FRANCE Leaseback
deposit necessary to buy a house in France,” comments Thomas Foster, international mortgage consultant at Baydonhill FX. It depends on the project, but
St Endreol Golf & Spa, Côte d’Azur A well-known golf and spa resort 45 mins from Nice with an established tourist residence. The
leaseback deal offers up to 4% guaranteed rental yield with no
occupancy. Two-bed apartments start at £244,000.
Erna Low:
www.erna
lowproperty.co.uk.
French banks will typically offer loans of around 80 per cent loan to value, with fi xed rate deals of around 4.5 per cent. Athena
Mortgages.com has repayment products of up to 100 per cent loan to value for leaseback properties. Shop around for the best mortgage to see if the leaseback company’s preferred lenders are really giving you the best deal. Part of your due diligence should be looking thoroughly at the underlying business plan behind a leaseback project, checking that the guaranteed rental returns are realistic. Typically, a 50/50 split of the net revenue with the developer will give owners a four to fi ve per cent yield – you need to ask if that is based on sensible occupancy levels and sensible rental rates. One project promising big returns is Domaine de Lavagnac, the £425- million redevelopment of a grand 17th-Century Languedoc chateau near Beziers. The developers, The Frere Group, is promising seven per cent guaranteed rental returns, based – it says – on the fact that this is an unusually large leaseback development (650 properties compared with the usual 30 or so) and the fi ve-star facilities, which include a championship golf course, France’s biggest spa and the biggest conference centre on the Côte d’Azur bringing year-round business. It remains to be seen whether they will deliver, however, as the project is delayed in breaking ground. Many leaseback developers have
been forced to hit the brakes during the downturn or failed completely. When this happened at Aiglon de Morzine in the French Alpine town of Morzine, the 12 leaseback owners didn’t bother with the hassle of a lengthy legal battle – they simply took over and now run the management company themselves.
Among the owners is Joanne
Yellowless-Bound, CEO of ski tour operator Erna Low, who says that despite being thrown in at the deep end, the experience has not put her off leaseback. “Quite the opposite,” she says.
“It’s a great concept, especially for ski properties that owners only want to use for a couple of weeks a year and rent out for the rest of the time. Leaseback is a good solid investment and the British are returning to the market as many developers are now offering far more choice.” The success of a leaseback scheme depends almost entirely on the quality of the management company providing the rental guarantee. “Some rental companies have struggled to provide the yields they contractually agreed with the buyers, so they have gone into liquidation or reduced the yields considerably,” says Patricia Fevrier from A Place in France. “This leaves the owners with little
choice as they are committed to the lease for at least the fi rst nine years of
ownership. Leaseback developments built and run by professionals who know what they are doing are riding the downturn well,” she says. “But you must check on the experience of the developers. Not all are offering a secure long-term way of investing.” So how can you know if you are dealing with a respectable company? One answer is to stick to leading names such as Pierre et Vacances, the biggest operator in the market. Odalys and Mer Montagne Vacances (MMV) are others, with MMV around for 28 years and the second largest provider of accommodation in the French Alps. Simple Google searches will identify who provides a good level of service. “With smaller, boutique companies,
buyers need to look at their credentials far more thoroughly and really do their due diligence,” says Joanna Yellowlees-Bound, although she is confi dent the worst companies have been fl ushed out of the market during the recession. Your bank can also help. When
applying for a mortgage, the bank will
Typically, a 50/50 split of the net revenue with the developer will give owners a 4-5 per cent yield – you need to ask if that is based on sensible occupancy levels and sensible rental rates
Hameau du Kashmir, Val Thorens 2300
This is the highest ski resort in Europe in the 3 Valleys ski area. Two-/three- bed eco-friendly units are available from £235K, with three lease options and up to 3.82% guaranteed rental yield.
Erna Low:
www.erna
lowproperty.co.uk.
APRIL 2011 A PLACE IN THE SUN 37
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