Can anyone tell me more about the French leaseback scheme?

Is it possible to generate income on a monthly basis via rental, as well as covering the monthly mortgage payments?

Is it only available on new properties?
Thanks

I have just started looking into this, so I'm no expert -

From what I have seen, the rental income you get is enough to cover the mortgage if you put down a 30% deposit. If you put down a bigger deposit, then obviously you would get some income (which you would have to pay French income tax on)

If you buy a new leaseback property, then you get quite a substantial VAT refund (approx 20% of the building cost).
You can get refurbishments on the leaseback scheme, but the VAT refund is much less.

Most of them are tourist residences and aren't really suitable for people who wish to eventually move into their property. They also usually only give you a few weeks a year use, which has to be prearranged.

I have found the following sites useful:

www.frenchbuy2let.com

www.livingfrance.com/forums/

Thanks so much mduff! As this was my first posting, I was starting to think I'd done something wrong....

Thanks for the info, I'll try those sites.

I have just been looking into the French Leaseback scheme. Does anyone know if there are any pitfalls to watch out for? After the 9 years do you ahve the sames type of ownership rights that you would have if you bought the property freehold.

The only pitfall I can see at the moment is that you can only use it for a limited number of weeks a year and that the rent you recieve will probably be less than what you could get privately - although it seems guaranteed!

Any comments appreciated.

I have a colleague currently buying an apartment in the French Alps under leaseback. His arrangement is that he gets relief on the VAT; has 2 weeks private usage a year; is in the lase for 6 years; then may be offered the option to buy, as long as no more than 60% of the properties are foreign-owned at the time, otherwise has to continue the lease; and receives a notional 'guaranteed rent' each year.

My own view is that this would not be for me. I think it's outrageous that I'd be paying for the property construction,but only able to use it for 2 weeks a year; I'd have no guarantee I'd be able to buy after the initial lease expiry; I'd be forced into a permanent lease if more than the 60% ownership level was reached reached; the 'guaranteed rent' isn't a rent at all - just a sum plucked out of the air by the scheme operators; and if I decided to sell, then I'd probably have a job competing with others who are full owners.

This isn't to say that Leaseback is a Bad Thing - I'm sure that it suits a certain profile of investment need. But I think that a lot of people are going to regret having gone into these schemes - thay may genuinely have saved £12K up-front, but to my mind the saving is not worth the longer-term costs and limitations for many people.

Another thought: The VAT thing is a genuine attraction, but make sure that you're not paying over-the-odds elsewhere, e,g, in the £/SqM cost, for example, or maintanance, or taxes etc.

In the Alps, the £/SqM in France is often 20%-30% more than, for example for a comparable build in Switzerland (yes, really!) or Italy. And by copmarable, I mean a similar ski area at a similar height with similar amenities (not nowheresville-sur-obscure at 800M with 45Kms of piste against 400Kms of skiing in Verbier at 3330M).

So you might be saving £12K in French VAT but paying an extra £20K against a similar place elsewhere. Or saving £100/month over 10 years in VAT but paying an extra £80/month in annual maintenance - as so on.

Do the sums, and I'm sure that leaseback is the right thing for some people. But I think that a lot of people aren't looking at all the factors.

I was not aware that you did not own the place after the lease ended. I was under the impression that you buy the place with your own mortgage (or cash) and then the holiday company (or whoever) leases it from you for a set period of time (I have heard usually 9 years). I thought after this period you then have full ownership rights and an do with the property what you like.
From what you are saying, it seems there is more to be aware of than it first seems. So you do not own the place properly?

Another thing. Does anyone know of any good developments in the Swiss Alps at high altitude.

I am with Dave on this.

A good rule - for me - at least is that financial transactions should ideally be as straightforward as possible.

As Dave says, this may meet a certain type of investment need. But I do not see why it would be better for most that plain straightforward purchase - where you alone have an interest in your property, can live in in when you like and sell it when you like without possible adverse financial consequences.