Buying property in France may be a costly tangle of red tape, but that doesn’t seem to deter the Britons who own more than 200,000 properties there, according to figures from Rightmove.com. France’s obvious attractions combined with low property prices would seem to be an effective analgesic for the headache induced by VAT, wealth tax (see right), residents’ tax and legal and agency fees.

If your dream is to buy and renovate a rundown farm, an element of expensive hassle is inevitable. But if you’re seeking a holiday home that doubles as an investment, France’s leaseback scheme, which offers tax breaks on the purchase of buy-to-let properties, is an attractive option. The quality of leaseback developments varies, but more luxurious ones are becoming more common as the purchasing power of the pound grows. The Canadian resort operator Intrawest has spotted a market in France, and is now building its first nonski resort there.

Domaine Haut Gardegan is currently 260 acres of lush meadow nestling among the vineyards of St Emilion in Bordeaux, France’s food and wine capital, 5km (3 miles) from the border with Dordogne. The site is overlooked by the 11th-century church of St Martin de Gardegan, from whose belltower one will soon be able to watch 425 flats and villas springing up to form a new village with shops and a market, designed by Eldon Beck, the architect of Whistler and Tremblant in Canada. There will be a golf course, spa, swimming pools, tennis courts, forests, a cooking school and terraced gardens.

Building will start this year on Castel de Bellevigne, a smart block of 129 one, two and three-bedroom flats. The style is traditional — all wood panelling and coffered ceilings — in keeping with the two old buildings on the site, a stable block and ruined house built in 1820, which will become a restaurant. “We are using white stone and stucco plaster throughout, and traditional tiling,” says Benoit Delaby, of Intrawest.

Prices range from €300,000 (£203,000) for a one-bedroom flat of 450 sq ft to €900,000 for a three-bedroom flat of 830 sq ft. As with all leaseback developments, they will be fully furnished and managed. Owners may stay for up to five weeks a year, paying rent at a discounted rate.

Those prices are high for the area, says Trevor Leggett, of Legget Immobilier in St Emilion. “We just sold a magnificent five-bed turn-of-the-century château with a pool and two hectares to an English couple for €750,000. No matter how luxurious a new-build development is, it’s never going to compete with an old stone farmhouse.” He admits, however, that the tourist rental market should be strong: “There is a huge shortage of hotel space here.”

The thought of holidaying in a new development pretending to be an old village may not appeal to all, but at least Intrawest is avoiding the “gated development” trap. “Everything is open to the public. We are trying to create a real village, not a sterile gated community,” says Delaby.

St Emilion has one million visitors a year, yet few hotels. Domaine Haut Gardegan, ten minutes’ drive away, intends to plug that gap, and will also cater for conferences. So is it a good investment? The rental potential is excellent, with a ten-month season, an incomparably beautiful location, easy access to the world’s best vineyards (among them Pétrus, Margaux and Latour), 49km from Bordeaux airport. However, there is no guaranteed rental return: the owner receives only 30 per cent of the pooled rental income, as well as paying an annual “club fee” of €1,500. The remaining 70 per cent is kept by Intrawest as a whopping maintenance fee.

That doesn’t compare well to other developments. Jonathan Mann, of Assetz France, cites a cheaper development in the Languedoc, Domaine du Golf, where owners can use their flats for up to six months of the year and receive 60 per cent of the rental pool.

Joanna Yellowlees-Bound, of Erna Low, Intrawest’s agents in Britain, is adamant that Domaine Haut Gardegan should still bring net returns of “about 4 per cent”. It remains to be seen whether investors will be convinced, but certainly the location and luxury appeal will prove a strong draw for wine-lovers worldwide. Erna Low Property: 020-7590 1624 www.haut-gardegan.com, 00800-0800 2020 Leggett Immobilier, St Emilion, 08700 115151

LEASEBACK

The purchaser buys the freehold and leases the property to a management company to let, usually with guaranteed rental returns. The buyer has limited use of the house and is exempt from the 19.6 per cent VAT payable on French property transactions, provided that he does not use it as his primary residence and lets it for 20 years. After 15 years’ ownership, capital gains tax is also cancelled.

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