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French Leaseback Property Questions
FAQ's
Is leaseback like timeshare?
No. With leaseback schemes you purchase the freehold of the property
where with timeshare you are purchasing specific periods of time in
a property. Although you are leasing back your property to the property
management company for a fixed period (normally 9 years) when the contract
comes to an end the property is still yours, unlike with timeshare.
Why is the VAT I receive back from the French government
less on a renovated property?
VAT on new buildings is 19.6% at present and on renovations it is 5.5%.
The VAT that will be reimbursed on renovated property represents 5.5%
on the part of the price that represents the renovation work.
When will I receive my rental income?
This depends on the property management company and the lease itself.
Payments vary from quarterly to once a year. If you have seen a leaseback
scheme you are interested in, and would like to know what the payment
frequency will be, please contact us.
Is it possible that my rental income can increase?
Again, this depends on the leaseback scheme you choose. Generally, the
% changes in annual returns are linked to the INSEE index of Construction
Costs which has increased since 1953.
If I purchase leaseback, can I sell it?
Yes. As the freeholder of the property you are entitled to do as you
wish with your property. If you decided that you wish to sell your property
and capitalise on your investment before the end of your lease contract,
then the person to whom you are selling would be obliged to see through
the remaining time on the lease contract. Eg. If you had a 9 year leaseback
scheme and you wished to sell your property after 5 years, then the
new owner would be required to see through the remaining 4 years of
the lease.
If for example, the oven in my property broke, who
would organise and pay for repairing it?
Whilst you property is being leased back to the property management
company, they are responsible for the upkeep and maintenance of your
property. If you do not renew your lease when it comes to an end, you
will be responsible for all maintenance and upkeep.
Click
here to see our leaseback properties for sale
What is the process in buying a leaseback?
Because there is such a high demand for leaseback schemes and the most
profitable are snapped up very quick, it is important to react quickly
as to reduce the risk of losing the property you wish to acquire. To
secure your property you must send 5 original signed documents to the
developer as soon as possible. In the majority of cases these are: 1.
the leaseback contract 2. the reservation contract 3. the technical
description of the building 4. the furniture list 5. the floor plans
We will supply you with the documents and advise your of the process
you must follow. Whilst these documents are being sent, you must transfer
your deposit to the French Notaire (notary) and send proof of this transfer
to the developer. This will then secure the property for you until you
are able to complete by signing the "Compromis de Vente" at the notaries
office (nb.there are other ways of signing the Compromis de vente if
you do not wish to go to France.) The developers are obliged by law
to allow you up to two months before completing so that you may find
funding for your project.
What happens to my deposit?
Your deposit is transferred to the notary's bank account. The notary
is independent of the developer and all French notaries bank accounts
are held at the "Caisse des depots et consignation". Deposits should
only be transferred to notaries holding an account here as they are
strictly regulated and the money cannot be given to the developer until
completion.
Where is it best for me to take out a mortgage? UK
or France?
With fluctuating exchange rates between the Euro and Sterling it is
advisable to seek advice on the best solution available to you. It is
generally worth considering obtaining a French mortgage as the interest
rates are lower than in the UK and the yield you will be obtaining from
your investment will be in Euros. To find out more about French mortgages
please contact us.
Who pays the bills during the leaseback period?
During the leaseback period the property management company are responsible
for paying the bills relating to your property. There are, however,
two taxes in France that relate to your property, one of which you will
be required to pay as the owner of the property. This is the local taxe
foncière and represents a reasonably small amount per year of around
300€ although this does vary depending on location and the size of your
property. The other tax, is the taxe d'habitation and this is paid by
the property management company.
What happens if I wish to go on holiday in my property?
This depends on the leaseback scheme you have chosen, but providing
your scheme allows some personal occupation you are entitled to holiday
in your property as detailed in your lease contract. The time you can
stay in your property during the lease varies, but generally the maximum
time is 8 weeks per year. The majority of the property management companies
insist that you notify them if you wish to reside in your property in
advance before a certain date so that they can avoid double booking.
Can I use the property out of season?
Yes, normally although this depends on the scheme, however there may
sometimes be a small administration charge to pay.
What happens when the lease contract runs out?
Because you are the owner of the property you may do what you want with
it at the end of the leaseback scheme. You can live in it, sell it,
rent it privately or renegotiate or renew your leaseback scheme with
the property manager.
Click
here to see our leaseback properties for sale
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