french investment

shiredeon

I have been pointed in the direction of the following company's site, if anyone has the time to take a look i would greatly appreciate their comments, thanks

https://www.premierfrenchleaseback.com

Techno

We've looked at these leaseback schemes in both France and Switzerland
The main downside that we can see is that if lots of people are buying at the same time - they may also want to sell at the same time (once the property has been held for sufficient years to ensure that VAT doesn't need to be paid back) but apart from that they are popular - a bit more expensive than buying an apartment direct but you know that the management ( and associated fees) are covered and there is some return on your investment

Shimrod

I've looked at these in the past, and decided against them. First up is the potential risk on exchange rate movements, especially if you are taking out a mortgage to purchase. Unless you are putting down a big deposit or buying outright, the rental income is unlikely to cover all mortgage payments and other costs - I seem to recall that even with a 25% deposit breakeven point was between 9 and 11 years depending on yield.

Also, in French law, the maximum lease you can take out with the management company is 11 years, but you need 15 to be clear of capital gains tax. In this first lease period, the management company will bear all maintenance costs, but after that the cost is shared with the property holder - supposedly offset by a renegotiated rent (the management company get first refusal on a subsequent lease - property laws are very much in favour of the renter in France).

If you are attracted by the potential for large capital growth, it may be worth doing some research on resale of these lease properties - I could find little for resale, so the projected capital value may need to be taken with a pinch of salt.

On the plus side, the schemes were initiated by the French government and they provide guarantees in case of management company failure.

I have an offset mortgage, and after running the figures through Excel, found offsetting savings against that gave a better return.

Shim

shiredeon

Thanks techno,
The downside for me is it would be purely for investment as we already have property in france and i have no interest in modern or new build property as they most seem to be.

shiredeon

I tend to agree shimrod, i could purchase outright but i still feel it would prove inflexable in the long run.