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Investment Profile

This investment report takes you through the how and why you should consider an investment in VSL Village, a leaseback Complex situated in the Lot et Garonne, South West France near to the Dordogne. This entire village is built in the style of the “Bastide” and consists of houses and bungalows with their own gardens set around groups of courtyards. There are 12 beautiful apartments already refurbished on site for you to stay in to experience the true quality of this development. Phase one of the development completes in April 2011, this development offers year-round appeal; the area is naturally beautiful and is set on an established 18 hole championship golf course within 150 acres of land. The development will be fully managed on site on completion and offers both an excellent financial package and strong capital appreciation for the medium to long term.

Deal Summary 9-year extendable leaseback scheme A strong feature of this investment is the 2 year interest mortgage interest payment rental guarantee followed by the rental pool profit share opportunity. With owners having up to 8 weeks usage of properties in the “Village” coupled with the owner’s affinity scheme for discounted additional usage makes this investment very appealing for lifestyle users as well as the serious investor. The leaseback arrangement is extendable for up to 20 years and beyond, discussions are underway with management companies and tour operators who are anxious to secure units of accommodation in this well established tourist area order to secure both “In season” and “off season” holiday lets at this all year round golf resort. This rental strategy for this investment is key to high yielding returns and increased profits through the rental pool following the 2 year mortgage interest guarantee scheme. 19.6% French government cash back providing instant equity With traditional French Leaseback properties the French government refunds the VAT to the purchaser three months after completion effectively refunding a large portion of the deposit. In this instance we have negotiated with the developer that the VAT will not need to be paid during the build process and purchasers will sign over the VAT claim to the developer who will apply for this at the completion stage. This effectively allows our investors to retain their capital requiring only a 10% capital investment on the gross price at the point of reservation. NB: Leaseback schemes DO NOT apply to all developments and is available to such schemes as ours who have to comply with stringent rules in order to qualify. The VAT refund will effectively form part of the deposit resulting in a lower loan to value mortgage for a 10% investment on the gross price. This is effectively a “gifted deposit” from the French government and gives it a huge financial advantage over a conventional purchase. 10% below phase 2 and up to 20% below phase 3


Added to the 19.6% cashback, investors are buying into this scheme with a healthy discount on phases two and three with Prices from â‚Ź169,000 (excl. VAT), Prices are very accessible for a range of buyers hence demand is expected to be high from both foreigners and French nationals. The broad market, with limited supply, will ensure a strong exit strategy in the future. Summary Villeneuve Village is a well designed development (to be built in three phases) of approximately 300 two, and three bedroom properties with the added attraction of overlooking the championship golf course Villeneuve Sur Lot Golf and Country Club. It is set in Lot et Garonne one of the most attractive parts of South West France near to the Dordogne and is surrounded by beautiful scenery, historic Chateaus, small villages and towns. It is very much a traditional part of France and very picturesque. The main employment for local occupants is agriculture, with vineyards forming the main employment industry outside of the tourist industry an area only 30 minutes from Bergerac airport.


The Golf Course It is widely recognised in investment markets that one of the most profitable investment purchases an investor can make is one situated on an established Golf course. One of the fundamental reasons for this is that golf is an all year round sport and therefore provides a year round rental strategy for increased income yields. Other reasons are to do with strong capital growth strategies and high yielding rental returns. We advise our investors to invest in projects with a clearly defined exit strategy whereby the investor maximises all profits by selling the investment on. This development we believe has an excellent exit strategy as it will appeal to other capital and lifestyle investors, local residence, and those looking for longer term occupancy and enhanced lifestyle. Many off plan developments worldwide are sold with “planning permission only� on golf courses which does increase the risk with the investment strategy in case the golf course is never completed. This is not the case with Villeneuve Village as the golf course here has been established since 1987. The 18 hole par 72 championship course blends into its surroundings, using the many natural gradients, elevation changes and contours to add to its challenging nature. The course is a pleasure for golfers of all abilities; however there are plenty of hazards and challenges to keep things interesting including elevated greens, undulating fairways, water hazards and numerous strategically placed bunkers. The fairways are lined with fruit trees, so even wayward drives can be rewarded at certain times of the year, albeit with a plum or an apple, rarely the opportunity to reach the green in regulation. There are beautiful views of the surrounding country side from many places around the course, particularly the 8th and 14th Holes. The Golf course hosts many championship competitions and attracts new competitions year on year. In September 2009 we are for example hosting the Brittany Ferries Cup 2009

