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Let & Managed properties in France

Let & Managed properties (Residence de Tourisme or French Leaseback)

If you think you will use your property just for a few weeks during the year, then you might want to rent it during the rest of the year. Bear in mind that the leaseback purchase will not suit everyone. You need to check with us if it suits your personal case.

By signing for a French leaseback scheme, you become the freehold owner of a furnished property. The length of the leaseback is usually between 9 and 11 years (renewable). You will get a fixed rent normally linked to the inflation rate. Therefore, every year you will see your rent rising according to an Index published by the INSEE (ICC, IRL or ILC). The rent will be paid by the property management company whether it is occupied or not. This is the reason why the percentage can only be up to 5% of the cost of the property. If you decide to rent the property by yourself you could easily manage to make an average 8% return but you will not be sure to rent it all year. Furthermore you will have to deal with all the repairing work, refurbishment, bills, taxes and so on.

A property management company will take care of your home and for all maintenance and hassle (bills…) and usually guarantees you up to 5% net return on your property. You will have no extra cost as they will be paid by the holiday company (refurbishment…) during the length of the leaseback: it is in their interest to keep the place in good order so that they can rent it more easily.

20% VAT refund (Cash back)

If you decide to go through a French Leaseback purchase, then you will be entitled to get the VAT back (20% in France).
It can be paid and reclaimed by the developer in which case you will pay less for your property. If you do it by yourself, it can take up to 3 months to get the VAT back. Most of the time the developer will provide assistance to reclaim the VAT and he might charge you a small commission for that.
In order to get a full VAT refund, you will need to rent out your property for at least 20 years. You can also decide to do a leaseback for only 9 years, in which case you will repay 11/20ths of the amount of the VAT.

Investment

You can use 2 different methods to finance your investment: Interest only mortgage or a classic monthly repayment. The figures below give you a clear idea of the cost of each solution. Please note that it was calculated with a 40% deposit. If you give a higher deposit then you will not need to add money every month to pay the mortgage.

If you take an interest only mortgage you will have a mimum cost every month and start to earn money from the first year (based on a €125,000 investment with 5% return and a 2% interest rate mortgage). After 15 years you can decide to sell it and to make a profit on the sale as the price of the property is most likely to increase. However, if you are looking for an extra income in the near future, the monthly repayment is a better solution: as soon as the mortgage is paid back (for example 15 years) you will enjoy an income in euros. You can also decide to sell it and keep the full amount of the sale. For more advice about French Leasback Mortgages do not hesitate to contact us on 0207 428 4918.

Capital gain tax

You should not forget that the value of your property will also increase and it is a potential capital gain.

  • The new CGT version consists in:
  • 2% abatement per year after 5 years of ownership until 17 years of ownership
  • 4% abatement per year during years 18 to 24
  • 8% abatement per year during years 25 to 30
  • No CGT after 30 years

In another way, the CGT tax rate for non main-residences is 34.5% for French residents and 19% for non-residents living in Europe.

Taxes

You are required to declare your income in France; however, as there is a tax treaty between France and the UK, you will not be asked to pay your taxes twice. If you take a Leaseback, there is a method that allow you not to pay income taxes (on the rent). To find out how call us on +44 207 428 4910.

Checking list

  • The amount of the rental percentage
  • The cost of the furniture included in the price or not
  • Notary’s fees (2.5%)

We write on a regular basis News & Articles related to French Leaseback. Should you have any question related to this scheme do not hesitate to contact us on +44 207 428 4910.

We do not charge any commission for our service for Off plan / New Build as we get paid by the French developers. For resale leasebacks there is a French estate agency commission which is already included in the advertised price (FAI), Sextant France, part of the Sextant group offer a resale facility and market French resale leasebacks on both international and French markets.

Selling your French property through us is an easy process.

If you are interested in selling your property through us, please send us an e-mail at:

[email protected] with those informations:

  • Your contact details
  • Photos of the property (inside and outside)
  • Address of the property
  • Description of the property
  • Price
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