Forget a year in Provence, with UK pensions in a mess now could be the time to invest longer term in French property
Stuck in the quagmire of the current UK pension landscape, now could be the time for millions of Britons in search of reliable income in retirement to look across the channel to France.
The French government supports personal investment in property leaseback schemes by refunding the VAT, effectively resulting in a near 20 per cent discount on the price of the property. The French have been using leasebacks as an alternative pension vehicle for more than two decades because they offer a reliable income stream from guaranteed, index-linked rental income.
But there’s more than the income to attract investors. Most schemes allow personal use of the property – which could be in a glamorous location like Nice, Paris, Val d’Isere or Biarritz – for up to 20 weeks a year. Furthermore, there are no capital gains tax considerations after 15 years of ownership and the underlying asset itself passes from one generation to the next, unlike the traditional pension.
Leaseback schemes are fairly simple to understand. An investor buys a freehold property that is simultaneously leased back to a reputable management company. This company pays a guaranteed rental income and looks after all aspects of marketing and managing the property.
The property market in France is considered one of the most stable in the world with average capital appreciation of approximately 5 per cent per annum. However, location is key. For example, a leaseback investment in high tourism areas such as Paris, the Alps or Cote d’Azur could see annual price capital appreciation over 10 per cent per annum.
Another interesting pension alternative are the new-style, active senior retirement villages where investors can purchase a property in an authentic French community and benefit from an insured rent before taking up residence much later on. This allows investors to build up a pension pot to enjoy in retirement and, again, there’s the underlying asset, which can be passed on to future generations. Better than a traditional pension? Definitely – and with a bit of joie de vivre thrown in.
For information contact Pierre & Vacances in London. Tel: 020 7471 4500