THE DREAM of owning a home abroad that will be a nice little earner remains exactly that for many people, who are put off by the prospect of organising week after week of holiday lets. Thoughts of lounging serenely by the pool are blighted by images of a dripping tap that needs fixing before the next planeload of clients arrives.

There is an alternative, however. From New Zealand to Sardinia or Spain, homeowners are handing their keys to holiday companies in leaseback schemes. That means that investors buy new properties in a holiday village or ski resort and lease them back to the developer (usually a holiday company). The developer then lets them as part of a package tour and the owner receives a guaranteed rent — on average 4.5 per cent of the purchase price — for the length of the lease, which is usually nine years. That is the theory, but how does it work in practice?

Ronald and Jackie Stubberfield bought a two-bed apartment six years ago at Pont Royal, between Aix and Avignon in Provence, from Pierre et Vacances, one of the biggest leaseback developers and holiday resort operators. “We bought it as an investment, with the added attraction of having an apartment we could use outside the main vacation period,” Ronald says.

Jackie adds: “The site has a golf course, tennis and badminton courts, archery and cycling as well as pools and a beach. We chose the site because it was the only one with stables, so Michelle, our 19-year-old daughter, could ride every day if she wanted to. She would go off and have a wonderful time, make new friends and come back only for meals. The other people there were predominantly French, which was a little tricky, but Michelle did try to speak French.”

They paid £80,000, with the added perk that ths sale was net of £15,680 VAT — an incentive offered to investors in France. Under leaseback, the owner is also relieved of regular maintenance and service charges. “We don’t have to pack DIY tools, gardening equipment or paint brushes every time we go — we’re on holiday the moment we arrive,” says Jackie. There are downsides, however, as she points out: “The rules do mean you can’t change anything in the apartment and put your stamp on it.” Nor can they leave personal items in the flat, so each summer the family has to pack up golf clubs, tennis rackets and other holiday gear.

Peter Allen, a psychologist from Herne Hill, South London, is buying a two-bed flat at the first Spanish Pierre et Vacances site at Bonmont on the Costa Dorada. He and his wife, Rosalie, already own an apartment near the French ski resort of Avoriaz but this is their first leaseback property. “We knew from our own experience of similar holiday resorts in France that they work very well: they are very popular with the French.

“Tarragona, the nearest town to Bonmont, is a beautiful place. The Romans loved it for its good climate,” says Allen. “I first visited the area when it was having a carnival and it was the festive spirit that really sold it to me.”

The couple’s children, Rebecca, 21, Mark, 17, and Joanna, 15, are keen tennis players. “They still come with us on holiday and I imagine will want to come to Spain. There are tennis courts, a golf course, pools and a free bus will take us to the nearest beach 4km away,” he says. Since he put down a 30 per cent deposit on the €200,000 (£138,000) flat 18 months ago, prices have already risen. “We expect to complete in June and the first tenants will arrive in July.”

In Italy the company is also building at Calarossa on Sardinia. Here, however, VAT is not refunded and prices start at €144,000 (£99,000) for a studio. The yield of 4.5 per cent includes a period in which owners can use the property themselves. In Bonmont you can choose to visit for three, four, six or nine weeks a year, although the yield falls the more you use it. Your return rises in line with building industry inflation — now averaging between 1.5 per cent and 2 per cent. And European mortgage rates are about 3 per cent. Most investors are comfortably covering their costs. “Owners have to pay the local property taxes but they are very low,” says Dario Nabavion, of Pierre et Vacances, “and they don’t have to pay any maintenance charges for nine years. At the end of the lease they can choose to sign another lease, keep the place for themselves or sell it.”

In the south west of France, Premier Resorts is selling apartments and villas from £246,000 at Domaine de Laprade. Yields vary from 3.6 to 4.2 per cent net of running costs.

In Turkey, which is preparing for an influx of foreign buyers as it attempts to enter the European Union, one developer is offering a more generous leaseback yield of 7.7 per cent. Prices at the Avsallar resort on Turkey’s southern Mediterranean coast start at £50,000 for a two-bedroom apartment in the hillside complex overlooking the sea. “The apartments are leased back to a very upmarket hotel complex,” says Len Orford of Playa Villas. “And owners can pay the income into the HSBC branch in Alanya, which is paying 21 per cent interest because of high inflation in Turkey.”

In New Zealand owners of apartments in the Heritage Building in Christchurch can buy a two-bedroom flat for NZ$375,000 (£142,000) and lease it to the Heritage Hotel for a guaranteed rent of NZ$772 a month (£292). Linda Aitken, of the estate agent Harcourts, says: “If the occupancy rate is high the flat would earn much more. And the hotel offers a bonus each year, which is expected to be approximately NZ$6,000 (£2,273). The service charge of NZ$6,066 (£2,294) is also paid by the hotel.”

LEASE OF LIFE

• Check you are dealing with a reputable company. If high returns are quoted ensure they are guaranteed and net of running costs

• Look out for hidden charges.

• Ask what happens should you wish to sell before the end of the lease and check what terms apply when the leaseback term ends.

• Obtain specialist legal and tax advice.

• Contacts: www.pierre-vacances.fr/immo; Playa Villas (Turkey) 01293 888866; Harcourts (New Zealand) www.harcourts.co.nz; Premier Resorts 020-8940 9406.

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