Posted on 17 November 2012
The idea of sale and leaseback schemes in ski resorts was originally conceived in the 1980s, and these types of schemes are most commonly found in the French Alps. The idea originally came about due to French tourist boards identifying a shortage of hotel beds in ski resorts. It was decided to give incentives to build holiday accommodation in areas that weren’t usually zoned for mainstream residential properties.
Under this scheme the buyer is obligated to purchase freehold of the property and to leaseback the unit to the developers or a management company. The properties are generally let out for a specified number of weeks each year, and owners usually receive a guaranteed fixed rental income.
The owners are free to use the property during the remaining weeks, and the responsibility for decorating and repairs is handled by the management company. The properties are usually sold fully furnished. In addition the VAT is refunded to the buyer so long as the property is leased for 20 years. Otherwise the VAT has to be paid on a pro rata basis. Most sales are for a leasing period of between nine and 11 years, so buyers more or less have to renew their deal with the developer in order to get the best returns.
Although this type of scheme isn’t for everyone, it has proved to be pretty successful for those looking for a long-term investment rather than a more traditional holiday home, and the VAT refund is a definite incentive. However it does offer little flexibility and locks owners into schemes for long periods.