French Property Lease backs

Reaper

Yes I agree it is unsuitable for this particular investor as he would be putting all his eggs in one unregulated basket.

colsten

With the prospect of Britain leaving the EU, it would be a very brave decision by a private investor to buy property in the EU. Even if you understand the current legislation and tax implications (do you?), nobody can tell you what a Brexit would mean to your and/or your heirs' investment.

bigadaj

Sounds a bit timesharey to me. Or the airport parking slots option, student lets etcetc

Would also be interested to hear where this was heard about first.

Sam_J12

I agree with the sentiment of the other posters about being very wary.

But perhaps you can provide more details. What companies are you dealing with? What are the terms of the investment? How much are you investing? What is the return?

dunstonh

A broad view from the regulator is that unregulated investments are only really suitable for wealth investors who dont mind putting no more than 5% of their investible wealth into such things.

It sounds like you would be way over that.

kidmugsy

Dear Chaps,
A nice American has offered to sell me a bridge his family owns in New York City. What do you think?

Iain-Le-Roi

Hi everyone

Thanks for all the responses. I may be underplaying my financial situation a bit. I do have two UK properties with substantial capital, and a S&S pension that a I pay a decent amount into every month. I certainly wouldn't consider myself wealthy or "an investor" though but can afford the odd holiday in the alps as one poster eluded to.

The system isn't time share-ie at all. You own the property 100% but on a mortgage as in the UK. The French government offers all VAT back (@20%) back to new build lease investors so the mortgage companies see this as capital meaning you can get around 90% LTV and not need to invest much capital. You own the freehold apartment but then lease the apartment back to the management company for a contracted 10/11 year period. They take all the profit for the rent but pay you a contracted yield back. For the larger "safer" companies its only around 4-5% but it would cover most of the mortgage payment (and you can fix mortgages for 20 years) meaning that if the company stays solvent then they are contracted to pay you a yield of 5% per year for the term you have leased it to them regardless of what they need to spend on it or whether they rent it.

They only build in places where rent is guaranteed though i.e central and next to lifts etc. They take all your profit but you don't have to do anything and have a known (assuming all stays well) amount each month. They do all the maintanence etc. Here are a couple of articles on it:
https://www.aplaceinthesun.com/news/feature/tabid/131/EntryId/2274/page/1/French-leaseback-homes-the-pros-and-cons.aspx
http://www.telegraph.co.uk/finance/property/expat-property/11532549/Expat-property-Buying-a-slice-of-Alpine-life-in-France.html

To me it seems a decent bet if you use a larger company and are prepared to wait out the long term.

I have been talking to this UK based broker/investment company but don't know a great deal about them. They have good online presence and longevity as well as published books on the subject - http://www.leaseback.co.uk/about.html

It doesn't seem that well known but does seem legitimate. I would obviously see things "built" and "in the flesh" first.

cheers and glad to have sparked some debate

ILR

Iain-Le-Roi

kidmugsy wrote: »

Dear Chaps,
A nice American has offered to sell me a bridge his family owns in New York City. What do you think?

hmmmm ....... :T

Iain-Le-Roi

Reaper wrote: »

I don't want to come across as a supporter as I would not invest in it but neither would I automatically exclude it.

For example you would probably be willing to buy shares in Centre Parks, in which case buying a leaseback cottage managed by them might not sound so outlandish.

Centre Parks is actually one of the recommended ones as the yield is particularly good as its year round/non weather dependant. The exact same leaseback scheme applies to buying centre parks property in France. It is a government scheme.

Sam_J12

Hmmm, thanks for providing more details. Does this mean the yield is 5%? I think you would be better off putting the money in S&S instead - much more liquidity and if you are interested in a 20 year period (based on the mortgage term you mentioned) then I think the markets are almost guaranteed to give you a better than a 5% return.