Management Company The on site management team will deal with all of the day to day running of the property from bookings and reservations to changing the sheets to replacing damaged items . The management company will market the property and manage the arrival and departure of guests. The management company will be linked into the Holiday Lettings and tour operator partnerships so will handle all aspects of the property rental and management to ensure that this is a hands free investment for our clients. Owner usage bookings will be made direct with the management company who will also book additional usage through the owner’s affinity club. THE DEVELOPMENT FEATURES Phase 1 • • • • • • • • • • • • • • • •

94 high quality houses built around a courtyard with private garden area. Tiled floor areas throughout Fully-fitted, quality kitchen with oven hob and white goods Fitted wardrobes throughout Built in the style of a local Bastide village with market square and fountain Village style development with allocated parking 18-Hole, Par 72 championship golf course Golf driving range Golf practice range Resident PGA teaching professionals for private or group lessons Approved golf tour facilities On-site, high quality restaurant On-site bar Clubhouse & bar Heated outdoor swimming pool (seasonal) Historic surroundings throughout the local area which include weekly markets in traditional local villages

There are many improvements and additional facilities been added in phases two and three they can be viewed on the web site.

Risk profile France is a developed country and its stable economy is the fifth largest in the world. France is also the world’s number one tourist destination with a long history of steady capital appreciation in the property markets rather than the boom and bust of some other countries. This is a low-risk high yield Investment with a solid medium to long term capital growth strategy. Facts about France • Political France is a mature and stable democracy. • Economy France has the 5th largest economy in the world and the reforms of Sarkozy are likely to strengthen it further. • It is the world’s fifth-largest exporter of goods, and the third-largest exporter of services and agriculture in the world. • Tourism France is the most visited country in the world with over 79 million visitors a year. • France is the 23rd most populated country in the world. 16.4% of the population of France are 65 years old or more, Golf is a sporting pursuit regularly played by the retired. • France shares borders with 8 countries: Andorra, Belgium, Germany, Italy, Luxembourg, Monaco, Spain and Switzerland and many holiday in France. • Fertile plains cover two-thirds of France, which is the largest country in Western Europe. With more than half the land under cultivation, France leads the European Union in food exports. • Flights are well serviced to the three surrounding airports by all major operators with Ryanair and Flybe flying direct from the UK to Bergerac airport which is about a 30 minute drive away. • Property market Capital growth in past five years has averaged 16% per annum across France. • Capital growth inelastic supply and rising demand from French and projection foreign nationals will continue to ensure the longevity of this project. • Mortgage payments guaranteed for 2 years • Leaseback contract for 9 years, extendable to 20 years. • Financial package 19.6% VAT refund paid to developer and flexible mortgage product. • Location is Stunning, the development has panoramic views over the Golf course and surrounding countryside. • Exit strategy Demand continues to outstrip supply.

Discounted Furniture, fixtures, and fittings. Furnishing the property following completion is a very important part of this investment in order to conform to tour operator’s specifications which in turn allow the maximum rental returns. As such we have negotiated heavily discounted furnishings The furniture will be given a price in the detailed price breakdown: this is for accountancy purposes only as it will enable you to offset tax through the furniture’s loss of value over time. Inventory Exact details of the inventory will be contained in your purchase documents but this list gives you an idea of what is included: Beds Sofa bed Sofa Bedside table’s Dining table Chairs TV unit Chest of drawers Mirror Clock TV Pictures Wastepaper bin Curtains Full lighting set Full sets of bed linen Full kitchenware set Personal usage at discount on holiday let prices You and your family and friends, and may use an apartment yourself for up to 8 weeks a year without affecting your mortgage guarantee. (High season excluded) If you wanted to increase your occupancy then this can be arranged for you but would lower your return compared to an owner that makes their property available to rent all year round. If you would like greater flexibility without committing to a set number of days per year it may be worth considering opting for no personal usage in the agreement. You can take advantage of the owners affinity scheme to acquire further additional usage at heavily discounted rates to provide you with flexible usage whilst maximising your rental return.

