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Leaseback what
is it?. What is Leaseback? A "leaseback" scheme is a company has the right to use
it for, usually, short-term tourist lettings. This is usually for a fixed
period of 9 years. water & electricity charges,
community fees, repairs and replacements etc. They will also be required to
return the property to you in good condition. If you do not want to do so you
can allow others to occupy the property on your behalf or, usually, surrender
your right in return for a higher payment from the company.
French companies of the size and
status of British Gas. The guarantee from them is, therefore, worth having. You are merely allowing someone
else to use your property for part of the year in return for a cash payment. At the end of the 18 years they
can request a further renewal, but you do not have to agree to their request.
However, if you refuse the request you
will be liable to pay them compensation for the value of the business they
have built up in your apartment. At the end of your agreement the
property is yours to do with as you please. You can continue to rent it out,
use it yourself or sell it. Who is Leaseback right for? Anyone who cannot use a home for
more than a few weeks per year at the moment, but who might be able to do so
in 10 years time. Anyone who wants to buy a
property with substantial amounts of borrowed money in order to leverage his
investment to the full. Anyone who likes the idea of a fixed income property investment in an era of predicted long-term low inflation and low interest rates. Why think of Leaseback? The government allows you to buy the property free of VAT. VAT is normally 20.6%, therefore this is a major saving. A £100,000 property will only cost you £80,000. The guaranteed return will,
typically, be 4.5%. This is after deduction of all the expenses of running the property. This return can, in
effect, be completely free of French tax. Mortgage finance is available, in many cases for 95% of the price paid, at about 4.2% fixed rate or 3.8% variable rate. You can usually use the property yourself for your holidays FREE OF ANY CHARGE. Additional time can often be rented back from the company. Leasebacks are available in places where there is likely to be considerable property appreciation over the next 9 years. It is possible to buy Leaseback
properties in several locations, so giving your family and friends the possibility of
holidays in, say, Paris, Normandy and Monaco at varying times during the year.
Such a portfolio can be put together for a capital outlay of about £15,000
and a monthly "topping up" payment of about £450. At the end of the 9 year period you would have properties which were worth about £250,000 at cost PLUS whatever amount they had grown in value over the 9 year period. It would not be unreasonable to expect a 100% increase in value over this period if the properties were chosen wisely. An Example You buy an apartment in Paris - list price £100,000 including furniture. The costs of acquisition (legal fees, notaries fees etc) will be about £2,400. Your total investment will therefore be £82,400. If you fund 95% of the price you paid (say £76,000) by mortgage, your monthly repayments, over 10 years, will be about £775. Of this about £250 will be interest and the rest capital repayments. These payments can be reduced by taking the mortgage over 15 years (£570 per month) or 20 years (£470 per month). Your guaranteed income will be, say, £4,000 per annum or £333 per month. All of your interest and a large part of your capital repayments can therefore be covered by the "rent" received. This income will be tax-free and, indeed, you will have additional tax allowances of about £5,000 per annum to set against any other income in France. Euro: Strong against US $
and linked currencies. The average cost of living is generally lower than
other EU Countries especially in country districts. Paris is however is very
expensive. Economic climate: There are no
limitations on foreign property investment although purchasing regulations
vary by type of property. French real estate increased by 30% in the
2001/2002 fiscal year. Capital Gains tax: of 33% is incurred
on the sale of second properties within two years of purchase, this rate reduces
against additional years of ownership until it no longer applies after 22
years. Popular investment areas: Due to its size the
options in France are diverse. The Dordogne, Charente Maritime, Brittany, and
Cote DāAzur as well as
cities like Lyons and Paris are all well subscribed. Price ranges: Low budget property
is costly to refurbish and may often be found in rural areas but also in
ancient parts of towns and villages. The choice of location reflects future
pricing and should be carefully considered. The universal appeal of The South
of France, thanks to its climate and unique character, generally commands
higher prices than other regions, apart from Paris. Budgetary guide: New villas: Eās250,000 +, New
apartments: Eās100,000 +, Town
Houses: Eās 95.000 +, Detached
houses: Eās115,000 to 150,
000, Farm Houses: Eās150,000 to 220,000, Character Houses with land: Eās300,000+
Renovations: Eās 25,000 to 35,000,, Service Fees: Agents often
present their properties with the commission included in the asking price, in
which case legal fees are the only addition. These start on very cheap
properties at around 10% and decrease to around 6.5% for properties of 200,
000 euros upwards to approximately 6.2% on very expensive properties. These
legal charges include taxations and re-registration of deeds, apart from the
notaires fees, hence reduced rates for new builds. It is worth āshopping aroundā among reputable
notaires who will provide quotes on the total legal charges Mortgages: Standard term 15
years. Mortgage requirement must be indicated at the same time as the initial
agreement. French banks will provide up 80% funding. Information: Web access www.fopdac.com (property & services
info) www.fxhistory.com (exchange), www.info-europe.fr (French Government). For more
information please contact MobileHomes@PropertyInFranceForSale.com This information
was correct when printed. |