We chatted to Brigitta Szabo of MGM, a trusted ski property specialist, based in the French Alps.
On 28th September, SnowOnly participated in the biannual Your Overseas Home Virtual Event. The event was free to attend and hosted entirely online. Its purpose is to fill international buyers in on a range of topics to set them on the path for a smooth, safe property purchase. Topics include managing currency risk, residency & citizenship, and mortgages.
For the first time, SnowOnly joined the Your Overseas Home Virtual Event, hosting a range of seminars on purchasing a ski property. We chatted to Brigitta Szabo of MGM, on the difference between an outright ski property purchase and a leaseback, and how to decide which would suit you best.
MGM is a property developer based in the French Alps. The company was started by a local family, over sixty years ago. In that time, they have become total experts at showcasing and managing carefully selected, beautiful ski properties. They are attuned to the desires of holidaymakers and ski homeowners alike, and know what they are after, be it the most incredible views, a ski in/out property, or to be close to the best restaurants. MGM specialises in both outright and leaseback property purchases.
What is an outright property purchase? Why choose one?
With an outright ski property purchase, once the sales contracts have been signed and funds have changed hands, the home is yours to do what you want with. When you buy outright, you must pay 20% VAT.
An outright property purchase is most popular with those that want their ski home to be their new main residence or are planning to use it as a holiday home for themselves, friends and family. About 70% of people looking to buy outright fall into these categories.
If you would like to rent out your property, you can, there are no restrictions.
Generally speaking, these are standard apartments that do not have luxury additions like a gym or hot tub. If you do buy a home with these features, it is your financial responsibility to maintain them, which can prove pricy.
What is a leaseback property purchase? Why choose one?
With a leaseback property, 100% of the home belongs to you, including the freehold.
When you buy a leaseback property in the French Alps, you can claim back the VAT (20%) on the purchase price, provided the property is new and is made available for rent on a commercial, fully managed basis. As you do not pay VAT, the property can be significantly cheaper than a home bought outright.
MGM then rent out the property for twenty years, on your behalf. They will manage advertisements, booking, repairs and all other maintenance of the property. In addition to a homeowner tax, you will pay a contribution service charge of €33 per square metre a year, which covers the cost of maintaining the property.
Another benefit of a leaseback property is that they typically come with leisure facilities: a gym, sauna, swimming pool, spa. So, when you stay in your ski home, you get to enjoy a hotel-like experience. This is possible because MGM manages the properties in a way that is not the case with a home bought outright.
How long can I stay in the property?
The potential downside of a leaseback property is that you are not able to stay there whenever you want. With MGM, you will arrange times in the year when you are able to stay in the property, and when it is being rented out. This will divided up between low, mid and peak season. If you do not have to abide by school holidays, then you will find significantly more freedom in how often and for long you can stay in the property. However, if you would prefer greater flexibility, then an outright property purchase will probably suit you best.
If it is primarily a rental property, can I leave my belongings there?
All ski properties come with storage that can only be accessed by the owner, should you want to leave your ski gear or any other belongings there.
What happens to the property after twenty years?
After the twenty years is up, the VAT has been paid back and you are free to do what you want with the property. You could move in full time, rent it out privately or sell.
If you would like to sell the property before the twenty year mark, you can. However, the next buyer would need to agree to continue the rental obligation. For example, if you chose to sell after ten years, they would need to agree to continue the rental agreement for another ten.
Ultimately, there are benefits and potential downsides to both outright and leaseback purchases.
If what you are after is flexibility in how often you can stay in your ski home, buying outright is probably the way to go.
While leaseback would better suit those keen to maximise their investment and take a hands-off approach to renting their property.