Investment opportunities from £17,725 in France

The leaseback scheme was introduced by the government in France in 1976 and has been running very successfully now for over 30 years. The scheme was introduced due to the chronic shortage of short-term/holiday accommodation in France due to it being the no. 1 country for tourism in the world. The scheme is as follows- you purchase a property in a city or holiday resort in a completely managed residence offering hotel services and are given a guaranteed rental income of between 3% to 6% NET of all charges for 9 or 11 years (often renewable) plus a full refund of 19.6% VAT applicable on all new-build property. Often you can also receive a number of weeks personal use in addition to the guaranteed yield. The other unique potential of these investments is that 99% of them are fully compatible with a SIPP purchase (assuming there is no personal use taken). This allows for a large saving on income tax and capital gains tax but also importantly 40% of the purchase price is paid by UK Inland Revenue (assuming you are a 40% tax payer).

Below we have selected 4 of the best leaseback property investments currently available with a brief investment analysis on each. Assuming an average projected capital growth rate of 7% per annum the ROI on each of these upon receipt of the VAT refund will be 74.9% per annum. With mortgage rates available from 4.2% and 80% finance available it is easy to see what makes these investment opportunities so attractive.

1) Villeurbane at Lyon NET yield: 5%, Starting Price: 82,418 Euros ex VAT and 98,572 Euros inc VAT + furniture at 6,650 Euros = 105,222 Euros. The amount of deposit required is 20% = 21,044 Euros, then they must add 4% for legal fees (3943 Euros) and 1000 Euros (in this case) for mortgage arrangement & bank setup fees. The total the client will have to lay out therefore is 25,987 Euros. The VAT refunded is 16,154 Euros so after the refund the amount of money tied up in the property is (25,987-16154)= 9,833 Euros.

2) Residence Val de Loire, Amboise, NET yield: 5.3%, Starting Price: 90,880 Euros ex VAT and 108,692 Euros inc VAT + furniture at 8,677 Euros = 117,369 Euros. The amount of deposit required is 20% = 23,474 Euros, then they must add 4% for legal fees (4348 Euros) and 1177 Euros (in this case) for mortgage arrangement & bank setup fees. The total the client will have to lay out therefore is 28,999 Euros. The VAT refunded is 17812 Euros so after the refund the amount of money tied up in the property is (28,999-17812)= 11,187 Euros.

3) La Villa Carnot at Cannes, NET yield: 4.5%, Starting Price (including furniture): 268,230 Euros ex VAT and 320,803 Euros inc VAT. The amount of deposit required is 20% = 64,161 Euros, then they must add 8% for legal fees (25,664 Euros) and 1947 Euros (in this case) for mortgage arrangement & bank setup fees. The total the client will have to lay out therefore is 91,772 Euros. The VAT refunded is 52,573 Euros so after the refund the amount of money tied up in the property is (91,722-52,573)= 39,149 Euros.


4) Les Loges Blanche, Megeve, NET yield: 3.94%, Starting Price: 289,000 Euros ex VAT and 345,644 Euros inc VAT + furniture at 10,000 Euros = 355,644 Euros. The amount of deposit required is 20% = 71,129 Euros, then they must add 4% for legal fees (13,826 Euros) and 2,166 Euros (in this case) for mortgage arrangement & bank setup fees. The total the client will have to lay out therefore is 87,121 Euros. The VAT refunded is 56,644 Euros so after the refund the amount of money tied up in the property is (87,121-56,644)= 30,477 Euros.