| Are French Leasebacks the same as Timeshares? |
| No, not at all. Timeshares mean that you simply get to use a property during set periods of the year. Unlike a French leaseback, with timeshares you are not the owner because once the term comes to an end, you are left with nothing. When you purchase a Leaseback property, you are the actual freehold owner of the property. You simply agree to rent it out to a particular tenant (a management company) for a period of usually 9 years. After the leaseback agreement ends, the property is yours to do with as you wish. The only similarity with timeshares is that during the lease, you can only use the property during specific timeframes agreed with the management company. |
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| Are leaseback properties always new builds? |
| Generally, most leaseback schemes involve newly built apartments, although some major renovations or refurbishments can be included in the scheme. The scheme allows a full VAT refund if the development is brand new and you will also benefit from reduced notary fees. |
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| What happens when the Leaseback period comes to an end? |
| You are free to live in the property or sell it on. If you do not wish to sell or live in your property, then you need to give the management company first choice on renewing the lease. Generally the easiest and most common decision is to sign a new commercial lease with the management company as the benefits of the scheme will still outweigh the inconvenience of letting it yourself. |
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| Is my rental income guaranteed? |
The rental income is guaranteed throughout the period and is usually paid quarterly in arrears. The rental companies who pay the rent are usually large holiday companies with substantial numbers of clients and property portfolios (for example Center Parcs).
These rentals are indexed to construction costs (the INSEE Index of Construction Costs) which means that every year as construction costs increase, your rental income increase as well. Your return is evaluated each year. The worst case scenario is that you always get your original guaranteed return |
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| What happens if I want more than my allocated weeks? |
| If you want extra weeks, above and beyond the number which has been allocated to you, then the majority of management companies offer these to you at discounted rates. Remember that with many of the companies Attika uses you may be allowed to select a different apartment in a different area of France, so one period you may have a ski holiday, and on the next you may choose a property in a seaside resort. You can of course just use your own property wherever you purchase, but it can be a great benefit to select to stay in a property run by the same management company in a different area in order to vary your holidays. |
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| Do I qualify for a VAT refund on my existing property if I rent it out |
| No, the VAT refund is only applicable on residences which have been designated as leaseback residences ie they offer certain services such as laundry room, managed reception etc. if you have a normal apartment and use it as a buy-to-let, you will not unfortunately be entitled to the benefits of a leaseback |
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| What happens if I can't use all my allocated weeks |
| This depends on your particular contract, however many owners sub-let their properties to friends, family or by advertising. Usually the management company will “buy” back your unused weeks from you if you inform them in plenty of time. |
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| What type of finance is available? |
| Your Attika representative will help arrange finance for your French leaseback. Such purchases are normally financed via repayment mortgages as opposed to interest-only, over either 15 or 20 years. As a non-resident you could expect to qualify for an 80% loan-to-value. French residents can be financed for 100% of the purchase plus the notary fees. Remember you will then receive the VAT refund as well – Once this has been refunded we recommend that you invest the sum in order to cover your mortgage costs or you could invest it in another leaseback in order to build up your French property portfolio. |
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| How much are the notary fees? |
| The notary fees are the same as in a classic purchase. If your leaseback purchase is a new build as are the majority on our site, then your notary fees will be around 2.5% - older resale properties (which are rarer in leasebacks) are around 7.5% |
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| Would I make more money by buying a property outright and letting it myself? |
| Leasebacks are really a long term investment, to be seen as a means of earning you an extra income in the years to come. You could make more money by buying a property to rent out but you would not have the income guaranteed (particularly during those periods with low occupancy) and you would be responsible for all costs (including maintenance, changeover, laundry, cleaning, gardening, advertising, etc) as well as being responsible for such things as dealing with any emergencies that may arise. If you wished to use the services of a management company, they can take up to a half of your rental income in their fees. You would also not receive your VAT back or have other benefits such as furniture replaced etc. |
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| Is the lease always for nine years ? |
| No, although nine years is the most common period, the leaseback companies can ask for any period from nine years (the minimum) upwards. Another common length for a lease is 11 years. |
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| Could the management company become bankrupt ? |
| All leaseback companies are required by law to have professional indemnity insurance in order to protect you. Attika takes great care in selecting our leasebacks and chooses only those run by long-established management companies similar to Center Parcs |
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| Do I have to buy the property furnished? |
| Yes. All leaseback properties are sold fully furnished and equipped ready for letting. You become the owner of the furniture at the end of the lease. The price may be stated minus the purchase price of the furniture but your agent will let you know about this. |
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| Do I have to pay Capital Gains Tax if I resell? |
| Yes, unless you keep the property for at least 15 years. Tax is payable on the gain less Notaire fees, agency fees and costs of major work carried out. After the first 5 years, you have an allowance of 10% per year meaning that after 15 years you have no CGT to pay at all |
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| How do I get back the VAT? |
| This will depend on the leaseback management company. Some developers pay you back the VAT themselves,. Others can take from 4 months to a year to claim the VAT back for you. |
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| Who pays the bills during the leaseback period? |
| The management company is effectively your tenant and they are responsible for paying the utility bills for the duration of their lease (9 or 11 years). They are also responsible for replacing furniture etc. You may however be responsible for a share of the co-propriété costs depending on whether or not you use the property for your own holidays. You may also have to contribute to any building or repair costs that fall outside the building guarantees although this depends upon the individual contracts you have. You will have to pay the Taxe Fonciere (ownership tax) every year. Do remember that all of these charges can be offset against your rental income so that you can pay little or no income tax. Your Attika representative will arrange this for you |
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| How many French Leaseback properties can I buy? |
| There is no restriction on the number of leaseback properties you can buy. You do not need to be an EU citizen. Anyone can invest in them and you are free to purchase as many as you can afford ! |
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