A look at French leaseback schemes

IN the 1970s the French government introduced the leaseback scheme for property purchases to boost investment in the tourist industry.

The arrangement works by you buying a house or apartment and then allowing a management company the right to let it to holidaymakers.
And the management company are responsible for the expenses related to the property for example, gas, electricity, water etc.
The advantage is that you are able to purchase a property for a substantially reduced figure as there is no 19.6pc VAT charge.
But you are also guaranteed an income for the duration of the contract.
The contract should also allow you to occupy the property for around four weeks a year giving you, your family and friends a pleasant holiday home to enjoy.
A leaseback scheme should not be confused with timeshare, as you are the registered owner of the property from day one, your details will appear on the documents.
What you are doing is allowing the company to run the property on your behalf, then after a set number of years it is yours to do as you please.
Not surprisingly leaseback schemes are increasingly popular especially for longer-term investments.
Because you could purchase a place through a scheme, continue living in the UK for the length of the contract and then move in to your property once it has come to an end.
The return, or rent, will be around 6% of the price paid and is usually index linked to inflation.
The properties that can be purchased through a leaseback scheme have to be newly built or totally rebuilt.
However, they are often found within areas that are likely to enjoy considerable growth over the coming years such as the Alps and Cote d’Azur.
As always the terms and conditions of any leaseback scheme should be checked by your legal adviser to ensure, among other things, that you will have vacant possession on conclusion.