What is French Leaseback and how does it work?

Investors buy the freehold of an off-plan property outright, so you own the property. As with all new properties, the purchase price includes VAT, however with a Leaseback property the VAT is refunded back to you. As VAT in France is 19.6%, this either replaces, or significantly reduces your deposit.

The property is then leased back to a management company who specialise in the tourist management, maintenance and rental of these properties for a period of 9 - 12 years. In return owners receive a guaranteed annual return which increases with inflation, irrespective of occupancy of the property, NET of all communal charges, maintenance and running costs.

History of French Leaseback Properties - Why were leasebacks introduced?

In the late 1960s, following the increasingly large number of tourists visiting France which continues today as the most visited country in the world, the French government recognised the need to encourage investment in the construction of tourist residences, and offered an incentive to investors by refunding the VAT on the purchase price of properties built for leaseback purposes.