According to all the information I have from government statistics and the feedback from all property sales through Notaire, yes, in Languedoc on average property prices have increased by an average of 10 percent per annum for the last six years.

However, leaseback properties will not necessarily perform in the same way. There is no definitive model as all leaseback plans are different, but there are important factors affecting the resale price.

1. The development company invests a large amount in selling the plans, sales are accented towards a new unit with new furniture and is simpler for a customer to finance. This does not necessarily reflect the true resale price of another unit. An individual has to compete with a strong marketing service selling new properties and will not achieve the same price

2. The TVA advantage is reduced, an existing owner has to repay and the amount then transferred to the new owner is smaller in proportion and loses the benefit of the tax gained.

3. The guaranteed income period is reduced, yet the income is still fixed at the original purchase price, so if the original return was 5 percent, and the property was sold after three years at a 25 per cent increase - then the return will now be under 4 percent for the new buyer.

My opinion is that a leaseback is a term investment giving a guaranteed income and will not usually show any capital gain - it needs to be kept for a minimum term of 10 and preferably 20 years (if the management company wishes to renew the lease) and is similar to a bond, giving guaranteed income and your original investment back - I never recommend leasebacks for a capital gain.

I hope this helps

Tony

Thank you for your site, I enjoy reading your advice as I believe it is independent.

I have recently (2 years ago) purchased a ‘leaseback’ property in Le Cap d’Agde in the Languedoc region and am considering purchasing a second property in the same holiday village. Judging by the asking price it would appear that the property has increased in value by 10% for each of the last 2 years.

Do you know if this is correct,

Richard