INVESTMENT PROPERTY RETURNS IN FRANCE

Property and tourist experts expect property in France to increase in value by an average of 15% per annum and the potential rental income for seasonal rentals to average 5%, of the current investment value, over the next three years (2004 on). The rental market shows no signs of abating, after all nearly 60 million tourists visiting France in 2004 making it one of the top tourist destinations in the world.

Lease Back Schemes

Leaseback's can be a very attractive option for investors who are looking for a high and long-term guaranteed rental return on their investment, and would also like to own an attractive pied-à-terre in France to enjoy in retirement.

Properties with leaseback approval offer several advantages:

• High net rental return guaranteed by a commercial lease for a period of nine to 11 years, from some of France’s leading tourist management companies
• Exemption from TVA (the French VAT, charged at 19.6 per cent) on all leaseback properties. However, a pro rata TVA discount would be charged should the property be disposed of within the first 20 years
• Investors rarely have difficulty raising finances for these schemes.

Leaseback properties are only available in larger cities or tourist locations, where there is a demand for good-quality accommodation. Also, this kind of scheme should only be considered as a long-term investment.

The Viager System

The viager system accounts for some 10 percent of private house sales. A viager is a residence that is sold on condition that its seller, usually an elderly person, may continue to occupy his residence until his or her death. They usually sell well below the market price. This system currently accounts for 10 percent of house sales by private owners in France.

When you purchase a viager, you pay a bouquet, which is an initial amount of the total price. The rest of the purchase price is paid in monthly installments, and the amount is based upon the age (and hence longevity) of the resident and calculated in respect to the total amount due.

The buyer becomes the owner upon the death of the seller.

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