Guillaume Errard has a piece in Le Figaro on the possible reform of ‘risky’ nature of French leaseback property purchases:
The article features a letter written by Bruno Le Maire, French Minister of Economy & Finance dated April 7 and addressed to Brigitte Kuster, which appears to discuss reform of the leaseback system:
” A reform aimed at improving information pre-contractual […] in order to better warn of the risks associated with this type of investment, is currently under study ”,
Ce type de contrat est assez contraignant pour le bailleur qui doit, dans certains cas, verser des indemnites d’eviction pour ne pas reconduire son bail. Face a cette problematique, une reforme visant a ameliorer l’information precontractuelle des investisseurs en residence de tourisme, afna de mieux avertir des risques lies a ce type d’investissement, est actuellement a l’etude. L’objectif de ce projet de reforme est motive par le constat du caractere risque de l’investissement en residence de tourisme, ce qui requiert une information objective des investisseurs, a l’instar des obligations d’information prevues pour les produits financiers.
This type of contract is quite restrictive for the lessor who must, in certain cases, pay eviction compensation in order not to renew his lease. Faced with this problem, a reform aiming to improve the pre-contractual information of investors in tourist residences, in order to better warn of the risks associated with this type of investment, is currently under study. The objective of this reform project is motivated by the observation of the risky nature of investment in tourist accommodation, which requires objective information for investors, like the information obligations provided for financial products.
Errard goes on to write (Google Translate):
The setbacks of investors, engaged in arm wrestling with their manager, pushed Bruno Le Maire to act. ” The objective of this reform project is motivated by the observation of the risky nature of investment in tourist residences, which requires objective information for investors, like the information obligations provided for financial products ” , continues the minister. In other words, we could consider that the process be validated by the Autorité des marchés financiers. A safeguard which would indeed not be useless for an investment whose income is supposed to be guaranteed.