Has Anyone Ever Sold a French Leaseback?

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OverseasCafe

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This query comes after questioning many agents on the saleability of leaseback properties. They virtually all say that they can be sold and that there is a strong market for them, yet when I've asked them for a case study I've been completely stonewalled.

Even if they can be sold I would have to question the ability to gain any real capital appreciation from them (even in the good old days when capital appreciation was more than a concept) as, it would result in a drastically reduced rental yield, which can't be good.

So, if there's anyone out there who has successfully (or otherwise) sold a leaseback property I'd love to hear how they got on.
 
I think most people buy them for the medium to long term as the benefit of recouping the vat is lost when you sell them quickly,but i am sure someone is out there as they have been around for a while now ?
 
Leasebacks have been sold in some volume in Ireland since 2000, in that period I'm sure someone must have, at the very least, tried to sell one.
 
OverseasCafe said:
Leasebacks have been sold in some volume in Ireland since 2000, in that period I'm sure someone must have, at the very least, tried to sell one.
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You must be right OverseasCafe, someone must have tried to sell one. 48 hours now and no response though. Could it be that French leasebacks are at the (crowded) smoke-and-mirrors end of foreign property "investments"
 
I suspect there is no shortage of people who have tried to sell a leaseback, but they may not have been hugely successful, either failing completely or having to take a big hit on what they paid. Either way, Irish people who fare badly when selling property don't generally like to talk about it too much. Which is a great pity, because it could prevent others from making the same mistakes in future.
 
I'm not sure what your point is here.

A leaseback construction by definition requires a long term investment. If you really want to flip a property you'd probably be better off buying it outright, paying a rental agent yourself, and then selling it. I mean getting a little bit of VAT relief on the purchase, or a reduction in capital gains tax when you sell, isn't going to make a significant difference as to whether a 10 or 20 year investment is viable or not IMHO. There are so many other ownership constructions that you could look at to make an investment tax efficient e.g. setting up your own holding company, moving countries, partial ownership in a partnership, owning assets in a personal pension fund.

In many ways a leaseback looks to me like buying a normal 10 year or long term bond in any manufacturing company, or investing in a container ship.

You put in an amount of capital and in return you get cash back in regular coupons. And you need to be comfortable about the managing agents as well as the underlying source of rental income.

There's no magic here: if the real rental income isn't there then there isn't going to be any cash to pay off the coupon. And if the underlying property prices in the area don't rise you're not going to make capital gains either.

I personally wouldn't enter such a leaseback scheme, but isn't it inherent and clear from the construction that holding to maturity is required, that an early sale will probably lead to a loss, and that this should be clear to anyone spending more than 10 minutes looking at the deal?

A quick search on "leaseback France" via google and clicking on the top 3 sites should warn you sufficiently about this. To be fair I found all 3 sites to be very up front.

One even writes: Leaseback is really nothing other than a self-invested pension scheme. You wouldn't try and flip your pension fund, would you?

So what's your point / complaint?

disclaimer: I have no interest whatsoever in any leaseback scheme or property company (except for owning shares in property funds and companies trading publicly on the stock market).
 
The point is that French leaseback schemes are, and always have been, the lemons of the foreign property sector. The purchasers were, in the main, looking for a status symbol foreign property and thought they had found a cheap way to keep up with the Jones of Celtic Tiger Ireland. I believe that knowledgeable property investors would not have touched them with a barge-pole. You only have to look at other posts in this forum to see that rental agents and promised rental income are disappearing at an alaming rate. The properties will, for the most part, be impossible to sell because the are not attractive to local buyers. Without wishing to be a Cassandra, I think that the experiences of Irish buyers of French leasebacks, Eastern European apartments and anything in Dubai will provide ample evidence for the need to regulate the way in which foreign property is sold to inexperieced investors.
 
Sorry, but I still don't see your complaint with the French Leaseback system in general. Posters seem to be painting the whole Leaseback construction as being somehow fraudulent or doomed to failure, whereas it has clearly worked in the past for many investors in France. Even though your personal opinion is that they were and always will be "lemons"

OK there may be some rotten companies out there like there are in any investment space, there may be some investments that are not returning because of adverse markets, there may be people who have made a lot of money through commissions, and there may be a need for more regulation regarding the sale of property as a financial product in Ireland.

