Resale of french leaseback advice?

I think your sales agent will value the property. Then it is up to you as the owner to put on the market at whatever price you think is correct or acceptable while bearing in mind what an expert in leaseback sales (if they really are !)has  told you.

I am also about to put my property up for sale but am just trying to decide on one of the online agents. I only know of two but I don't know if they have a "track record" of reselling leasebacks. Can you recommend a leaseback sales agent ?

To reply more directly about a selling price that you could achieve .... I'd say you need to market your property at a price that will give a buyer 6% to 8% gross return. As we all know there are many expenses to be paid annually by a leaseback owner. Perhaps a 6% to 8% gross rental yield could give the new owner a 4% to 6% net yield after expenses but before income tax. Also remember that buying expenses for a new owner will be up to 10% of the purchase price of the property.

I hope this helps.

Hi,

there is a property price register which gives the sale price of all properties sold in Ireland - is there any equivalent in France ?

I also would like to know of anyone who has sold a leaseback property without making a loss.

I know the houses sold in my resort have taken massive losses.

thanks 

Sinead

We are in process of selling at moment. But we are looking at huge loss. Lease is up in two years. We don't know if we are mad selling but we are fed up with hassle. We also think we should just run as we never know what's around the corner. Our lease is with odalys. Marty.

I considered this about a year ago, and although the sale price was reasonable (i.e. a loss I could live with), the commission required from the Agents (c.15-20%) made it not economically viable to sell.  If things are tipping along OK it's probably worth holding onto the property in the current climate.

If anyone has a proven faster/cheaper option for selling please advise.

Seamus had some advice on here some time ago - not sure if there is any updated information available form him?

I have my property up for sale with Sextant. Paid 142k and trying to sell for 80k. Might have to cut the price again as I just want out. Think the commission is quite high. They should lower it to bring down the price of the property. 

Hello,

Just wondering aside from the actual sale price of the property what percentage commission are the agents charging for leaseback sales.

Thank you

We are currently selling our propoertry with Sextant. Their commission is 12% of the net sale price. This seems very high but when you consdier what they do isn't too bad. Certainly better value than UK agents. 

Hi Stortfordhal , would you mind please advising as to the rental percentage return / yield you are currently receiving on your property ?

We purchased our property  for € 187,000.00 and based on our current rental return which is about € 2,000 per annum ( minimal to say the least )  

I calculate that  we would have to sell at  € 33,000 approx. to give a 7%  annual return to a possible purchaser ...  possibly I am incorrect in my understanding

of the situation ( which I honestly hope is the case ) and so am trying to compared like for like as it were ..

You'd have to sell at 28,571 to give a 7% return based on 2,000 income. Why do people sign on the dotted line for rent reductions that will render their property worthless and gives them negligible income in terms of mortgage payments. If you accept a rent reduction of this magnitude then you are signing your own death warrant. Your return now on 187,000 is just over 1%. You have no power over the management company if you sign their rent reduction offer.

Hi 

I bought my studio and apartment for 190,000 euro and if i want to sell them now with 6% yield , after paying 12,000 commission , I will get about 70,000 !!! What a terrible waste of money . Sextant want 12,000 to try to sell them .Surely things can only get better ....they could not possible get worse with these investments ....could they ? Could they become worth nothing ?

carol

Any investor who gets your apartment at that sort of discount will be very pleased with themselves.. They will wait till the lease expires, get rid of the management company and rent out the apartment for long term rental. This will bring in somewhere between 500 and 900 a month depending on location...so 6K to 11K PA..that doubles what the apartment is worth . if enough of you get together you can get rid of the management company yourselves and find another one at the end of the lease...You may have to pay back a proportion of the VAT refund which is designed to apply over 20 years.  There are lots of challenges and costs along the way (i.e. renovation and repainting)  but your apartment should ultimately be worth pretty close to what a similar non leaseback is worth in the same area. The trick is not to be forced into a firesale at the same time as everyone else... 

Any investor who gets your apartment at that sort of discount will be very pleased with themselves.. They will wait till the lease expires, get rid of the management company and rent out the apartment for long term rental. This will bring in somewhere between 500 and 900 a month depending on location...so 6K to 11K PA..that doubles what the apartment is worth . if enough of you get together you can get rid of the management company yourselves and find another one at the end of the lease...You may have to pay back a proportion of the VAT refund which is designed to apply over 20 years.  There are lots of challenges and costs along the way (i.e. renovation and repainting)  but your apartment should ultimately be worth pretty close to what a similar non leaseback is worth in the same area. The trick is not to be forced into a firesale at the same time as everyone else... 

