Sale and Leaseback Investments

There are a lot of property terms out there and it can all get a bit confusing, this much we understand. One such property term is ‘sale and leaseback.’ At homes4u we like to make things as transparent as possible for people, so here is a brief explanation.

What exactly is a sale and leaseback property and where did it come from?

The concept of a leaseback was introduced not too long ago in France in the late 1960’s. At this time the amount of tourists visiting the country started to rise significantly. Due to a shortage of quality holiday accommodation in popular parts of France, the government decided to invite investment. As an incentive to any investors, the VAT from any purchased new build properties built for tourism (19.6%) could be claimed back. Quite the incentive!


The property was leased back to the developer, the government had a glut of newly built accommodation to house the growing numbers of tourists and investors received a guaranteed rent without any hands on management. Everyone is a winner. Maybe this had something to do with why France was the most visited country in the world in 2007 with over 80 million visitors!

 

How does a ‘leaseback’ arrangement differ from an ordinary property transaction?

  • A leaseback arrangement is one where after purchasing a property, the owner enters a long-term agreement by which the property is leased back to the seller at an agreed rate. 
  • The seller will then either manage the property themselves or enter into an agreement with a third party.
  • The property is then managed and marketed on the owner’s behalf and they are paid a guaranteed rent for a pre agreed upon period.

Introducing Quay House

At homes4u, we are currently marketing a selection of exciting investment possibilities, one of which is Quay House in Salford, being offered on a sale and leaseback agreement. The development has been completed by the developers and each apartment is sold subject with the advantage of a five year full repair and maintaining lease and a 5% return. The development has proved extremely popular and four apartments were SSTC within the first week of marketing.

What are the advantages of a sale and leaseback arrangement with Quay House?

  • Five year full repair and maintenance lease with a 5% return
  • Long term, fully leased asset with five years of guaranteed income
  • Potential for rapid capital gain in one of the fastest growing investment hot spots in the UK
  • The opportunity at the end of the five years to either move in, renew the lease or sell


If you would like to be kept up to date with investment opportunities you can contact Ripon Abdul our Investment Specialist on 0161 236 0202 or send us an email. You can also visit our property search pages to view all our current availability.