France’s wonderful, diverse countryside, food, wine, traditions and culture make it the number one tourist destination in the world. In 2005 the country saw 76 million overseas holiday makers (up 1.2% on 2004) and 9 out of 10 French holiday makers vacationed in their own country (French government figures). To support and develop this vital industry the French government encourages the building of new holiday residences by offering attractive tax incentives for investors. For investors from overseas the most important of these is the refunding of VAT on the asking price of the property. This effectively means a reduction of 19.6%. 

Leaseback works as follows. You buy an apartment or villa (usually apartment) in a tourist complex which offers a range of hotel services such as sheet changing and cleaning. The property is bought freehold and you then lease it back to a management company usually for 9 – 11 years. During this time the property is maintained by the company, they organise it’s letting out and guarantee you a return (generally 3 – 5%). After the end of the lease you can re-new the lease, sell the apartment or use it as you wish. 

Owners are usually entitled to use the property themselves from a couple of weeks to six months a year. This can sometimes be free of charge without affecting the return, or can be off-set against the return – all lease agreements are different. 

The most visited parts of the country are the South, the Alps, Paris and Brittany. By investing in a leaseback scheme in a popular tourist area, with a good management company, investors can be assured of a guaranteed return and capital appreciation. For example, according to the magazine L’Expansion the high demand for accommodation in the Pyrenees has been pushing prices up, which between 2002 and the end of 2005 saw a rise of up to 40%, sometimes more in the ski resorts.

We have a number of leaseback residences in Pyrenean ski resorts. There is a four star development at Bagnères de Luchon, comprising a total of 107 apartments with 1 – 3 bedrooms and terraces. There is double glazing, electric heating, kitchens and bathrooms are fitted and equipped, and bedrooms have carpets or a floating wooden floor. Facilities include a heated pool, hammam, sauna, gym, cycles, lifts, and a ski rack for each apartment. The price for the property, furniture and parking (often including a garage), including the VAT, is 204 000 – 310 000€. The apartments are due to be ready for the 2008 skiing season. The return is up to 4.6% and owners have up to 8 weeks personal usage a year.

Bagnères de Luchon is an ancient, elegant spa town and ski resort (permanent population just over 3000) with grand houses and hotels testifying to its illustrious past when the who’s who of Europe descended to take the waters including Flaubert, Bismark and Mata Hari – the exotic dancer and courtesan executed as a spy. The spa was built in 1848 on the site of the old Roman baths. Today the waters are reputed to help rheumatism and ear, nose and throat problems and many health-seekers visit and stay in the town March to October. There are also programmes on offer for those simply seeking some R&R. There is also a golf course.

The busy, tree-lined, boulevard Allées d’Etigny, has rows of restaurants and shops selling clothes, regional food, trinkets, books and chocolates. The town is full of flowers, fountains and gardens. There is a Victorian bandstand in front of the spa. The grey jagged peaks around the town contrast starkly with all this gentility.

The ski domaine , 1440m – 2260m altitude, encompasses 28 ski slopes, over 138 snow canons, 4km of cross country tracks, a sledging slope, and other attractions. It is only 8 minutes from the centre of town to the slopes via the télécabine, just off Allées d’Etigny. After the skiing there is plenty of nightlife, including a cinema, bars, night club and a casino. Spain is only 10 km down the road.

Spring, summer and autumn health seekers and holiday makers come to Luchon for the waters and mountains. In the winter it is the turn of the skiers and winter sports fans. Luchon is an attractive, busy, elegant, year-round resort offering excellent 12 month rental possibilities – a good investment. 

Investors interested in leasebacks but unconcerned about using the property themselves could consider buying residences that offer the hotel-like facilities but for specific user groups such as students or the elderly. The returns can sometimes be very attractive.

We have student apartments in Pontivy, central Brittany. Pontivy, with a population of 15 000, is the main town in the area and is opening new higher education establishments that will take the student population to 1500. The residence is close to the centre of town, a sports centre and the University of Southern Brittany. The lease is for 9 years. Prices range from 69 497€ - 105 390€ including the VAT and the return is up to 5%.

France is a stable country with a legal system that ensures real estate investors’ rights are very well protected. Interest rates are also attractive, currently 3 – 4%, and we can help investors secure loans up to 80% of the purchase price. Investors also avoid paying tax on their rental income by off-setting the income against the interest payments on the mortgage. We help our clients complete their tax forms. 

France welcomes investors to help the country meet its need for residential and tourist accommodation and they are offered a range of guarantees and incentives that are hard to beat.