But holding out to maturity is still an option for a lot of holders of this product, just like in any other pension scheme or long term investment.

The Leaseback construction itself is apparently still popular in France, and I see no evidence of any way in which Irish investors are either locked in or out compared to French investors.

IMHO It doesn't appear anywhere near as scandalous as the endowment mortgages and pension mis-selling in the UK or time-share apartments in Spain and elsewhere in the 80's.

Where I live, when you buy a house with a mortgage it is mandatory to have to sit with a notary public who happily reads the contract to you word for word (at your cost). And if you don't understand the local language sufficiently they'll helpfully provide a translator to go through it even slower (again at your cost.) And if the notary is not convinced that you understand the contract you will not be allowed to sign until it is explained to you by a lawyer (at your cost).

Is this what you want?

Or should investors be allowed to invest in a variety of products and be expected to retain their own financial advisers and do their own due diligence?

Because you will pay for this increased regulation one way or another.

Me suspects that this is a bit of a populist witch hunt and that there are other things that require much more urgent attention from the financial regulators.

Like why the World-wide banking system is largely insolvent.
 
I don't think French leasebacks can be compared to purchasing in the Baltics or Dubai. I believe they are purchased by Irish people who want a holiday home with none of the hassle of renting which the French leaseback scheme provides. There is no great capital appreciation but it's not that type of market (it seems to me). It's only for amateur investors basically who want a holiday home on occasion and whose rent covers the costs. I've rented in these type of schemes and called into the sales office who were too busy to see me ! So I guess there is a market there. Personally I wouldn't purchase them but I can see why some people do.
 
Martin77 said:
I'm not sure what your point is here.
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The trick here is to read the question, "has anyone ever sold a French Leaseback?". It wasn't meant to be a trick question, I'm not trying to make a 'point', I just want to know if anyone out there has ever sold a leaseback and, if they have, how did they get on?

I've asked agents, who claim that leasebacks can be sold relatively easily, to put me in touch with some people who have sold them, and they, for one reason or another, haven't done so. I just wanted to do a little independent research, hence the question.

If you want a pension then buy a pension, don't buy a French leaseback.
 
OverseasCafe said:
The trick here is to read the question, "has anyone ever sold a French Leaseback?". It wasn't meant to be a trick question, I'm not trying to make a 'point', I just want to know if anyone out there has ever sold a leaseback and, if they have, how did they get on?
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Ok. You're the thread starter so I'll take your reply at face value.

You yourself posted:
OverseasCafe said:
I suspect there is no shortage of people who have tried to sell a leaseback, but they may not have been hugely successful, either failing completely or having to take a big hit on what they paid. Either way, Irish people who fare badly when selling property don't generally like to talk about it too much. Which is a great pity, because it could prevent others from making the same mistakes in future.
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which tended to suggest to me (apparently incorrectly) that you and others were fishing for bad news, rather than searching for a broad and balanced range of experiences.

Either way, I would also encourage people to share their results, both positive and negative.
 
I work closely with a couple of French lads and interestinglyy both have purchased leasebacks in Toulouse specifically as a retirement vehice. According to them it's a common practice amongst French people as a long term investment.

Good Luck.

OverseasCafe said:
If you want a pension then buy a pension, don't buy a French leaseback.
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Yes, but I think the leasback scheme was introduced by the French government to encourage renewal in tourist areas. Correct me if I'm wrong but I think French nationals get more incentives than non-French.
 
galwegian44 said:
I work closely with a couple of French lads and interestinglyy both have purchased leasebacks in Toulouse specifically as a retirement vehice. According to them it's a common practice amongst French people as a long term investment.
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Are you sure these are not French buy-to-let properties, which are subsidised for French nationals? Leasebacks are predominantly holiday properties, which means the attraction for French nationals is less than it would be for foreigners. This isn't to say that French don't buy them, they do, but not to the extend that they invest in buy-to-let properties.
 
As you don't seem to have found anyone who has sold one how about asking people if they have purchased one and why and when and location, to give you an idea of the Irish market in these type of properties. Maybe it's a very small market (Spain, Dubai and Bulgaria seemingly more popular.
 
Perplexed said:
Yes, but I think the leaseback scheme was introduced by the French government to encourage renewal in tourist areas. Correct me if I'm wrong but I think French nationals get more incentives than non-French.
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Do you have a source for this belief?