Prices The prices range from €169,000 (excluding VAT at 19.6%) for a two bedroom property to €285,000 (excluding VAT at 19.6%) for a three-bedroom property. Please see the price list featured on the web site for further detailed information. What’s the market value? The properties off plan have been bank valued and confirmed as suitable for mortgage security. Phase one will be discounted against future phases as we anticipate that the future phases will be increased by a significant percentage in release price to reflect the development of the phases and the additional facilities that will be offered.

Source: Notaries of France property pages at – all the data on the site is compiled using actual completed property transactions in the area. Property in the area has enjoyed good capital growth over the past five years and this is forecast to continue. The surrounding area falls into a government regional regeneration zone (Zones de Revitalisation Rurale or ZRR) which will also positively affect property prices in the area

Financial and Legal Projection of capital growth at 11-year point ( 9-years + 2 year off plan) Example is using a type T2 two bedroom property on the gross purchase price: Year 0

5% €202,124

8% €202,124

10% €202,124

12% €202,124






Gross profit on projected capital growth rate Year 11

5% €143,576

8% €269,156

10% €374,559

12% €500,974

Return on investment 5% in the bank versus 5% capital growth in Villeneuve Village The table below shows you the return on investment (ROI) you could expect by putting the deposit 0f 10% €16,900 in a bank for 11 years at 5% versus the ROI if you invested the same amount in this development (also over 11 years at 5% growth). It is 11 years rather than nine to take account of the build and leaseback period. Investment (over 9 years)

Gross profit after 11 years


Depositing €20,214 in a bank account at 5%



Investing €20,214in VSL village at 5%



You can see from the table that your return on investment is TEN times greater over 11 years if you invest your money in this development rather than putting the money in a bank. Mortgages We are presently working with several banks that have made an offer to finance the development and will announce our preferred finance partner shortly.

Stage payment details


What is a stage payment? Stage payments are a standard condition of purchasing property in France, Europe and around the world. A stage payment is an agreed amount of money that is released to the developer, either in cash from the buyer or from the bank via a mortgage, at set times during the construction period. The number and amount of these payments and the release schedule are specified in the Sales Agreement. When a mortgage is used to buy a property, stage payments are released by the bank, alleviating the need for further deposits from the buyer until completion. Advantages of stage payments Stage payments benefit both buyers and developers. Stage payments reduce the risk to both parties by ensuring that payments are made only for that portion of the work that is done. If financed via a mortgage the buyer has the additional security of having the construction guaranteed by the bank. The table below provides a summary of the stage payments for the Villeneuve Village development. Transaction costs package We have put together a package with our French partners incorporating all transaction costs should you so desire, (bank fees, proxy fees, notary fees, mortgage fees, VAT refund fees and bridge interest on the loan). This is an optional service that offers excellent value for money and will save you much time and effort sourcing these services yourself. Pensions & Self-Invested Personal Pension Plans (SIPPS) A SIPP is a type of personal pension that gives you more choice about the investments held within it. With a traditional personal pension, your choice is limited to funds run by the insurance company, but now you have a far wider choice about what you can place within a SIPP. This French leaseback scheme can be placed within a SIPP structure as it is classed as commercial property. You cannot place a non-leaseback property in a SIPP, making this development a great pension vehicle on top of all its other selling points. If you don’t want to set up the structures at the outset you can even sell the leaseback property to your SIPP fund in the future, provided it is sold at market value. This makes a French leaseback within a SIPP a very tax-efficient vehicle for a pension as you will pay little, if any, tax in France and none in the UK. The tax allowances are generous in France and it makes a great pension scheme on its own, outside of a SIPP. Your rental income is guaranteed to rise with inflation, while your capital will also grow significantly over time. You should seek financial advice from a pension expert for more details as we are not qualified to give you advice in this area. Tax issues Rental income is paid to you sufficient to cover your mortgage costs including VAT. It will be the responsibility of the client to ensure that all Tax issues are dealt with according to their particular circumstances. Arrangements will be made for all forms and returns to be made on your behalf for an annual fee. Capital gains tax There is no capital gains tax to pay in France after 15 years of continued ownership. The fixed rate of capital gains tax before this is 16% of the net gain (for EU nationals).

