Your French Property offers a fully comprehensive service free of charge
Your French Property are specialist providers of French property to the overseas market. Whether you are seeking a leaseback investment, a holiday home or a permanent place of residence in France we can help. Due to our long standing relationships within the French property industry, we are able to cherry pick the best properties as they come on the market and represent the major developers and estate agents in France. Our dedicated team of bilingual staff are on call to help you locate the perfect property and to assist throughout your purchase, simplifying the process and helping you free of charge.
Frequently Asked Questions
What happens if the leaseback company goes broke?
When buying any properties there are always associated risks. However it must be stressed that in this case the risks are minimal as all the major management companies we deal with are established, some of them managing well over 100 developments.
It is always recommended to carry out your own checks before entering into a contract.
When do I get the VAT back?
This really depends on the property you purchase and we would advise discussing this directly with one of our sales consultants.
Can you tell me about the ROI (return on investment) how this is calculated, i.e. % of purchase price and is the leaseback offering the highest R.O.I,
The Return on Investment is calculated on the ex-VAT price. (Which is normal, as you are not paying the VAT). Some companies pay this quarterly, others annually, always in arrears. When looking at the yields offered by each different development it is important to remember that it is not always the highest yield that will offer you the best long term investment. For example an apartment sold in an 'up and coming' part of Paris with a yield of 3.5% would be a better investment than lets say an apartment in Normandy at 4.5% as the capital appreciation of the first outweighs the second considerably. You must not forget that this is a real estate investment that one-day you may want to sell. Usual Real Estate rules apply: location, location, location.
Why shouldn't I cut out the middle man and go straight to a site and buy one directly from the developer?
You are absolutely within your rights to do this! However, the prices we quote are exactly the same as on site and most importantly we take care of the whole purchase process for you: from translating documents, to dealing with the Notaries etc and this service is absolutely free. Also it is worth taking into consideration that many leaseback programs are sold out before construction has even started, in which case there's no site office for you to go to. In most cases the developers will not want to deal with individual buyers as it is far more hassle than it is worth for them so they will quite often refer you to the agents who are selling on their behalf.
Is the Management Company entitled to automatically renew the lease after the initial lease period is over?
Not unless a clause is inserted in the contract that specifically states that condition. We try our up most to only deal with companies who have favorable and fair contracts so this is not something we would advise our clients to sign. Just be sure from your notary or legal counsel that you are safe on this point. Be sure also whether or not you need to give notice six months before the termination of the lease.
Is the income we receive net of all charges?
Each leaseback contract is different so it is important to look at the individual clauses of each contract.
Typically, the leaseback company pays all management costs, repairs, maintenance charges, taxe d'habitation, electricity, water etc. Apart from the 'Taxe Foncière' (rates) and the frais de syndic.
Is the rent guaranteed?
Yes it is by contract, for the term of your initial lease. After that you can either renew another lease (normally at an increased rate considering we are 9 years further on). Or you have the option to exit the lease and manage the property yourself. The rent is normally paid quarterly in arrears again, depending on the contract.
What's the difference between 'investment' and 'pure investment'?
A 'pure investment' property is one which you will buy with no intention of ever spending time in it. This property represents an investment and is not somewhere you would probably consider going on holiday. These properties tend to be in city centers where there is a shortage of long term lease apartments and also tend to have higher yields.
An 'investment' property is one in which you would / could spend anywhere from 1-3 weeks per year or a property which would have a contract which would give you a large discount on the published catalogue prices, so that you could stay in your property at a reduced price.
What are the drawbacks of buying a leaseback property?
Firstly, there are a limited amount of leasebacks being built at any one time, also the French market has been buying leasebacks for the last 20 years and so are already very aware of what an interesting investment this is. Added to this the internal market can move more quickly than purchasers in the U.K so the best leasebacks are snapped up in a matter of hours. To reserve a top quality leaseback apartment one has to be ready to move very quickly, which means constantly being on the lookout for apartments and chalets.
On the practical side, there are two major considerations to take on board. The first is that this is a long term investment; even if you choose to not renew your initial lease contract you are still looking at a minimum of 9-11 years commitment. If not, you are looking at a 15-20 year investment which should not be undertaken lightly. Secondly, it is important to realize that although the property is your, and you are the free hold owner, you will be tied into a very rigid contract in terms of occupation and time spent in the property. If the contract state you have only 2 weeks occupation per year (to be spent at certain times) then this is what you will have to adhere to throughout the initial lease term.
How my property is managed during the Leaseback period?
The management company is responsible for finding tenants for your property, and even if your property is not rented out they are obliged by contract to pay you your guaranteed rental income. They are also responsible for all the maintenance of the property, wear and tear and upkeep of the furniture. They will contact you if there are any problems which arise, and your accountant will also act as a liaison between you and them on all financial matters.
Why pick Your French Property
We at Your French Property are specialist providers of the leaseback scheme to the English market. We are the longest running sole providers of leaseback developments to the U.K and as such we have built up long standing relationships within the French Market. We are now in a position to cherry pick the best developments as they come onto the market and represent all the major developers in France. In addition to this we make it a priority to check both the management company credentials and the builder credentials fully so that we can proceed with absolute certainty that each property we sell is a solid investment, now and in years to come.
