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FRANCE Leaseback


Les Terrasses d’Helios, Flaine In the popular ski resort of Flaine, less than an hour from Geneva airport, this leaseback development has one-/three-bed units from £201,000 with views over the Grand Massif. Guaranteed rental returns are up to 3.5% for 18 years. www.experience- international.com. 0207 321 5858.


have an approved list of developers. “If your developer is not on the list,


that company will need to be assessed and researched by the bank. This usually involves a hefty amount of paperwork,” says Baydonhill’s Thomas Foster. There is also talk that the French Government is producing a blacklist of management companies who have failed investors. As further reassurance, under


French law clients’ deposits must be held in escrow and cannot be drawn down by the developer until there is an insurance policy in place guaranteeing the build of the property. “Deposits are fully refundable pending mortgage approval. Whatever happens, the client either gets their money back or is delivered their property as promised,” comments Charlie Williams from eco- leaseback developers Terresens UK. The other big grey area with leaseback, in many people’s eyes, is how you will sell your property. Karl O’Hanlon, who runs Domaine et Demeure property company in the Languedoc, warns. “It’s not just the fl exibility over


usage that I’m dubious about. I see selling on as the big problem. You can sell when you want, through a specialist agent, but if it’s within the fi rst nine years the developer has the right to levy a penalty, the new buyer must take over your lease and the vendor has to pay back a percentage of their VAT rebate, according to how long they have owned the property,” says O’Hanlon. For Seamus McConville, an IT


consultant who runs the independent portal www.frenchleaseback.net for buyers to exchange views, information and advice, the best time to sell is after


38 A PLACE IN THE SUN APRIL 2011


Le Domaine de Rochevigne, St Emilion, Dordogne


This development has 85 one-/two-bed units starting at £155K, with a guaranteed rental income of 4.3%. The development is 15 minutes from Bergerac airport and has beaches, golf and water sports nearby. Terresens: www.terresens.co.uk.


the initial lease period is up. “Your property is worth far more without the lease than with it,” he says, citing his own one-bedroom apartment at La Tania, near Courchevel. “It’s worth about £130,000 at the moment, but as a freehold property on the normal market, I could sell it for £215,000,” he says. And to play safe, McConville says,


he would recommend buying a resale leaseback property rather than a new- build one. “That way, you can see what the running costs really are and how secure the management company is,” he explains. Buyers can also profi t from current discounts of resale apartments – and hence higher rental yields – on developments such as the Pierre et Vacances-managed Arc 1950, where “nearly new” apartments have been reduced by up to 20 per cent. Hidden costs are a common gripe among leaseback owners. One reports an annual owners’ tax of €800 (£684), annual building management costs of €500 (£427), plus solicitor’s and bank charges. “The extra costs not revealed


to us at the sales stage mean we will average a 4-6 per cent yield on the investment over its lifetime – stocks and shares would have probably paid the same with a lot less hassle,” the owner comments. Other complaints concern the


need to translate all documents into English, even though many French leaseback projects specifi cally target the British market, and the poor quality of customer service and slowness in paying rent, even from the biggest leaseback companies. Check also that the management


company is who you think they are and that the job hasn’t been farmed out to a third party, and confi rm whether the rental income you will receive is net or gross. Armed with all the right


information, leaseback can be a worthwhile investment. It will never be about getting rich quick but done properly, it could leave you with a lovely property that has paid its way (for up to 22 years) before being yours to enjoy as much as you want.


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