Financial & Legal Funds released at the completion of: cumulative The reservation contract The groundwork The bottom floor of the 1st level The bottom floor of the 3rd level The bottom floor of the 5th level The walls The roof The painting Delivery & keys

% of funds released

% of funds released -

3% 32% 5%

3% 35% 40%





10% 20% 5% 5%

70% 90% 95% 100%

Buying Process Initial reservation: Allocation is on a first-come, first-served basis and you will be initially required to put down a fully refundable reservation fee of £2500 to secure a place on the allocation list. Some clients will wish to visit the development prior to confirming their intention to proceed, to facilitate this accompanied inspection trips will be arranged. (Details available on request) For those clients wishing to proceed without inspecting the development they will be able to select a property upon payment of a 10% deposit (gross price) payable in Euros, this will be held by the independent notary in an ESRCROW account whilst mortgage applications are made and contracts are prepared for exchange. The initial £2500 reservation deposit will then be retained against the furniture package all monies at this stage become none refundable. The Cherish Properties completions team will guide you through the entire process and assist you in completing your correspondence package for your mortgage application. Their brief is to: • • •

Be available face-to-face, by telephone or by e-mail, to answer any questions you may have about the investment process. Keep you up to date with the progress of the development throughout the build period. Facilitate Inspection visits throughout the build process.

Purchasing Process

Step 1: Reservation & deposit: • •

When we receive the initial 10% deposit your chosen apartment will be allocated to you and the legal paperwork will be drafted and sent to you. This 10% deposit will be held in an ESCROW account by the French Notary

The notary •

The notary is a French official who acts as a legal intermediary between the developer and the investor (see He or she is unbiased and is there to make sure that both parties are treated fairly: the notary is not acting independently for either party but is there to make sure the law is conformed to. A notary has been appointed for the development but you can also appoint your own if desired. You should think about appointing an English-speaking lawyer as well as a notary if you are at all unsure about the processes, but you need to bear in mind that you will have to pay an extra fee for the solicitor. We can recommend an English lawyer specialising in French law.

• Step 2: Compromise de Vente (Initial purchase contract) • •

You will be sent your initial purchase contract (Compromise de Vente), which confirms your intention to buy. You will need to sign the documents and return them to us

Step 3: Mortgage application •

At this stage you will apply for a mortgage with your chosen bank. Our French partners will check through the documentation and forward it to the bank on your behalf.

Step 4: 7-day “cooling-off” period •

From the day you receive the countersigned copy of the initial purchase contract a seven-day “cooling-off” period starts. Should you find you are unable for some reason to proceed with your purchase you may withdraw and reclaim your reservation deposit of 10%. After this period has elapsed you are then 100% legally bound to conclude the purchase.

Step 5: Mortgage offer Approximately two weeks after your application has been made and all the information asked for by the bank has been received you will receive a verbal acceptance from the appropriate bank. This will be followed by a written offer, which will be sent by mail directly to you. You must then send the signed mortgage offer back to the bank, which will forward it to the notary. Step 6: Signing the deeds • •

At the appropriate time the notary will inform you that the deeds of the property can be signed and will forward to you a breakdown of any outstanding costs still to pay such as notary fees. You then receive a document called the Projet d’Acte, which is the draft of the sales deeds. You will need to sign the final documentation, which can be done either in your country of residence or in France. You are now the official owner of your new property

Section 7: Ongoing support Our French partners can continue to look after the ongoing communication and paperwork between you, the management company and the accountant. This can be undertaken for a fee: Contact us for further detail regarding this. The average time taken to exchange is three to four months.

Inspection Trips We will arrange a viewing trip for you to visit the development if required where you can ask any further questions you may have. There are 12 fully completed apartments overlooking the golf course which you will be able to stay in whilst you learn more about the investment opportunity at VSL Village. We ask that you book and pay for your flights to the most convenient airport of your choice. We recommend you hire a car to see the full extent of the beautiful area we inhabit we have negotiated special rates through an Ex Pat car hire provider, or if you prefer we can arrange for your transfer from Bergerac airport. We have put together a fantastic package to allow you to find out more about Villeneuve Sur Lot Golf & Country Club and the various properties that we have available. This package will allow you to explore the Lot et Garonne and neighbouring Dordogne regions, play golf at Villeneuve Sur Lot Golf & Country Club or just relax and enjoy the peace and quiet. What’s included? Friday - Sunday • • • • • • • •

Arrival at Villeneuve Sur Lot Golf and Country Club. 3 nights’ accommodation in one of our existing fairway facing apartments. Unlimited golf. Continental breakfast daily in our onsite restaurant Detailed presentation of the investment and purchase process on Saturday morning Thorough tour of the resort and its’ current facilities. Free time to look round the area, chill out or play a round of golf on Saturday afternoon 3 course lunch hosted by the developer Saturday night

The aforementioned package costs €250 (excluding flights) this fee is refunded in full if you proceed with the purchase.