Everything I have read highlights the benefits of obtaining a particular tax status under French Law = statut de loueur en meublé professionnel (LMP), = Landlord of furnished property. Or indeed LMNP (non professional.) This has absolutely nothing to do with having French nationality as far as I can see.

But that's no different in concept to investing in anything in another country. You have to look at the particular international tax agreements to work out whether a particular tax break in one country will turn out to be beneficial for you personally or not in combination with the tax levied locally in your country of residence. The tax break you enjoy in France may be completely wiped out by another tax levied in e.g. Ireland. I don't see this as particularly nationalistic or exclusive. It's just a result of having different tax laws in different countries.

OverseasCafe said:
Are you sure these are not French buy-to-let properties, which are subsidised for French nationals? Leasebacks are predominantly holiday properties, which means the attraction for French nationals is less than it would be for foreigners. This isn't to say that French don't buy them, they do, but not to the extend that they invest in buy-to-let properties.
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The law may have originally started out for rural renewal, and maybe it's true in Ireland that they are marketed mainly as holiday lets.

But according to the french language websites I have read the investment may currently fall into any one of three categories: Student residences (résidences étudiantes), holiday lets (résidences hôtelières), and retirement / care homes (maisons de retraite). That's a fairly wide net with long term potential and not just dependent on the vagaries of the tourist sector. Although the quoted return may not look high, your actual result (and thus how you view the investment) apparently hinges on whether the tax breaks are advantageous or not in your particular situation.

Example Source:

Do you have a source that says "buy-to-let properties are subsidised for French nationals"?

Or is this again just a difference in tax law of the treatment of buy-to-let for French tax payers?
 
Martin77 said:
Do you have a source for this belief?

Everything I have read highlights the benefits of obtaining a particular tax status under French Law = statut de loueur en meublé professionnel (LMP), = Landlord of furnished property. Or indeed LMNP (non professional.) This has absolutely nothing to do with having French nationality as far as I can see.

But that's no different in concept to investing in anything in another country. You have to look at the particular international tax agreements to work out whether a particular tax break in one country will turn out to be beneficial for you personally or not in combination with the tax levied locally in your country of residence. The tax break in France may be completely wiped out by another tax levied in e.g. Ireland. I don't see this as particularly nationalistic or exclusive. It's just a result of having different tax laws in different countries.


The law may have originally started out for rural renewal, and maybe it's true in Ireland that they are marketed mainly as holiday lets.

But according to the french language websites I have read the investment may currently fall into any one of three categories: Student residences (résidences étudiantes), holiday lets (résidences hôtelières), and retirement / care homes (maisons de retraite). That's a fairly wide net with long term potential and not just dependent on the vagaries of the tourist sector. Although the quoted return may not look high, your actual result and how you view the investment apparently hinges on whether the tax breaks are advantageous or not in your particular situation.

Example Source:
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All of the above offers a very interesting insight into the whole French leaseback/Residence de Tourisme concept Martin, and thank you for it. Unfortunately it has vered off-topic. All I wanted to find out here is if anybody has sold a French leaseback property or not, and if they have, how did the sale work out for them? There still hasn't been a single reply to this query which I find very strange.

Perhaps we should start another thread to extoll the virtues, or otherwise, of the various options available to those looking to purchase property in France (although I'm sure most of them have been discussed in one way or another in previous threads in any case).
 
Apologies. I'm not here to extol the virtues of investing in France at all. I love to visit the place, but no more than that.

I also don't want to hijack your thread.

But if two people post on a thread that a French national gets treated differently than an Irish national in our supposedly free and fair Europe, or post incorrect/incomplete information about the limitations of a relevant law, I felt obliged to find out if it is true and to challenge that statement for the sake of maintaining the generally excellent quality of the information on this site.
 
Martin77 said:
Apologies. I'm not here to extol the virtues of investing in France at all. I love to visit the place, but no more than that.

I also don't want to hijack your thread.

But if two people post on a thread that a French national gets treated differently than an Irish national in our supposedly free and fair Europe, or post incorrect/incomplete information about the limitations of a relevant law, I felt obliged to find out if it is true and to challenge that statement for the sake of maintaining the generally excellent quality of the information on this site.
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I've no problem with that Martin, but could it be done in another thread? I just want to get some feedback from leaseback owners who've managed to sell their properties, no more, no less.
 
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