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EU Parliament – RESPONSE to MEP on French leaseback legal issues

I put the French leaseback issues to MEP Brian Crowley to take to the European Parliament for some answers. Here is the response he received from Olivier Guersant :

I am writing to you regarding your letter of 12 May 2016 addressed to Commissioner Jourova, which has been transferred to my services for a response. In your letter, you draw the Commission’s attention to recent changes made to French legislation regulating the leaseback scheme applicable to the purchase of properties in France. You mentioned that these modifications caused inconveniences to your constituents who have bought properties in France, and were therefore benefiting from this scheme.

I understand that the leaseback scheme allows the buyer of a property to benefit from a refund of VAT of 20%, under the condition that ownership of the property is maintained for a minimum of 20 years. The duration of the commercial contract with the management company in charge of renting out the property was initially set by law to 9 years, with the possibility to terminate it without incurring penalties after this deadline.

It appears that a new law will result in retroactive changes to some of the terms of the existing contracts. Specifically, this new legislation will act to nullify the possibility to terminate the contract with the management company after 9 years. The new law stipulates that the commercial contract is now set for life, and that an early termination of this contract would make the owners of the property liable for a penalty of an amount which would exceed the initial benefit granted upon the purchase of the property by the refund of the VAT. First of all, I would like to recall that, under the Treaties on which the European Union is based (1), the European Commission has no general powers to intervene with the Member States. It can only do so if an issue of EU law is involved.

From the information presented in your letter it could not be concluded that the amendments of French law regulating the aforementioned purchase scheme would infringe upon EU law. If your constituents consider that the new amendments resulted in damages, they should seek remedies before the national courts as any reparation of the damages can only be awarded by national courts which have the power, where appropriate, to order national authorities to compensate individuals for losses that they have suffered.

However, in case that there are elements which would substantiate a breach of EU law, I would like to invite your constituents to submit them directly to my services in the Directorate General for Financial Stability, Financial Services and Capital Markets Union – Mr. Stefaan De Rynek, (Stefaan.De-Rynck@ec.europa.eu) Head of unit of free movement of capital and application of EU law.

1 Treaty on European Union and Treaty on the functioning of the European Union

It seems that the use of the term ‘inconveniences‘ either demonstrates poor English or a complete lack of grasp of the issue. I am sure that Irish people who bought French leaseback properties under mis-leading  advertising etc and now have their family homes in Ireland under threat from French banks wish that all they felt was ‘inconvenienced‘!!

He also does not answer the issues that I put to MEP Brian Crowley. He talks about ‘..new legislation will act to nullify the possibility to terminate the contract with the management company after 9 years‘, it is not clear what legislation he is talking about here. The French commercial contract never ended after 9 years. One of the issues is that we were told it did when we were sold the properties!

Onwards to Stefaan De Rynek.

Olivier Guersant is the Director General of  the Directorate-General for Financial Stability, Financial Services and Capital Markets Union.

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