A Place In The Sun - December 2007 - French Leasebacks
Posted on Friday, 21 December 2007 09:42AM
Question: I have read your article on Leaseback on page 43 of the October issue. I am considering buying a
house in France soon and have heard of a French government sponsored scheme called Para-Hotelerie. What
are the main provisions of this scheme and how does it differ from Leaseback. Where could I get a copy of
the full provisions of this scheme. Perhaps your readers may be interested in this subject as I have never
seen it described in magazine articles. THANKS
Answer: Leaseback is not a French government sponsored scheme. The management company which is
applying for the authorisation to run a Leaseback is not approved by the French government as a sound
company. In order to get the label of leaseback and the authorisation to run a tourist activity in the building,
the company has to prove to the Prefecture that a minimum of apartments in the building are leased out to
them and that a certain amount of commercial services are provided to tourists. A leaseback can be either a
Residence de Tourisme or a Regime para-hotelier. Therefore a para hotellerie is a form of leaseback. The
difference between the two different types of leaseback is the services provided to tourist renting out the
properties (for example, the provision of breakfast facilities, room booking service, presence or not of a
restaurant etc…)
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Get good legal advice
You might not be able to sell for the term of contract.
The tenant may not leave.

SALE AND LEASEBACK TRANSACTIONS
These are known under various names such as "nouvelle propriété", "propriété allégée" (sale and leaseback) etc. These should not be confused with timeshares and are usually of new property and generally follow the system of sales off plan referred to above.
Properties sold subject to the leaseback scheme are often marketed as being sold with a "discount". Great care needs to be exercised as there is no "discount". There is, however, an immediate leaseback to the developer or to an associated company of the developer under a French commercial lease thereby making it possible to clawback TVA at 19.6% of the purchase price that would otherwise have been payable.
This clawback of TVA is therefore the greater part of any "discount" offered. In consideration of the commercial leaseback, the developer will often furnish the property, insure it, pay the outgoings, etc., and will permit the owner to use the property for say six weeks during each calendar year (such weeks being reserved in advance). Some schemes sometimes also offer an additional "discount" in the shape of a single rolled up rental payment for the full period of the lease (usually 9 or 11 years); other schemes offer a guaranteed percentage return on rental or some other formula.
These leaseback schemes are complicated and during the period when the commercial lease is running (9 or 11 years), it can be very difficult, for complicated legal and economic reasons, to resell a property purchased under this system. Furthermore, under the French system of commercial leases, there is no absolute guarantee that the tenant will relinquish the property at the end of the lease without an indemnity being payable by the landlord/owner.
You must obtain detailed and specific legal advice if you are considering one of these products.

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The difference is that the money in a bank account never increases in value (assuming you take the income). The value of a leaseback property increases in line with building price inflation of say 2% per annum. This provides some hedge against inflation, which otherwise diminishes the value of a cash deposit. The income can, of course, be used as such or invested elsewhere.

I have just logged onto this website following a dispute over the Leaseback I purchased sometime ago and was hoping others may have experienced the same problem as I and may be able to offer feedback.

I have recently found out,not been informed by the management company that my rental hasnt been paid since last August due to a dispute over the property registration.(Im already lost here)

I have also just found out that the management company in question have suspended all future rents until further notice.(Great)

I am now at a loss who to persue being all French agents and the mangement company seem to have gone silent.

Has anybody else suffered in this way?

Wayne

have just logged onto this website following a dispute over the Leaseback I purchased sometime ago and was hoping others may have experienced the same problem as I and may be able to offer feedback.

I have recently found out,not been informed by the management company that my rental hasnt been paid since last August due to a dispute over the property registration.(Im already lost here)

I have also just found out that the management company in question have suspended all future rents until further notice.(Great)

I am now at a loss who to persue being all French agents and the mangement company seem to have gone silent.

Has anybody else suffered in this way?

Wayne

hello I am new to this forum and I just wanted to say that there are many problems with the leaseback property in France. Some crooks are managing the residences and have decided to reduce the rents to be paid to the owners or to ask them to pay some extra costs (charges) or not to pay them any rent...
A group of owners has been created -- groups google --Invest-RT --, I am part of it, and we are trying to act for all of us (the owners of such leaseback programs with problems). We do not charge any one, we are volunteers and we live in different part of France or Europe... but all invested in a Residence de Tourisme and most of us have troubles with the property.
Several real issues have been flagged out. We are fighting for a good cause: our flat and our money. A good cleansing need to be done. Several meetings have been hold with the French government. The first proper step from the government is to extend the delay granted to the owner to find out a new managment company when the first one did not do the job properly or dissappeared: from one month to twelve months.
Second step will come in a couple of months.

In the mean time, if you are already on the leaseback property market, and you do have any kind of problems, please freely contact the group, try to post request on the web/forum, find other owners in your Residence de Tourisme ... seek advices
Don't stay alone.
If you are not on the leaseback property market, escape for the moment...
We also create an online petition (131007)
Please sign the petition it is important, it will be handed to the government.

Thats really good,can you share the specific web address and Ill put on the forum for my development and maybe get some more interest

Wayne

I'd like too but I am not yet "allowed" to post url / website on this forum
try on google groups / Invest-RT
and for the petition, try petitiononline follow by com and then just add / followed by the code given above

That sounds real bad for you guys. svrunner and wayne.

It is worth definately checking out the credibility of the management company. Ideally they are one of the big four players in the market.

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you are still LUCKY you are in EU, think if you face this in some Asian, fareast, middle east , any way GREAT JOB by SVRUNNER, can any body sine petition?

Basically it is "BIG fish ,,, small fish" game i saw some reports about UK also BY BC,,,