Frequently Asked Questions
* How does the sales process work for a leaseback purchase in France?
* Do I need a solicitor?
* What does the notaire actually do?
* How much are notaires fees? What do they include?
* In which country should I be organising the mortgage for my French property?
* What annual charges should I expect to pay?
* Is my rental return index linked?
* Is buying a leaseback property the same as a timeshare?
* Why do the French government reimburse the VAT?
* How do I get my VAT rebate?
How does the sales process work for a leaseback purchase in France?
After transferring a deposit to secure your preferred apartment, you will be issued with a reservation contract and commercial lease in French to sign and return. Both these documents will be countersigned and a copy returned to you for your files. Your contracts will then be transferred to a French Notary who will provide you with the title deed and notification paperwork within a minimum of 2-3 months and a maximum of 5 months. Once you receive the notifications package your first step is to go to your local public notary* and sign the proxy/power of attorney. Your own solicitor/lawyer may have the authority to do this. Signing this in the presence of the public notary/your lawyer with your identification gives Power of Attorney to the French notary to sign for the title deeds on your behalf. This is necessary for the French notary so that everything will be processed correctly. All the documents in the notification package you receive must be signed and initialed. Full instructions will be enclosed. Throughout the sale, the notary will call for funds directly according to the stage payments in line with the construction of the development in question. Towards the end of the sales process, just before the handover of keys, you will be issued with your owner’s certificate and be able to contact the management company to book your weeks stay in your apartment. * Your own lawyer/solicitor may be in a position to do this. If this is not the case, they or Erna Low Property will be able to recommend a public notary for you.
Do I need a solicitor?
There will be a French notaire to oversee the sale, however you may wish to appoint a solicitor in the UK or France. For a recommendation please consult our legal info page, or conact us
What does the notaire actually do?
The notaire is appointed by the State and acts for both parties. Some of his duties include: ascertaining details of title and third party rights, verifying the details of any charges affecting the French property, preparing the acte definitif (final contract), witnessing the signing of the acte de vente, registering the transfer of ownership, collecting the taxes.
How much are notaires fees? What do they include?
The amount quoted is a combination of the notaire's fee and taxes payable to the French state on purchase of a property. The larger part of this sum is tax. These usually amount to 6%-8% of the purchase price on resales and around 3% for new builds and are collected by the notaire. The buyer is responsible for the fees and taxes relating to the transaction.
In which country should I be organising the mortgage for my French property?
This depends very much on your own personal circumstances. Generally, you should be looking at borrowing in the currency and country where you receive your income. If you would like a recommendation for brokers or banks for a French mortgage, consult our financial info page or contact us.
What annual charges should I expect to pay?
As an owner of a leaseback property, you will be responsible for paying annually co-ownership charges which cover the upkeep and maintenance of the communal areas including cleaning of halls and corridors and the upkeep of any garden or pool that your building may have. Co-ownership charges are based on the size of the apartment. Payment of co-ownership fees will normally be deducted from the owners rental return. Co-ownership charges are often shared between the owner and the management company and should you ever decide to terminate the lease but keep the apartment, then you can expect the co-ownership charges to increase. Owners will also have to pay taxe foncière which is French land/council tax and the French tax authorities will contact you directly for payment. The level of tax is based on the size of your apartment and the larger the apartment the less the tax per m2 will be.
Is my rental return index linked?
Yes, your rental return is index linked to the French cost construction index published by INSEE (the French National Institute for Statistics and Economic Studies).
Is buying a leaseback property the same as a timeshare?
No, the fundamental difference between a leaseback purchase and a timeshare is that with a leaseback you own 100% of the freehold of the property right from the outset even during the period of the lease. Once the period of the lease expires, you own the property to do with as you wish. Also, unlike timeshare if you choose to have personal use included in your Leaseback contract you do have flexibility on the dates that you can enjoy your property.
Why do the French government reimburse the VAT?
The leaseback scheme has existed for approximately 20 years and is a government initiative to encourage investment in the tourist industry which is France’s number one industry. The French government recognised that people wished to invest in tourist residences but they didn’t want the situation where properties are standing empty for a proportion of the year when they could be generating revenue. The French government will recoup the VAT rebate from the purchase of leaseback property through the taxes on goods and services that tourists will pay during their stay.
How do I get my VAT rebate?
Normally the leaseback company will take care of this on your behalf. If payment for the property is made in stages then often the call for funds on the last stage payments is made through the VAT rebate although this varies dependant on the developer. Exactly how and when the VAT is refunded will be stated in your lease.