This is for anyone looking for a ‘low risk’ property investment opportunity, without the need to have a large deposit. All sounds a bit too good to be true but it is certainly worth further investigation. The article I read was focused on expats living in France, the reason being obvious as you read on, but I can’t see any reason why expats in Spain (or anywhere) couldn’t take advantage of this as long as you are ok with a property viewing trip to France!

Basically France has what is called their ‘Leaseback System’, which is a tax efficient way of holding property as a pension, as you get a full refund on the VAT - which runs at 19.6 per cent in France for new builds - providing you hold the property for nine years or more. As the VAT is refunded, it can in effect be used to set against the deposit on the property, which for a French mortgage is normally 20%.

“French leaseback can therefore be arranged as virtually 100 per cent loans and with interest only mortgages available, the capital outlay can be very low.”

“At the point of purchase, the income from the property will be guaranteed, as will the indexing undertakings, so the buyer knows the yield on their investment and how that yield and capital values will grow over the term of the contract.”

Of course “Central to the success of any leaseback scheme is the reputation and strength of the manager, who has the long term responsibility for filling the dwellings with tenants and maintaining the fabric of the building.”

What this basically seems to mean is that you can buy a property in France, as part of a pension scheme, with virtually no deposit and then hand it over to a specialist management company for guaranteed income and capital gains. All pretty interesting. I have checked out the sites mentioned in the article, and one of the ways it seems to work is that you buy an new off-plan property from a development which has effectively been built for the leaseback market.

Other good new re. investing in France is that “new changes introduced this year to both French inheritance tax and capital gains tax rules are set to underpin property price growth.”

One specialist believes that this is an important option for expats and UK residents who are looking for an alternative pension planning tool to UK property and stocks which are now higher risk.

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