Frequently French leaseback properties are developments that are in the planning stages and are pre-sold. A number of major companies in France are starting new leaseback developments every year.
If you buy a development property, you will almost certainly have to pay instalments at various completion points of the construction process of the leaseback property. The first amount will be a deposit to reserve your leaseback. It will have to be confirmed as transferred to the notary’s escrow trust account to hold your sale. This is generally 5% of the purchase price TTC (the purchase price including VAT) for French leaseback properties. You will normally have to pay the second and biggest staged instalment of approximately 25%, when final contract is signed. This will also be close to the time the foundations are started. The closing costs to complete the deal usually include taxes, the notary fees, and title registry. The notary will transfer the money in the escrow account into the developer’s account, less fees and taxes for closing the deal. (more…)
French leaseback property investments have many and various benefits. Most people who decide to invest in a leaseback property in France do so for two combined reasons. The buyer contemplates a return on his/her investment and can have a certain amount of time for personal enjoyment of the property. Vacations taken to your own property can be satisfying and cost efficient. But French leaseback programs offer more benefits and attractive advantages to property investors.
One major benefit is that on any new developments, the buyer will be able to get a full refund of the 19.6% VAT. It takes about four to six months for you to receive your VAT back after the construction is completely finished. It is conditional, though, on the buyer keeping the property for 20 years. If you hold your property for less than twenty and decide to sell it, the French government will require you to pay back a pro-rated amount of the VAT refund. In some cases developer will pay the VAT before the sale, making the French leaseback investment program an even better investment. (more…)
When you decide to participate in a leaseback property, there are a few decisions to be made. The first things you have to consider are the size and the location of the property you are looking for. Part of this process is working out realistic and have a preliminary mortgage assessment done. This will tell you how much you will be able to borrow if you were to finance your purchase with a mortgage. Once the big decision has been made and you have chosen your French leaseback property, the procedure is the same whether you have decided to buy an apartment, ski-chalet, villa or house to leaseback.
The first step in order to start the French leaseback buying process, you should take out an option on the leaseback property that you have selected. The option will have a maximum duration of 72 hours at most leaseback developers. This option will put the property on hold for the 72 hours mentioned. This will not allow anyone else to buy it out from under you while you work your way through the process. Within this time slot of 72 hours you have to transfer your deposit amount into an escrow account of the notary in order to reserve the property until the process has been completed. The deposit is usually 5% of the purchase price TTC, which means All Taxes Included and specifically the including TVA or Value Added Sales Tax. (more…)
One of the main ways to finance your French leaseback property is to mortgage your leaseback apartment, villa or chalet. Specific terms of the mortgage may differ from broker to broker, but there are some general issues which should be taken into account.
The French mortgage system is quite different from that of the United Kingdom. Since both formulas are based on your income, they may sound the same but there are significant differences. In the UK your maximum borrowing capacity is based on multiples of your annual income but not so in France. In order to calculate the maximum amount you can borrow to fund your French leaseback property, they calculate your coverage ratio. A French mortgage broker calculates your overall borrowing capacity and your ability to repay the debt. Your payments for the entire year including principal and interest cannot be more than one third (33.3%) of your annual income. It is normally calculated on gross income but sometimes it is based on net income or after tax income. To find your gross total income, you may count your regular salary, a part of your end-of-the-year bonus and your rental income. Each mortgage application is individually reviewed and has different contributing factors. Existing payments on mortgages, car loans, credit cards, and all any other kinds of borrowing are taken into consideration when a mortgage application is reviewed. (more…)
A popular way of investing in France is known as the Leaseback program. A leaseback is when the new owner of a real property enters into a long term contract with the person who just sold him the property. The agreement calls for the seller to no longer own the property, but to occupy it through a lease.
The leaseback plan works well in France, specifically for those who would like to have a second home or a vacation property, either now or in the future. At the same time the investor can expect to receive a return on their long-term investment. The French government has encouraged the development of leasebacks in various tourist areas that would normally experience shortages in rental accommodation. One of the main government programs is the provision of a variety of tax advantages including a rebate of the 19.6% sales tax, called the TVA. Different kinds of properties can be bought under a leaseback agreement, but they are generally not considered permanent residences. Ski chalets, villas, houses and even apartments can be included. (more…)