One quick way to devalue your apartment is to sign a new lease with a rent reduction. Dwoodgate is right, you need to get rid of your management company by either forcing them to pay your full rent or to break your lease by issuing them with a commandement de payer  first and then cancel the lease for non-payment. The only way your property will have any value is if it is out of its leaseback status. This takes time and a group of like-minded people working together.

Another thing to bear in mind is that even if you break your lease, so long as you find a management company (and this can simply be an individual with a french company number whose main business is property management) which provides at least 3 of the "leaseback" services (e.g. key holding, cleaning, meeting guests) then you do not have to lose your leaseback (LMNP or LMP) status and therefore you will not have to pay back the VAT which was initally refunded to you.

Seamus

Yes, and this becomes a more attractive proposition for such a French company if they have a number of apartments to manage. This can happen if a number of people in a development band together, exit their lease legally and use this type of company. As long as your apartment is in a lease its value is inextricably linked to the paltry rent you are getting from French crooks.

Thanks for all the good advice . Unfortunately for me I was lead to believe that my leases ended after 9 years and I could get out then , so June 2016 . So I signed to accept 35 % less rent as I though it was only for a few months and then I could get out or else the management company would give up . However I have now been told that the management company is not going to give up and want to go on for another 9 years !!! So I don't know if the bit of paper I signed means my reduction in rent goes on for the next 9 years too or if I have to sign a new bit of paper for the next 9 years ? I have to take legal advice on this one as I believe others and I  were duped into believing the reduction was only for a few months and not another 9 years. 

I agree that it is MAD to sell at these ridiculous rates but when one cannot pay a huge mortgage one really has no choice . I am not going to sell but am going to try and fight my case and hang on as long as I can and just hope it works out for the better in the future . Most of my apartment complex (about 120) have not signed to accept the 35% reduction so I don't know how the management company will stay on or want to stay on paying the higher rates if they are "SO BROKE".....what a joke .

carol

If you do not give notice to cancel the lease then it automatically rolls over with the existing rent with it being indexed to INSEE or whetever your lease says. If you break the lease the company is entitled to compensation. You can get around this by forcing them to pay the full rent by issuing a commandement de payer. If they do not pay then you can have the lease broken for no payment by a judge. If everyone stuck together and did this then you could have some power over your apartments yourselves.

Thanks June ....makes me feel worse now as all the English paper work i have says after 9 years you can decide to quit the lease if you want to or go on for another 9 years !!!

i have already signed to accept to take 35 % less but as I said I was told by the management company secretary that it was until the end of the lease in June 2016 not for another 9 years . Guess I should not have believed her either !!. That is why i have to take legal advice as I believe I was duped into it amd was not clearly told how long it was for . I am sending off all my papers this week to the French Solicitor who i hope can help me to get out of this mess . So I guess I have signed myself and no one to blame but if i though or knew it was for another nine years I would NEVER have signed it . I don't suppose I can go back now and tell them i want the higher rent as they lied to me about the length of time I would be on the lower rent for ?

carol

Carol,

I am not a French solicitor and cannot tell you definitively.

Hi Juan 

ah thanks anyway ....it is all a big mine field .....very confusing for everyone in this situation .

carol

What percentage of the original rent is the new management company paying? 50%? Were your initial leases cancelled?

Well I have written to the French Ambassador this week to bitterly complain to him all about this scam . It is terrible .....have you ever written to him to complain ? I have also asked him for the name address, phone number of who is in charge of this in France as maybe they are the person we should be all taking a case against !. The whole property is devalued by this yield structure , so the Management Company is devaluing the property as well as not paying . I was told that mine would ONLY sell if it had a 6%yield and even at that it propably won't sell . I would like to speak to you about Residhotel as I am with them too . Do you have a phone number I could call you or you could call me ?

thanks 

carol

Well done Carol for taking a bold move and alerting Ambassador to what is hapening to our Irish citizens in France.

Thanks Mainstream  will let you know what he says ....that is if I get a reply .....are you in Andilly ? If so would like to talk to you ?

carol

Do let us hear if you get a response from the French Ambassador. 

I've been thinking of starting an online petition but am still not sure on a) what the goal is and b) who to address it to.

My own 'goal' (apart from going back in time and never getting involved!) is the following:

"Give owners of French leaseback properties, where it is clear that the basis of the sale was dishonest and misleading, and the financial and psychological well-being of these owners has been compromised, the option of having their lease cancelled without the requirement to pay 'back' VAT. "

And when I say pay 'back' VAT, the French revenue would never have received this VAT in the first place if the prospective owners had known the implications of a Bail Commercial and the meaninglessness of the term 'guaranteed rent', because they would never have bought the property at that price in first place.

What does anyone think?

