Myself and my partner put a deposit on a property in a new development in France with one of the top UK based French Property agents. We were looking purely for an investment property which provided decent rental income. We had no interest in a holiday home.

When we first contacted the agent about the property we explained our criteria for buying. They promptly provided us with a table of rental figures they had compiled for the development showing income of €32k per annum before management fees. I have this table on email from them. Based on these figures we put down our booking deposit.

It has since come to light that these figures are completely unrealistic and that we'd be lucky to get €14k to €16k per annum, before management fees. We promptly contacted the agent and demanded that our deposit of €14500 be returned. They admitted that we would be very unlikely to achieve the rents flagged to us before we put down our deposit.

It has been 3 months since we contacted them with no sign of our deposit being returned. We are being constantly told that the complaint is being looked into.

Do we have a case against them or is it our fault to have accepted their rental claims without further investigation. Do they any liability for the information they provided to us?, is this false advertising. We feel we were very misled and believed we were dealing with a very reputable agent with a lot of experience in the french property market.

All opinions on this matter welcomed

I think that you need to read the smallprint very carefully.

Yields always depend on a vast number of variables, most important of which is how good your management agent is. No one without a crystal ball is ever going to be able to get a truly accurate figure as to what rental income can be expected.

In my opinion, every developer makes unreasonable claims about the potential rental income of a property. But usually they cover themselves with a line about 'for illustration purposes only, results may vary, blah, blah, blah'.

Everyone should do their own research on rental yields before investing if this is going to be important to them. It's really not that hard to do.

First find out what equivalent properties are renting for. Just Google 'apartment rent <location>' and look for the prices that properties similar to yours are renting for.

This is also a good method of finding out if your management agent is any good. If you do the same Google search and your agent is nowhere to be seen, start worrying and think about using whichever one comes up in the top positions.

If you are really prepared to do your homework, then make enquiries about competing apartments in the area to find out what availabilities are like. If you find that a lot of the apartments are fully booked, you're onto a winner. If availability for most of the apartments is high throughout the year, then you should start getting nervous.

In summary, I am afraid to say that you were a little naive if you based your finances purely on what was advertised by the developer.

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EGYPT REAL - Your One Stop Shop for Hurghada Property

Author of: Propertastic's Complete Guide to Hurghada Property and Egypt's Red Sea Riviera Real Estate

Just out of curiosity, which agency did you buy through?

Might prevent others being caught up in the same situation.

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Yes, I work for a Real Estate company doing market research and analysis but I'm not involved in sales.

Have a nice day

Taking advantage of people seeking to get rich quick, developers and agents have often claimed greater than market rental figures. Often rental guarantees are worked into the selling price.

To avoid falling into this snare, take the following precautions:

1 -- Look at what other developers offer in the same area.
2 -- Make a mock attempt to rent a property in the area.
3 -- Check the vacancy rate of rentals in the area you seek to buy.
4 -- Never make a deposit on rental income properties before doing so.

As to if you are covered in your contract -- send it to me and I can look it over for you. Unless you are covered in your contract, if can not prove that the agent or developer made false claims with intention to do so, or such claims were way out of line, you may have little or no case whatsoever.

This just goes to prove that only you and your independent soliciter will have your best interests in mind.

My question to you, is why would you believe any one.
Second in business, if things are not written down, and in a contract what legal position do you have.
Three you are working in a country outside your own.
Four, kick up a stink, and get a good lawyer to sue their ass
Legally you probably have little chance, morally you do, but unfortunately most morals in business are left on the toilet seat.

Personally think you are quite stuffed but at least try to get your money back or get some big chaps to do it for you. Debt Collectors.

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Goldberg Global,

The problem is not with rental guarantees. These often can be worked into the prices of the product. It is what happens after the period of the rental guarantee that is important. What will the investor get two, three or four years down the line. If an investor recieves a 12% rental guarantee, but the market provides for a mere 6% the investment is a poor one. First, the client financed the rental guaurantee in the purchase price. Second, the expected future income will not be forthcoming.

In this case the contract may be fine and the developer may abide by all the terms of the contract, but in reality the client is getting short changed.

This means that before buying a rental property, do not look only at the rental guarantee but also at the local market. The main question should be: Does the local market support the develoer's claim at present? Is the market a trend or seasonal market or is it a stable market? -- What is true today, may not be true tomorrow!

Dear Tim10,
To sound blase is that not obvious to check the real market rate before investing.
Yes developers do add on rental guarantees in some locations, in others no, the question should be market rate of course, and ideally a seperate company to the developer renting, ie. a professional company.
Most people or serious investors would always check market rate before putting their money in, and not believe all they are told by the seller with a vested interest.

The rental guarantee needs also needs to be checked who is guaranteeing, their solvency etc, but reality is of course the market always determines if it is a good yield rent area or a dog.

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I think Elmay has learnt the hard way, being hit in the pocket, ouch, sorry to hear that, and hope you can get better rental figures. - via marketing etc

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Agreed! I think we are saying the same thing.

Wow, like the sheep wondering in the woods and the big bad wolf decides they want to eat the sheep.

Like in everything in life TRUST and VERIFY is a safe couple of words to live by.

I listen to NOTHING of what I hear and only half of what I see. I don't ever want to go for the ride of my life that has no benefits to me EVER.

You can't be careful enough in a foreign country. Remember that the Real Estate Broker makes NOTHING without a sale. Most times telling the truth does NOT bring a sale.

If it is too good to be true it is probably too good to be true. I can go on and on but the bottom line is NO ONE is looking out for your best wishes but yourself and YOU didn't do a good job.

Escott