C
carriglee
Guest
Re: ..
Tim
At the end of the initial lease, the owner can re-negotiate a new lease, lease to a new tenant, retain for personal use or sell. However, it is important to remember the following points.
The lease entered into by the owner and the head tenant (i.e. management company) is a commercial lease which under French law entitles the tenant to a renewal of the lease after the initial period (i.e. usually nine years). If the owner doesn't offer the tenant a new lease then the management company is entitled to compensation. However, the legal advice I received and that has been reiterated by others suggests that there is no appetite to enforce the above laws. Anecdotal evidence suggests that some owners were asked by management companies of a few developments to pay compensation for non-renewal and did so. Again, the legal advice I received suggested that such compensation should not be paid by the owner as the above laws would be difficult to enforce.
So what happens after nine years? I have not owned a leaseback property long enough to experience the end of a lease. However, having communicated with some people that have, the consensus is that they renegotiate the lease with the existing management company but based on average rental yields for the given type of property in the given location at the time of the negotiations.
There is a minority of people selling the properties after the initial lease. This is because most buyers are using the properties to create additional incomes rather than speculating on price increases. Therefore, it is extremely difficult to find ex-leaseback properties for sale. If you do a search on google you may find a few of them - if not let me know and I will try to track down a few for you.
Of course it is the prerogative of the management company not to seek a renewal but again I have not heard of any such cases and it would be unlikely.
Regards,
Paidi
Tim
At the end of the initial lease, the owner can re-negotiate a new lease, lease to a new tenant, retain for personal use or sell. However, it is important to remember the following points.
The lease entered into by the owner and the head tenant (i.e. management company) is a commercial lease which under French law entitles the tenant to a renewal of the lease after the initial period (i.e. usually nine years). If the owner doesn't offer the tenant a new lease then the management company is entitled to compensation. However, the legal advice I received and that has been reiterated by others suggests that there is no appetite to enforce the above laws. Anecdotal evidence suggests that some owners were asked by management companies of a few developments to pay compensation for non-renewal and did so. Again, the legal advice I received suggested that such compensation should not be paid by the owner as the above laws would be difficult to enforce.
So what happens after nine years? I have not owned a leaseback property long enough to experience the end of a lease. However, having communicated with some people that have, the consensus is that they renegotiate the lease with the existing management company but based on average rental yields for the given type of property in the given location at the time of the negotiations.
There is a minority of people selling the properties after the initial lease. This is because most buyers are using the properties to create additional incomes rather than speculating on price increases. Therefore, it is extremely difficult to find ex-leaseback properties for sale. If you do a search on google you may find a few of them - if not let me know and I will try to track down a few for you.
Of course it is the prerogative of the management company not to seek a renewal but again I have not heard of any such cases and it would be unlikely.
Regards,
Paidi