- The counterpart to French leaseback many advantages is that there is a certain rigidness. You can’t visit whenever and for how long as you wish. You can’t personalise your decor and leave any personal belongings. Some management companies though tend to have very refined French home style decors and give your French property the looks of a self-decorated home.
- The investment is not as liquid as any property and there are certain restrictions if you want to resell. First because there is a commercial lease attached to your property. The management company is entitled by law, to keep the property for the duration of the lease (between 9 to 11 years). When the lease expires you can renew or not. Generally management companies renew which is good news because it means that they earn money and you too and also because it is a guarantee that your French property will be maintained to high standard for many more years. Nevertheless if you want to reclaim the property for your own full use you have to give at least one year notice. Another reason why the property is not as liquid as a traditional property is because leaseback is so specific and can’t be resold like a traditional property. Nevertheless, big management companies offer to resell for you since they have a huge pool of potential clients in their holiday makers.
- The last constraint in this regard is that if you take back your property into personal use there won’t be any rent charged with VAT on your property. You then have to pay back the French tax administration a proportional part of the VAT refund you got at the time of purchase (for instance if you sell after 11 years you owe 9/20th of the VAT refund). This is also the case if you want to resell the property unless you sell it to another VAT-registered individual, in other words if the property goes on being a leaseback property subject to VAT.
This is why you should really consider leaseback French property as a pure investment but at a time of uncertainty its value is one of the safest because it is based on safe grounds.