leaseback as the government in France have set out specific standards for the materials and constructions used in the building of the property. Therefore investors can be sure of the quality of the properties they are buying and people renting and staying in the property can be sure of the quality of there accommodation.
Another benefit for leaseback investors is that when the French Leaseback property has been contracted for 20 years of rent, the investor is entitled to a tax refund of value added tax paid within six months after the actual date of purchase.
Another great thing with French Leaseback property is that the management company has the responsibility to maintain the healthy condition of the property and if any maintenance & repairs need doing, they are responsible and will cover the costs.
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