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The Benefits Of Investing In French Leaseback Property
While property markets around the world have fallen victim to the credit crunch, France is proudly not one of them. The market is stable and still proving an ideal location to invest. French mortgage banks have continued their responsible lending, creating confidence in the market and allowing investors from all over the world to purchase French leaseback property.
The French leaseback scheme enables buyers to have full ownership of the property within a certain time period, normally between 9 to 12 months. After this period of time, they will be offered the choice to either hand back the property or renew the lease and continue ownership for a further year.
There are many benefits to owning a French leaseback property. Investors will be able to receive rental income from the business, ranging from 2.5 to 5 percent. They can also retain VAT tax from the purchase of the property, which equates to around 19 percent (higher than the 17.5 percent from the UK).
There will be a management team on call to perform any maintenance that needs to be done on the property, so you don't have to worry about the wear and tears. There are also furniture packages that buyers can purchase from the management teams, so the property can be rented out immediately.
Despite the dire property market around the world at present, French lenders have not changed their lending policies for foreigners and therefore it is still possible to receive 100 percent financing on leasebacks, with a fixed rate for the entire duration. In a market where there is always genuine interest, French Leaseback is certainly an attractive opportunity.
Mortgage options include interest only, repayment, or a combination of both. If you are a little short when you start out, you can defer payments until you begin receiving rental income. French banks will require you to take a life insurance policy with your mortgage. Your mortgage payment must be debited from a French bank account however this can be arranged without meeting the bank in person. French banks will also charge a filing fee of up to 1 percent of the loan amount so you'll need to account for this in your sums.
The market moves very fast in France and once you have decided to purchase a leaseback property, you'll need to place an option on the property you have chosen. This will usually need to be done very quickly, particularly if it's a popular development. However the good news is that what may turn out to be a spontaneous choice, will be protected by a seven day cooling off period by French law, so you are within your rights to change your mind.
To secure the option and reserve you're property, you have 48 to 72 hours to lodge a deposit with the development's notary. This is usually about 5 percent of the value of the property. Following this, you need to check all official documents, including floor plans, list of furnishings and a description of materials and then sign a preliminary reservation contract, a lease agreement and an official fiscal form to obtain the VAT refund.
Once these contracts have been completed they are returned to the developer for signature and you will receive a copy in return. From the day you receive the signed copies you have the seven day cool-off period during which you can change your mind. After this period, your reservation will be considered to be firm and definite.
Overall, the French leaseback market is getting more popular as investors begin challenging different markets. While you do have a cooling off period, you should still make sure you know what you are buying and also understand the whole process of French leaseback before you jump in both feet forward.
About the Author Dominic Donaldson is an expert in the property industry. Find out more about French Leaseback and why so many people are looking to invest their money in these developments.
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