Is Leaseback the same as Timeshare?
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| Absolutely not! When timeshare is purchased, all
you get are specific periods of time to use at certain
locations over a set number of years. Once the term comes to
an end, you are left with nothing. When you purchase a
Leaseback property, you are the actual freehold owner of the
property who has simply entered into a lease agreement with a
management company. In essence, the management company is your
tenant for the duration of the leaseback contract. Upon
completion of the leaseback agreement, the property is yours
to do with as you wish. The only similarity is that during the
lease, you can only use the property during specific
timeframes. |
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What happens if I have to sell the property
before the end of the Leaseback term?
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| As freehold owner, it is your right to sell it
at any time. It is important to consider, however, that you
would be obliged to sell the property with the remainder of
the Lease term, and whatever period remaining on the lease
should be reflected in the sale price. In addition, selling
before the end of the lease agreement means that a proportion
of the VAT discount must be refunded to the Government (1/20th
of VAT for every year before 20 years). |
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Who maintains and takes care of the utilities
for my property during the Leaseback period?
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| The management company looks after all the
properties in the development. Because of the strictly
enforced standards required by the government, all properties
and their grounds must be maintained in perfect order. The
management company is also responsible for paying all the
utility, upkeep, and general maintenance bills of the property
during the term. |
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Why is there a discount on the purchase
price?
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| The French government invented the Leaseback
program, which gives tax breaks to developers in order to
encourage them to build 'Residence de Tourisme' developments.
This discount (VAT refund) is then redistributed to purchasers
as an incentive to attract investors. This program was created
because of the high importance tourism holds in the French
economy. Today, there is a great shortage of summer holiday
accommodation and France earns a significant amount of its GNP
from tourism – as the number one tourist destination in the
world. |
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Am I able to live in my own property when I
book my holiday time, and what about off seasons?
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| As long as you have booked on time, you will
most certainly be able to live in your own property. If you
are late in booking, however, you may have to take
accomodation in a similar property. Keep in mind, however,
that the management company always accomodates the owners.
Your property is also available during off seasons, but a
small fee may be charged or discount given on the public
rental price from the management company. |
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What happens if I can't use or wish to use
more than my allocated weeks?
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| If you can’t use your specified weeks, it is
quite common for owners to sub-let their property, although
this type of arrangement must be done privately. Be aware -
some leases restrict this. If you desire to use more weeks
than what is normally alotted, it is common practice for the
management company to offer a discounted rate on any extra
weeks you may require. |
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How is the rental income guaranteed?
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| The rental income is guaranteed by the
management company throughout the leaseback period and is
usually paid quarterly in arrears (this may vary by contract).
The management companies are established, usually very large
holiday accomodation companies with a substantial numbers of
clients, assets, and a strong portfolio. |
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What happens at the end of the Leaseback
period?
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| Again, as freehold owner of the property, the
property is yours to do with as you wish. Sell it or negotiate
a new lease with the management company, if you decide to live
in this property full time we do advise to verify with your
advisor before to process, as some companies may accept it and
some may not. |
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Is it possible that I would get a higher
rental return if I bought the property outright and rented?
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| Generally yes, but there are five important
points to consider. First, your rental income would not be
guaranteed, so you would be subject to all fluctuations in the
accomodation market. Second, if you decide to find and use
your own management company, you will find that the normal
charge for services can be up to 25% of all your rentals.
Third, you will be responsible for all advertising costs to
attract renters, maintenance bills, pool cleaning, gardening,
utility bills, cleaning, changeover costs, and property
emergencies. Fourth, classic properties have purchase costs of
approximately 10% including stamp duties, legal and mortgage
fees, etc., whereas Leaseback purchase costs
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