Leaseback schemes

THE French government introduced the leaseback scheme over 30 years ago to promote development of accommodation in tourist areas.

The deal is that you get a property at a substantially reduced price, as there is no 19.6pc VAT charge, but you agree to let it through a management company for a number of years.

You are able to use it for three to four weeks in a year and will earn a guaranteed income for the duration of the contract. And then once your contract runs out you are the owner of the property.

An article on the This Is Money website describes Leaseback schemes as the ‘Lazy way to a holiday home’ and their popularity is increasing.

The piece provides an example of how the schemes work:

So an owner, who buys an apartment for £100,000, will earn £4,500 a year, rising in line with inflation. In return, the buyer hands over the keys to their home for an initial term of at least nine years and it is let to holidaymakers. Owners can use it for three weeks a year.

As with anything involving property and finances it is necessary to do your homework and read up on the subject, which should include speaking to a professional with knowledge of the system.

One of the minus points is that you are likely to have a home on a beach resort style plot, and the houses are likely to be uniform in design.

But you can see the appeal of a leaseback scheme for someone who is looking longer term and seeing it as an investment for the future, providing an opportunity to use their home upon retirement.

Related article:
A look at leaseback schemes