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 Become
a French Property
Owner investing in
new build leaseback
property such as
holiday complexes,
town centre
apartments for
students or
businessmen, ski
resorts and seaside
and countryside
locations. You will
receive a VAT rebate
of 19.6% and earn a
guaranteed rental
income from an
established
management company,
irrespective of
occupancy, at a
fixed annual amount
(normally
inflation-linked).
The lease will be
for a period of 9 –
11 years. The lease
contract must
include terms and
conditions
concerning the use
of the property and
charges that the
owner will have to
pay (if any). During
the lease contract,
the property
management company
will let the
property and will
look after the
maintenance of the
property.
Depending on the
development, you can
stay in your
property for
holidays at no
additional cost
during the lease but
usually, the maximum
period is 8 weeks
per year. At the
beginning of the
lease, you must
mention which weeks
you will prefer to
spend at the
property. It differs
from development to
development. Some of
them will offer a
discounted use while
others will not
offer any use either
free of charge or at
a discount.
This is a freehold
investment and most
of the costs are
covered by the
guaranteed rental
income. This kind of
investment will
offer numerous
advantages such as:
The main reason in
giving the VAT
rebate is that VAT
is earned by the
French authorities
during the period
that the property is
let out.
Refund of the VAT
only applies if the
property is newly
built. If the
property is
renovated or
refurbished, the VAT
will not normally be
refundable.
But some renovated
properties will need
such renovation, in
which case they will
be considered as
new-builds and
qualify for a VAT
rebate of 19.6%. You
must check this
before purchasing.
This is on an
understanding that
property will be let
out for a period of
20 years. At the end
of the lease, the
owner can renew the
lease contract for
the same period time
and why not
renegotiate the
terms of the lease
in order to have
more personal
occupation. (It’s
important to
negotiate the terms
several months
before the end of
the actual lease
contract.)
Otherwise, the owner
can decide not to
renew the lease and
use the property on
a full time basis or
sell it. In that
case, at the end of
the lease, a part of
the VAT would need
to be repaid to the
French authorities
pro-rata. This works
out at being 1/20th
per year. After 20
years of leaseback,
no VAT is repayable.
If the owner of the
property wants to
sell it during the
lease period, it can
be done and the new
owner would have to
honour the remainder
of the lease.
If the property is
sold after the lease
period, it can be
sold as a normal
property.
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