For many investors buying leaseback property in France the
key attractions are the guaranteed yields, stable economy,
low deposits and low interest rates. For most leasebacks
though even if you managed to get 100% finance for the ex
VAT price you still have had to find the VAT as your
deposit which you do not get back until 3-6 months after
completion. This can often slow down an investor's momentum
as they are waiting to receive back the VAT before using
that money as the deposit for their next investment.
Because off-plan properties are usually released for sale
18 months to 2 years before completion you could be waiting
over 2 years to get your VAT deposit back.
The next thing people often have trouble with is finding
100% interest only mortgages as up till now really only 80%
has been possible. Investors often like the idea of
interest only mortgages as it reduces their monthly
mortgage payments and therefore improves their cash-flow.
However interest rates for interest only products have up
till now been rather uncompetitive with the classic
"interest and capital" mortgage interest rates which have
put people off taking them.
The third thing that for some investors has prevented them
from taking the plunge and investing in France is that they
have felt the yields are not high enough on leasebacks
which have usually been around 4-5% NET (equivalent to
around 6-7% gross). Even though they are guaranteed and
paid NET some investors prefer to take the gamble and
purchase something in the emerging markets that they
"think" will have a higher rental return.
These issues have now been overcome and you can now get the
ultimate leaseback investment. Let's take an example of one
to three bedroom apartments from 106,917 Euros in a
stunning high quality residence at Mers Les Bains, Picardy,
just 300m from the sea and right in the town centre,
walking distance from all amenities. The guaranteed NET
yield is 5.27% and you can secure 100% interest only
finance (subject to status) at a fixed rate of just 5.1%
(correct at time of writing).
What this means is that you can invest in and excellent
location in France that pays for itself and all you need to
find are your bank and mortgage setup fees plus your legal
fees (notaire fees). If you add all these together they add
up to roughly 7% of the property price. For better
understanding we have provided a simulation below of an
investment in a 1 bedroom apartment:
Property Price: 106,917 Euros
VAT@ 19.6%: 20,956 Euros
Mortgage: 106,917 Euros
Deposit: 0 Euros
Notaire fees: 5115 Euros
Bank & mortgage fees:2302 Euros
TOTAL personal contribution: 7,417 Euros
This is just one of the highly attractive investments
currently available in France and with the new French tax
reforms great things are expected for French property in
the coming years.
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Leapfrog Properties is a French Property agency
specialising in sales across France and Niclas Dowlatshahi
is the Managing Director. Visit
http://www.leapfrog-properties.com to find out more.
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