Completely false rental figures, Where do we stand?

[Elmay]

Myself and my partner put a deposit on a property in a new development in France with one of the top UK based French Property agents. We were looking purely for an investment property which provided decent rental income. We had no interest in a holiday home.

When we first contacted the agent about the property we explained our criteria for buying. They promptly provided us with a table of rental figures they had compiled for the development showing income of €32k per annum before management fees. I have this table on email from them. Based on these figures we put down our booking deposit.

It has since come to light that these figures are completely unrealistic and that we'd be lucky to get €14k to €16k per annum, before management fees. We promptly contacted the agent and demanded that our deposit of €14500 be returned. They admitted that we would be very unlikely to achieve the rents flagged to us before we put down our deposit.

It has been 3 months since we contacted them with no sign of our deposit being returned. We are being constantly told that the complaint is being looked into.

Do we have a case against them or is it our fault to have accepted their rental claims without further investigation. Do they any liability for the information they provided to us?, is this false advertising. We feel we were very misled and believed we were dealing with a very reputable agent with a lot of experience in the french property market.

All opinions on this matter welcomed

 

[ubiquitous]

Do we have a case against them or is it our fault to have accepted their rental claims without further investigation.

The latter, I expect. Caveat emptor

Do they any liability for the information they provided to us?,

Unless their legal advisors have been negligent, I suspect not.

is this false advertising.

Probably. That said, I doubt if this makes a whole lot of difference to the above.

 

[z106]

Myself and my partner put a deposit on a property in a new development in France with one of the top UK based French Property agents. We were looking purely for an investment property which provided decent rental income. We had no interest in a holiday home.

When we first contacted the agent about the property we explained our criteria for buying. They promptly provided us with a table of rental figures they had compiled for the development showing income of €32k per annum before management fees. I have this table on email from them. Based on these figures we put down our booking deposit.

It has since come to light that these figures are completely unrealistic and that we'd be lucky to get €14k to €16k per annum, before management fees. We promptly contacted the agent and demanded that our deposit of €14500 be returned. They admitted that we would be very unlikely to achieve the rents flagged to us before we put down our deposit.

It has been 3 months since we contacted them with no sign of our deposit being returned. We are being constantly told that the complaint is being looked into.

Do we have a case against them or is it our fault to have accepted their rental claims without further investigation. Do they any liability for the information they provided to us?, is this false advertising. We feel we were very misled and believed we were dealing with a very reputable agent with a lot of experience in the french property market.

All opinions on this matter welcomed

Ya - you learned an expensive lesson.
ALways treat any rental/capital grwth projections from someone with a vested interest with a pinch of salt.

They will probably come back with some cock 'n' bull story about how the rental market has changed recently.

 

[GDE]

I beleive there a certain regulations in the UK and Spain against putting that kind of financial advice on paper and not providing it especially without financial accreditation. check if they are a uk based company
It would have a lot to do with how they worded the email with the figures and if they claimed with certainty that this rental figures would be achieved.
You should contact a uk real estate solicitor if they are based there - the only issue is it looks like your buying off plan so you dont really have a case yet until the rental starts coming in

If your buying off plan in france bougyues immobilier are a good company, the last time I looked they had an off plan development in almost every city in france, their rental yields advertised are realistic (4-5%) and their paperwork is very protective to the buyer and highly regulated by the french government. I dont think however france is a great place to invest - low yields, low capital appreciation.

 

[Duplex]

UK legislation which might be applicable.


Estate Agents Act
The Estate Agents Act 1979 regulates the work of estate agents. Its purpose is to make sure that agents act in the best interests of clients, and that both buyers and sellers are treated honestly, fairly and promptly.


Property Misdescriptions Act
The Property Misdescriptions Act 1991 makes it an offence for an estate agent or property developer to make false or misleading statements in the course of their business.

 

[riviera]

Myself and my partner put a deposit on a property in a new development in France with one of the top UK based French Property agents. We were looking purely for an investment property which provided decent rental income. We had no interest in a holiday home.

When we first contacted the agent about the property we explained our criteria for buying. They promptly provided us with a table of rental figures they had compiled for the development showing income of €32k per annum before management fees. I have this table on email from them. Based on these figures we put down our booking deposit.

It has since come to light that these figures are completely unrealistic and that we'd be lucky to get €14k to €16k per annum, before management fees. We promptly contacted the agent and demanded that our deposit of €14500 be returned. They admitted that we would be very unlikely to achieve the rents flagged to us before we put down our deposit.

It has been 3 months since we contacted them with no sign of our deposit being returned. We are being constantly told that the complaint is being looked into.

