What is the leaseback scheme?
It is a government backed scheme whereby the owner of a property signs a rental and management contract called 'bail commercial', or leaseback contract, with a management company. This company then rents the property as a tourism, business or senior property (depending on the classification and location of the residence). The french government provides an incentive by taking out the 20% VAT from the purchase price as long as the property is rented over 20 years (the rental income being subject to VAT). The owner then gets an income from the management company.
If the owner decides to stop renting within those 20 years, then the proportion of VAT for the years not renting the property will have to be repaid to the Tax Office.
The owner owns a property classic freehold, this is nothing to do with leasehold ownership.
There are various types of 'baux commerciaux' and some are stricter than others, some also are clearer than others.
Some provide you with the option of usage few weeks a year and a guaranteed income, others provide with a guaranteed income but no usage (discounte owner's prices) and some provide an income which is a share of the profits of the residence...some provide that there are no building maintenance charges to pay as covered by the management company while others require a participation to those...
Our advice is always to go through the leaseback contract with your notaire so you have all the terms and conditions explained.
Leaseback contract lenght vary from 9 to 11 years but as we work with many resale leaseback properties, we propose contracts which can end in a few months to ones with a full lenght of 11 years renewable.
Leaseback properties can be great 'hassle free' investments (choosing the right combination of location, management company and contract) and they are tax efficient. There is usually no french income tax to pay for many years due to the deductions available.
What are the Syndicat de copropriété, the Syndic and Conseil Syndical?
As an owner of an apartment in France, there are few terms that some owners get confused with but it matters very much to understand the role of each:
- Syndicat de copropriété: represents all the coowners of the residence
- Syndic : is the company who manages the contractors doing the cleaning, maintenance work etc and sends the maintenance charges to the owners. They have legal duties and responsabilities when professional. In some instances, the owners manage themselves the residence and don't have a Syndic.
- Conseil Syndical: they are the owners representatives, volunteers, who check the accounts, can propose work to be done and work in collaboration with the Syndic. The Conseil Syndical is elected at the General Meeting and they coopt a President amongts themselves. It is crucial to have an active Conseil Syndical representing owners to provide checks and balances and promote the good maintenance of the building. Anyone can step in to become a member of the Conseil Syndical.
Being a President of a Conseil Syndical of a building France, I am happy to share my experience. Just contact me.