I have been researching leasebacks recently as Attika is opening in the Alps and the vast majority of new build properties offered there are on a leaseback scheme. They are, as you say, very popular with UK and Irish buyers as they provide hassle-free property ownership with typically 4-5% return on Investment and the added benefit of using the property for a few weeks per year.

I have outlined the negative sides of them below – most leaseback companies deny all of the negative sides but this has been gathered from French financial magazines and investment sites as well as talks with local developers.


The main thing that needs to be taken into account is the capital appreciation on properties.

-Unlike stocks and shares, the problem with property is that it takes time to sell. In the case of leasebacks, you are the owner from day one (unlike with a timeshare) and therefore can sell the property at any time you choose. However you would be selling the property with the remaining lease still in place and so the property could only be sold to another investor during this period meaning that the pool of buyers will be smaller as the new buyer must honour the remaining lease.

-Also, if you sell the property before the end of the lease, a proportion of the VAT would have to be refunded to the French Government (1/20 th of the VAT for every year until 20 years has expired.). Therefore a leaseback must only ever be seen as a long term investment.

-One problem with leasebacks noted in French Money Magazine is that at the end of the initial lease, all of the apartments in a development appear on the market at the same time thus reducing their value. This same magazine said that most investors are happy to get their money back from leasebacks and enjoy a few weeks per year holiday time in them – it did not rate them as an investment.

-Certain leasebacks are built in “regeneration” zones where the French government is hoping to boost the tourist economy. In my opinion, although the prices in these areas are very attractive, the risk is too high as you should always keep an eye on the resale potential. It cannot be certain that tourists will be attracted to these areas and you may thus never see any capital appreciation. When advising your clients, be very careful about the areas which are offered to you as a good investment – check that they are already successful tourist spots – many leaseback companies offer developments in all sorts of places where capital appreciation is unlikely – beware.

-At the end of the initial 9 or 11 year lease then French law dictates that unless you decide to live in the property or sell it, then the same rentor has to have first refusal on the property. This means that in many cases, you would never be able to use your property for personal rentals. You may also not have the right to live in it as it may be classed as a tourist residence only. The development has to remain in the classification of a Residence de Tourisme. The management company has rights under French law to retain their status, no matter what they say in any contract, and can claim compensation (copied from France Voila magazine).


- Many mortgage companies refuse to lend on leaseback properties – they fear that at the end of the lease, the property will NOT be returned in a good state even though this is promised in the contract with the management company. After all, if the holiday company decide that from the following year onwards they will not be using the development, why would they spend money on carrying out repairs and maintenance.?

I would however recommend, as have many others on this site, that you look into areas such as the Cote d'Azur where capital appreciation is first class and the rental market is very buoyant...you are certain to make money from your investment with none of the negative possibilities that you could encounter with a leaseback.

Claire Healy
Attika International