This scheme can be a great way to buy new build or newly refurbished property if getting a fixed rate of return on your investment is a high priority and you don't mind restrictions on the amount of time you can use it. Essentially what you are doing when you enter this type of contract is buying a freehold property but granting its lease to a holiday company for a period of between 9 and 11 years where the rental return is fixed and guaranteed regardless of whether it is rented out or not. They are hence normally located in popular holiday resorts. It is possible to get a higher return from renting the property during the summer months yourself but this of course brings with it a risk and hassle factor.



Refunded VAT: One of the great bonuses of this scheme is that the purchaser gets a full refund of the TVA (VAT) of 19.6% if it is a new build property which is either refunded 6-9 months after completion or paid and recalimed by the developer. When the initial lease period expires the management company usually has the right to lease it again until the 20th year but if the owner is not in agreement it is rarely insisted upon. If you choose not to lease your apartment out again or sell it then you will have to pay a proportion of the TVA according to how many years are left outstanding from the first 20 years. For example, if the property has been under lease contract for 11 years and there are therefore 9 years remaining, then the amount of TVA that must be paid back to the French government is 9/20ths of the TVA. After 20 years TVA is no longer payable. Should you wish to sell your property within the lease period then you must sell it with the lease contract intact to someone who is prepared to see the contract through.

Guaranteed return on investment: The guaranteed investment return will typically be around the 5% mark net of all costs tax-free as you benefit from non-professional lessor of furnished property status (LMNP). This in effect means that you will receive as much interest as you would in a high yielding savings account as well as the opportunity to gain from capital appreciation of the property.

Personal Use: Leasebacks often allow the owner the option to occupy the property for a number of weeks a year in return for slightly lower investment yields. If you choose not to use the weeks then you will usually get a higher annual yield.

The management company: An experienced management company will take care of the entire maintenance of the apartment or villa, usually with hotel services available such as reception, house linen, well-kept gardens, swimming pools and 24hr security.

Furnishing: Furnishing, decoration and electrical appliances are all supplied and maintained by the management company.

Accounting impacts during the loan's term:

-Deductibility of the loan interest

- Deductibility of miscellaneous expenses (property taxes)

- Amortisation deductibility; 3.3% per year for 30 years, however they are deferred and not imputable in regard to the business income.

After the loan's term the deferred amortisation can be imputed and set against the received net rents.

Notary Fees and sales process: The sales process is the same as for new build/renovated properties with the same notary fees: 3% on new builds and for refurbished leaseback properties you will have to pay the usual 7-8% notary fees on the property before refurbishment working out at between 4% and 6% of the value of the purchase price.

Better than Timeshare: Unlike time share schemes the owner actually sees a return on his/her investment through annual rental yields and also appreciation in the value of the property which can be substantial- so it is not money down the drain. The bonus though with these schemes is that like time share the property will be well maintained by the holiday company with no responsibility for changing of linen and cleaning- you simply turn up during your chosen weeks and enjoy it!