The Leaseback Scheme 1.The leaseback concept was created by the French government in 1976 to encourage the supply of good-quality accommodation in the most popular tourist destinations throughout France. It was a forward-thinking initiative designed to help France keep pace with its rapidly growing tourist industry and has proved enduringly popular. The idea was (and still is) that, by encouraging this sort of enterprise, the government could stimulate regional economies, which would then impact the economy as a whole. What is a regeneration zone? A regeneration zone (Zone de Revitalisation Rurale/ZRR) is an area designated by the French government for investment. The scheme was set up to promote investment in areas of low permanent population. In total these areas cover 39% of France but are occupied by about 8% of the population. In order to encourage private and commercial investment the government offers exemption from corporation tax to companies setting up in the area which are involved, directly or indirectly, in its development. All of the major French leaseback providers now build between 20% and 50% of their projects in these areas, which has a positive knock-on effect for those local economies. How does a leaseback scheme work? The property is sold off-plan and a commercial lease is signed at the outset by the investor. This commits the new owner to letting out that property through a predefined management company for a fixed period of between 9 and 11 years, automatically renewed unless you negotiate to reclaim year-round usage. You can use the property yourself, with different packages for a fixed number of days each year, but of course the rental income is then reduced. This rental income is guaranteed by the management company meaning that the investor does not have to worry about rental voids. The management company also looks after the upkeep of the property and manages any problems, meaning that it will be completely “hands off”. When the commercial lease period comes to an end, a new one can be negotiated with the management company, but the property could also be used by the owner or be sold. Running costs and exit strategy You receive a guaranteed return on your investment in the form of a 2 year mortgage payment guarantee following which the properties are placed in a rental pool and following a 40% management fee deduction in overall profit the remaining profit is shared across the owners at a rate appropriate to the size of the property purchased. There is an annual service and maintenance charge expected to be around €1500 annually this will not be due for payment during the first 2 year guarantee period for those owners involved in the leaseback scheme. Following the 2 year mortgage payment guarantee for leaseholders we will arrange the payment of local taxes, annual property insurance and an accountants fee for filling in their annual tax return and deduct this from the annual rent payment - this will avoid owners having to open a French bank account. Although the tax allowances for these schemes are generous, it is worth consulting a tax expert or a French accountant. One great benefit is that, if the property is sold after 15 years, there is no capital gains tax to pay in France. You can sell your leaseback property at any point within the commercial lease period (provided it is sold as a leaseback) and you are able to keep the VAT refund. In practice this is not common, as most people want to hold on to their investment for the longer term. At the nine-year break point (when the first management company lease period comes to an end) you may be able to sell as a non-leasehold property, although this is again uncommon and there are occasions where by the VAT refund would become repayable..

  Summary The French leaseback scheme is a great option for those people wanting a low-risk, long-term investment. It’s ideal as part of a pension plan with excellent security and good potential for capital growth as well as offering tax breaks in the form of a VAT rebate and capital gains tax benefits. It can form part of a retirement or lifestyle plan and is completely hassle-free once it’s up and running. If you make the right choice the French leaseback scheme is a fantastic investment as it offers little moneydown, little daily involvement and good long-term capital growth. The French leaseback scheme continues to be popular over 30 years after its launch because so many parties benefit from the arrangement: the government, developers, investors and tourists alike.

DISCLAIMER: Cherish advise all readers to conduct their own due diligence. Any information provided throughout this document should not be relied upon as your only resource in coming to an investment decision. The information is provided "as is" without warranty or any representation of accuracy, timeliness or completeness. We strongly recommend that property purchasers seek independent legal and financial advice before purchasing a property.

VSL Investment Report  

VSL investment report

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