Diarmaid Condon on French Leasebacks

Have you seen Diarmaid Condon’s blog ?

Sadly, I came to it too late, after I had already signed a second lease. That was the second mistake I made (the first was signing the first lease !).

Diarmaid has been writing on property for a number of years and  is up to speed on the problems with the sale of French Leaseback properties.

Have a read of his cogent article on the problems with French leaseback properties here .

He describes how many owners signed a second amendment to the original lease which meant a reduction in rent, all because they were afraid they would a) have no rent at all to pay the French mortgage and b) have the French government demand payment of 19% VAT on the purchase:

The management companies would then claim that they could not continue to provide the agreed returns (often as high as 5%) and owners would have to take a 30% to 50% reduction in rental income for the company to remain viable.

All too familiar. I was promised 5% in the original lease. I was pressurised into a 50% reduction after the operator, who was also the developer (quelle surprise), claimed the resort was facing bankruptcy. It went into  receivership anyway.

Does this resonate with you ?


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