Our dedicated team of account managers are all bi-lingual and are ready to advise clients every step of the way during the purchase process. From organizing the best mortgages to sourcing and liaising with bi-lingual solicitors, we pride ourselves that our open communication with both clients and suppliers keeps the purchase moving forwards swiftly and most importantly, straightforwardly. Most importantly we offer all this as a complimentary service to all our clients.
Why shouldn't I rent out my leaseback property myself?
The management company does an enormous amount of work on your behalf, which take a lot of time and effort. If you managed it yourself you would be responsible for all the maintenance for your property, including emergencies, change-overs, finding tenants etc. Yes, you could potentially earn a high yield however this would not be a guaranteed rental income.
When can I sell my property?
Your French Property makes it a policy to only work with reputable management companies which will allow the owner the freedom to choose what they wish to do with the property once the initial lease period is over. You are always the owner of the property, and as such own the freehold, however bear in mind that you are in a lease contract that runs for a minimum of 9 years (for leasebacks) or 3,6,9 years (for buy-to-lets) . If you wanted to sell before this time had elapsed, the new owner would have to take over your contract and see out the remaining years of the initial lease period. You would also have to pay back a portion of the tax benefit that you received at the outset, and may be asked to pay a penalty.
Is there a limit to how many I can buy?
Not at all, many people build up portfolios of leaseback or buy-to-let properties as this is an excellent investment. We would advise you to keep your portfolio diverse if you were in fact going to do this, which means choosing properties which are in different location (ski, south coast, city centre, Atlantic coast, Brittany / Normandy) as this will minimize any risk should the property market take a down turn in one of the sectors.
What types of mortgages are available and how do I get one?
Leasebacks are normally financed on a repayment basis rather than interest only over either 15 or 20 years. French banks are seen as quite strict in their loan terms, and non residents have to provide 3 months worth of bank statements and prove that their accumulated debts do not exceed 33% of their incoming finances. As a non resident in a good financial position you can expect to qualify from 75% - 105% LTV.
Am I responsible for paying all the bills or maintenance costs during the Leaseback period?
No, the upkeep and general maintenance is the responsibility of the management company. They are responsible for any wear and tear or damage to the property and are obliged by law to return the property to you in a 'reasonable state' which is defined in the strictest terms by the 'code of construction & Habitation' Unless the leaseback contract states otherwise the owner is only responsible for substantial damage to the roof and repair to the boiler.
All the utility bills etc are paid for by the management company, and your rents are paid net of all these charges. The only extra charges are usually what is called a 'tax foncière' (local rates) and annual accountancy fees as well as the insurance which is covered by the co-ownership syndicate and is mandatory in most cases as it is the building insurance. The tax foncière is usually not payable for the first two years depending on the commune and only represents a small annual tax, normally around 200-400 euros per year for a studio. By law an accountant must be appointed to fill in your annual tax return, normally fees are between 300-400 euros per annum.
Is it going to be one long headache after I've bought the property?
Not at all. Leaseback properties are financed with repayment mortgage, after a 20 year period, your apartment would be fully paid for and your capital gains bill would be zero and you will have kept all of your reimbursed. Your annual accounts are provided for you and you have no maintenance or tenants to worry about as this is taken care of by the lease management company. You would also of course benefit from 20 years capital growth.
What type of investment is it?
It is a medium to long term investment, and this can seem somewhat daunting to some investors. To make full use of the refundable Vat and to wait until your investment is fully paid off you should really look at investing for the full 20 year period. However you can withdraw from this agreement after the initial lease period is up, (initial lease periods last anywhere between 9 - 11 years) This means you can sell the property on the open market, use it as a holiday home, second home or your can rent it out locally when you are not using it. In this instance you would have to pay back half of your refunded VAT (if you withdrew after 10 years for example) but this may be a negligible cost if you chose to sell it as your capital appreciation would balance this out.
Why should I buy a Leaseback property?
Both seasoned and new investors alike are investing heavily in Leaseback properties, due in part to the refunded VAT, the guaranteed rental income, the fact that someone else is managing the property for you, in some cases the holidays you can take in the property which give you a sense of making the most of the investment and the way in which you investment brings dividends far enough down the line to make it an excellent pension plan.
Is a leaseback property similar to a time-share?
With a leaseback, you own the freehold to your property and are merely allowing others to use it for a set period. This gives you a guaranteed rental income, normally paid quarterly in arrears, a solid investment for the future and in most cases holiday occupation a couple of weeks per year.
Why do you get 19.6% VAT back on leaseback purchases?
The French government has given tax breaks to developers in order to encourage them to build 'Residence de Tourisme' developments. By allowing your property to be used for year round rentals you are greatly contributing the French tourist economy. This only applies to new build properties, however if a property has been renovated or refurbished then you would still receive a VAT rebate however it would be a percentage less than 19.6% and unfortunately this deal does not apply to any properties in Corsica where the VAT is 8%.
How do I know the management companies are reputable?
In the first instance all companies which Your French Property deals with have been thoroughly checked and their financial background and stability verified. We especially make sure that the lease contracts which we deal with are favorable and fair to the owners, and because of this there are some developments which we would not take on as they may have clauses in their contracts which we feel would not be beneficial to the owners.
