What is the French Leaseback?

-         you buy a property freehold (as most properties in France) which you agree to lease to a leaseback company for a period of 9-11 years (sometimes up to 20 years in some cases)

The benefits are:

-         You do not pay the VAT (up to 19.6% if new development). So an immediate discount of almost 20% on property purchase price or you are refunded the VAT a few months after completion (your purchase price includes VAT). This latter formula is the most common.

-         You are guaranteed a yield on your property price ranging from 2 to 5.50% of that same price. The yield is indexed so it will increase with time (in last 5 years the increase has been between 1.5 and 2.5% on average which can mean +25% of original yield after 9-10 years). For example you might very well start at 4% to end up at a 4.80% guaranteed yield after 10 years giving you an average of 4.40% yield over the duration of the leaseback.

-         With some leaseback development you are guaranteed a set period of personal use in your property. Personal use in traditional leaseback varies from 2 to 8 weeks on average with the light leaseback scheme (Quasi-hotelier) giving you as much as 6 months personal use (the maximum if you want to be able to get the VAT back). If you wish to use your property more than your personal allowance allows you to, you usually benefit from a further discount  (10-20%) on the leaseback operator rental catalogue.