Do we have a case against them or is it our fault to have accepted their rental claims without further investigation. Do they any liability for the information they provided to us?, is this false advertising. We feel we were very misled and believed we were dealing with a very reputable agent with a lot of experience in the french property market.

All opinions on this matter welcomed

The same thing happened with new builds here about 2 years ago. A company were giving hopelessly optimistic rental projections. The property rental company was left to pick up the pieces. 40 weeks a year at 700 Euro a week turned into about 10 weeks a year.

Ouch.

I actually went incognito to view property with one of the agencies a year ago. Interesting experience. They quoted figures from the INSEE (the French ESRI) that I couldn't find and they went on about how how their friends and family all had investment properties along the coast.

That company are pariahs now, at least where I am anyway. But presumably there's others at it too. They took 10% commission in their heyday.

 

[asdfg]

Why not ask you question on the following UK sites

www.fool.co.uk or

 

[budapest]

Unfortunately you don't seem to have carried out adequate research in this instance and if you've signed binding contracts, I don't think there will be any comeback.

Nobody can predict the future, which rental return effectively is. Unless a guaranteed rental agreement was signed, any suggestion of rental income is just that - suggestion. I'm sure the company never officially committed to any specific figures.

Never believe rental return projections from estate agents or developers. Always talk to unbiased local management companies and do as much local research as possible.

 

[threeticks]

A word for all readers and especially Irish property fanatics.

Property is not a regulated activty. Not in Ireland, the US nor in any country in Europe I can think of (please correct me).

What does that mean? It means there are no legal requirements placed on those people selling, marketing or broking property assets in terms of duties towards buyers/clients/customers.

That is just one reason why property is one of the most risky asset classess in which to invest even before you start gearing it up, as almost everybody invariably does.

Fair point Camry,
but, false or misleading information/advertising/claims would apply no matter what the product is.
These claims were used to entice the op into investing in this property.

Projected income im sure was the wording but, with in reason.

 

[Bronte]

OP says he paid a booking deposit, normally booking deposits are returnable. But I'm not sure in relation to English agents on a French property. Has a contract been signed? If you have is there any clause in there that allows you to break the contract. For example subject to mortgage. Other alternative is to walk away and lose the deposit if you can afford to and they can't pursue you.

 

[Pabloescobar]

When dealing with third party/middlemen/sales agents or direct with the Developer

It’s
Caveat Emptor ​

A few basic rules to remember when investing in property abroad:-

1. At least take the same level of care and caution when buying property in a foreign country as you would in the UK (i.e. employ a subject mater expert lawyer to advise/act on your behalf, as opposed to one recommended by a vested interest (VI), or rely on a commissioned sales person).

2. Take everything people with a VI’s (i.e. developer/sales agents or a lawyer recommended by them) say with a large pinch of salt and test their statements against factual/market reality, do your own due diligence (DD).

3. If the price/deal seems too good to be true it usually is. In fact focus on ‘value’ and the opportunity for it to increase, be added to and realised. Don’t fall into the common trap of comparing a property investment abroad with UK prices, as it is meaningless in assessing ‘value’.

4. Always take into account the cost of buying and selling when doing your DD. In places like Spain and the US these can be high and erode your profit or increase your loss. Also gain a detailed/realistic budget of the running costs of the property and taxes you will incur as an absentee owner. Investment properties abroad always cost more to own/run and generate lower income than budgeted for.

5. Never pay over your deposit unless you have a bona fide Bank Guarantee or it’s held in escrow. To pay the deposit into the developers/sales agents cash flow is to invite disaster, let other mugs do this and move on.

6. Take time to research what drives the market locally (both historically and currently) e.g. Take Florida as an example: Average annual property price rises in Florida historically being 3 to 4 % per annum and with 2004/05 being circa 15% and 27% respectively, and with interest rates being raised every month it was ‘buyer beware time’. Remember fundamentals need to underpin the market and locals/local economics can’t afford the prices wet back Brits seem willing to pay. There won’t always be a 'greater fool' to off load to.

7. Never believe that your property has gone up just because the developer is charging new buyers ‘fresh off the plane’ a higher price than you paid six months or so earlier. Resale’s abroad (especially where there’s overdevelopment and/or, a none existent/weak resale market), do not command ‘new property premiums’ and can take years to sell if incorrectly priced. Bulgaria is a classic example of where Brits have paid £50k for 2 bed apartments and think they’ve made £10k profit because the developer is selling the next phase at £60k, only to find they can’t even find a resale buyer at their original purchases price. Many also made the mistake of taking the developers advice to buy two units, one to keep and one to sell at a profit!!

8. Buying a property abroad is not a ‘passive’ investment; you’re starting a business the main asset of which in hundreds or in Florida’s/Caribbean’s case thousands of miles away.

Buyer beware!
Pablo Silver or Lead?