The Assetz Leaseback builds on the strengths of the traditional French Leaseback scheme, whilst removing many of its weaknesses.
The background to French Leaseback
‘French Leaseback’ schemes are one of the most popular rental guarantees available today. They enable investors to purchase a freehold property which they then lease back to a property management company, earning a guaranteed rental income for at least nine years. In return for signing a long-term rental agreement with the management company, the French government gives the buyer the 19.6% VAT charged on all French property back as a discount.
The French Leaseback scheme can be particularly good for long-term investors and for those looking to enjoy the property as a holiday home for a few weeks a year, but is too inflexible for periods of extended personal use.
How is Assetz Leaseback different?
The Assetz Leaseback scheme offers greater flexibility for investors. The owner can pick and choose when they want to use the property and will receive an agreed rental income. This scheme is much more suitable for investors who want to commit for the short to medium term, as owners can choose to opt out of the leaseback agreement after just five years with no penalties, instead of the traditional nine years. The owner would need to pay back the VAT refund in this case. They can also sell the property on, free of any leaseback agreement.
The Assetz Leaseback can also be applied to high specification apartments and villas, offering a higher standard of property than is typically available on conventional Leaseback schemes.
Stuart Law, Managing Director of Assetz comments: “Although French Leaseback remains one of the most popular choices for British investors in France, many are put off by the length of the commitment required and the inflexibility concerning personal use of the property.
“This new scheme offers investors a solution to both these concerns, alongside all the existing benefits of the Leaseback scheme. Investors can use the property as much as they like and sell on after five years free of the leaseback contract, taking the capital profits. We will be launching many schemes over the coming year on this basis.”
Case study: Residence la Pinede, Le Bacares, Languedoc Roussillon
Residence le Pinede on the shores of the Mediterranean is made up of 15 three-bedroom villas with garages, terraces and private gardens, along with 41 one, two and three-bedroom apartments.
The attractive fishing port of Le Bacares is a year-round tourist attraction, easily accessible through low budget airlines, which is creating a big demand for rental accommodation. The increase in property prices in the Languedoc area has been in the region of 10% annually over the last few years compared to a national average of 7%.
All the properties are available either as a traditional holiday home or as an investment opportunity through the Assetz Leaseback scheme, costing from €119,500 (£81,577).
Under the Assetz scheme, investors would claim back VAT on the property purchase and receive a 5% guaranteed rental yield for five years, with all administration fees, taxes and insurance paid, along with three weeks’ free usage and a 15% discount on the public tariff at other times. Following this period, the management company would continue to rent the property out for another four years, should the investor wish to do so.
