Profit from holiday homes: how it works
How sale and leaseback works
A buyer purchases the freehold of the property without paying VAT and leases it back to the developer for a period, often at least nine years.
The developer gives an annual rent guarantee, typically 3% to 7%, and at the end of thelease period the property is returned in perfect condition.
Each property usually has options for the purchaser to make personal use of his or her investment for a few off-peak weeks of the year at no cost.
Utility bills and general maintenance costs are paid by the developer but you would still have to pay local taxes.
How rent guarantees work
A rent guarantee is paid in monthly installments, usually from the last day of the month after a new build property is completed.
It is calculated return on the net purchaser price of a property.
Sometimes the rental guarantee som is deducted from service charges of ground rent, rather than forming a separate and specific payment.
Usually the owner can rent out a property and keep the income even if this overlaps with the period for which the rent guarantee applies.
