What is leaseback?

The leaseback scheme is the result of a series of financial measures taken by the French government in the mid- nineteen eighties to help boost the tourism and construction industries and increase the availablility of short to medium-term accommodation, of which there is a chronic shortage in France. The scheme allows investors to cover the major part of their mortgage repayments thanks to the tax-free rental income they receive and to benefit from a regular and secure source of supplementary income during their retirement years.

In addition to the tax-free rental income and to the very attractive VAT concession - a complete refund of the 19.6% VAT paid on your new-build property - your investment will provide:

  • • A guaranteed rental income,
  • • Good capital growth potential,
  • • None of the usual difficulties tied to owning property abroad,
  • • A secure property investment easily achieved thanks to low French mortgage rates,
  • • A firm foothold on the French property ladder,
  • • In some cases, a choice of holiday accommodation all over France.


Freehold Property

A leaseback property a freehold property which you can sell at any time, like any other property and which will be fully fitted and furnished, let out on a temporary basis and part of a complex or development providing hotel type services such as cleaning, managed reception and breakfast and laundry facilities.

All properties sold under the leaseback scheme must present the usual guarantees required by the French government in terms of quality of construction and the financial guarantee for completion.

At the time of purchase, you will sign a commercial lease ( or "leaseback agreement") with a management company that undertakes to pay you a guaranteed return on your investment, calculated in terms of a percentage of the value of the property, known as the “yield”. This guaranteed rental income is indexed yearly and varies between 3-5% per annum, depending on the property and the amount of personal use you require, if any.

The initial term of the lease is generally between 9 – 11 years and will usually be automatically renewed for a further 9 years after that.

How Leaseback Works

After handover, your property will be managed like a hotel and the leaseback company will take care of maintenance and repairs and cover most costs including insurance.

As an added bonus, several of the major management companies operate programmes all over France and you will often be able to use other residences under the same conditions elsewhere in France. This effectively means that you could spend your holidays in a different part of the country every year, including the best ski and coastal resorts.