Maybe a few of us visit the embassy !!!!!

If you finally sell your leaseback you will find the  expenses really high - everyone wants their slice.

6% agent (did nothing for it other than put an advert)

bank took fee for settling mortgage

notair took a slice (I know it should be paid by buyer, but they find some little charges)

site management took 1000+ euros and didn't say why

chaged 400 euros to have some mandatory legal surveys done (which seemed to be  some word processed forms). The company refused to show me the documents until I paid them, then didn't bother to show me after I paid

energy certificate

Odalys "forgot" to pay the last periods rent

I had no control over this as the notaire just paid everyone out of the sale price. If you ask for justification, or try to argue, you will be ignored.  I was just glad to get out.

I learnt the first rule of French life - everyone rips off each other.

Yes I agree, but at least the hemorraging of money stops. Signing a 50% rent reduction lease is ensuring that French crooks profit on your pain for another 9 years.

Hello SineadM,

Would you be interested in holding a meeting for a number of interested leasback owners and apply our minds to charting a way forward .I would welcome your thoughts and ideas.

Hi 

no reply as yet from French Embassy ....no sure if I will get  a reply or a two liner from some person who works in the office . Let you all know . Oh I don't know we could all go on Joe Duffy and then some of the people not on this forumn might phone in and tell what has happened since they defaulted ? I really think that we have all been made fools of and I do feel very bitter about it .

carol

The Joe Duffy liveline is just a show for (mainly Dublin) whingers and nobody in any position of power would listern to that irritating rubbish. In my opinion this scam needs to be looked at by Prime Time Investigates as it is international fraud and way too big for that clown Joe Duffy. I emailed Channel 4 some time ago but got no reply. Given how every French 'professional' is complicit in this scam it needs to be investigated by a show with gravitas.

Hi Mainstream,

the owners in my resort have had a number of meetings over the years and I find that the owners have different situations and therefore somewhat different agendas. I think many for example, want to sell, and therefore don't want to 'damage' the reputation of their property and so on.

Personally, I think Irish people (and others) that have been impacted by this 'scam' need to organise in some way. but there has to be a clearly defined goal. 

For my own part, I'm planning to put up a website and launch a petition for the French government to recognise the issue and a) allow the cancellation of leases without compensation due to operators and b) withdraw the penalty of paying the remaining amount of VAT on the purchase of the property.

What I would like to do is document on the site what's happened, and attempt to quantify the scale in terms of how many owners are involved, what the capital investment was and what the financial losses are, and also the psychological/stress impacts. Then when I have something concrete, try to take it to the media and also to the relevant French government department. 

I expect that the French will not respond in any significant way, but nonetheless I think that the message needs to go out there.

I'll post here when I have it up and running.

Feedback welcome!

Sinéad,

Good idea. I am happy to help in any way I can.

im in !!!!

Hi Sinead M,

Delighted with your response and energy & leadership that you are demonstrating. I speak to many Irish & UK owners weekly who are very irate with this leaseback situation in France.

If you could leave an email/ contact tel. no. I would be delighted to go into more detail with you.

Hi Mainstream,

I don't want to post my personal contact details on an open forum (Google will be all over it!) and there doesn't appear to be any way of contacting other members here. If you can figure it out absolutely we can touch base. Are you on Twitter ? If so maybe you could dm me @SnappynScrappy

Anyhow,  I don't want to set expectations as I don't have much time to devote to pursuing this.

But I'll let you know when I have a site up and a contact form on it.

cheers

My place is still for sale at a massive discount. Sextant fees are 10k plus vat.  My yeild when I bought it for 150k was 4% (6000k rent). It is on with Sextant for 90k. I think if they cut their comission and I cut my price a bit more it might sell. Thing is they do not have the let's make a sale/make the market mentality. So we will see if it sells.

At the end of the day it is all a scam and we are the victims and no one cares. Same thing happened my friend in USA.

If you have the option to not pay your mortgage, like my friend, and walk away, I would do that.

Good lucjk everyone. 

PS...

That should say Good Luck :-)

To SineadM . I would be very interested in joing too. I have already written to the French Ambassador in Ireland to complain to him about this scam and have asked him for the exact name and number of the person who is still in charge of this scam . I have not had any reply yet and if I do not get a reply I will write agin and also to the Department of Foreign Affairs here to ask them the same question. I agree wioth all you saY. If you get such a site up and running you/we/somebody needs to get on Joe Duffy Show to highlight and publicise the site so all that are not on this forumn will know about it and can join in and make a big impact. I only found out about this forumn last month so I would say that there are lods more like me out there . 

Let me know if you get it up and running .

carol

Excuse all tying /spelling , have hand in sling !

carol