What are the benefits of leaseback properties?
VAT refund
The French government will refund the VAT (11-19.6%) to investors, which represents a significant saving on the purchase price to investors. (the VAT rate for new build properties is 19.6% and for refurbished properties it varies between 11-14%).
Instead of investors paying the VAT and reclaiming it back as it’s a long process, Pierre & Vacances will pre-finance the VAT in advance.
Low Risk
Investors are guaranteed annual returns, which is also index-linked to the Dwellings Rent and Construction Index. The return is provided irrespective of tourist occupancy protecting investors from fluctuations in tourist demand or downturns in the property market.
Low Stress
Pierre & Vacances will completely look after the management of your property and you will not need to worry about any maintenance, repairs or upkeep costs of the property, communal areas, facilities or finding rental tenants throughout the whole lease period.
Quality Maintenance
Pierre & Vacances will maintain your property to very high standards throughout the period of the lease as they have a vested interest in the properties immaculate presentation for its tourist clients.
Potential Capital Appreciation
Property in France continues to offer very good growth with a high demand from local and overseas investors. Leaseback properties are built for tourists and as such are situated in the best locations with the facilities, amenities and accessibility that holiday-makers expect and such benefit from these additional features that a normal property does not . These factors all contribute to the demand for Pierre & Vacances managed properties and the capital appreciation that results.
Increase in Annual Rental Income
All annual rental income is linked to the French Cost of Construction Index, (http://www.insee.fr/en/indicateur/indic_constr/indic_constr.asp) so investor’s returns will continue to increase in line with this index. For the last 10 years this has averaged around 2.5%.
Limited French Tax on Rental Income
Non-resident owners of French property are liable to French income tax of 25% on their rental income, though French tax rules allow investors to off-set this liability against several factors including French mortgage interest repayments, notary fees and depreciation of the property. (*Please seek independent qualified advice for verification)
Personal Usage
Investors have the option to choose a leaseback formula that includes weeks of stays at their property each year (which may also be swapped with another equivalent apartment in one of the 200 P&V properties). In addition, all owners have the benefit of a 15-20% discount for all stays at P&V properties in their winter and summer catalogues.
If it’s purchase via pension this benefit cannot be applied.
Excellent Financing
Subject to some income level criteria, French banks will lend up to 100% of the purchase price of the property including notary fees and Euro-interest rates are currently low.
Pierre & Vacances leaseback properties are defined as commercial properties and as such are eligible investments for SIPPs (Self Invested Personal Pension) according to the Finance Act 2006, as long as there is no personal usage. P&V can introduce tax, legal and SIPP pension experts to explain how you can invest in this way and enjoy the various tax breaks this provides.
Can I sell during the lease period?
As the freehold owner of your apartment, you are entitled to sell your apartment at any time within the lease period. The new investor would observe the remaining term of the lease, which can be adapted to suit his/her usage needs
Resales
Pierre & Vacances not only build and then manage their properties but also sell and re-sell the real estate to investors. There is a very efficient re-sales network in place that has been working for years where investors may sell their Pierre & Vacances properties whether during or after the lease period. Many properties are sold on-site to one of our 6 million tourist clients and In the most popular properties there are often waiting lists from clients. This is a fundamental part of our business and an important factor to consider when considering your exit strategy.
Reputation
Pierre & Vacances is listed on the French stock market and is the leading tourism property development and management company in Europe. Our reputation has been gained over 40 years of building and managing quality properties in the best locations across France (and now in Spain and Italy) and by providing holidays to over 6 million tourist clients a year.