English
FrançaisWith all the difficulties over the years, many owners of French leasebacks are looking to sell theirs. Not always simple and not always happening.
It depends once again on the residence situation, location, management company (of course) and of course the return.
Few would tell you that it could be preferable to sell without the lease in place and so are asking you to break the lease before advertising for sell. Well be very careful on because of course you could have a reminder of the VAT to pay if you do that or even may not be authorised by the town hall. (I know few places like this).
I still have owners contacting me some time thinking it is not yet possible to sell because they have not reach the 20 years mark or because they have the lease still running.
Even today you can still sell your leaseback, due to the COVID many investors are looking to invest in this more than financial institutes. So you still have a possibility but not all the properties are treated the same way.
If everything is going well enough then it will be more interests. So yes at the end it is only based on how the leaseback would have been running.
At the end everything could find a buyer but prices could be up and down. When contacting specialised agents ask for a valuation and if you are not happy with it nothing is forcing you to go with them. They will ask you for rent statements, lease, plans, charges, taxe fonciere, etc...
They do sale.
Regards,
Eddy
Eddy, If a person wanted to sell their Leaseback apartment, what's the best way of doing it? Apparently, some companies charge an exorbitant fee to sell it for you. Is it better to sell it when there are still many years left in the Leaseback agreement? Is there less interest when the Leaseback agreement is due for renewal? Thank you. Regards, Michael.
Michael,
Ideally the more years you have left the better it is. The reason is mainly because investors would be worried of negotiation of leases the closer it gets to the end of the lease.
Agencies specialised in reselling leasebacks must have an agreement in place as they are all charging between 10 to 12%. The agents I am dealing with are around the 10% and have a good track record.
They are also taking on the residence in "Difficulties" meaning having issues with rent or management companies, etc...
Do not hesitate to contact me directly if you wish.
Regards,
Eddy
Eddy,
What is in all of this for you? Are you getting commission based on other people's misery?
Not at all, if some one is asking for my assistance I only charge an administration fee for my time and expenses which remain small. I am here to assist anyone who could be interested.
Hi everyone,
Reselling your French leaseback is still possible today and many French investors are still going around but following the Covid 19 closures all management company have put on hold the rent payments or trying to negotiate with owners so this means a lot of the investors are currently waiting to hear about the negotiation and the conditions in the payments restart.
Regards,
Eddy Regnier
Hi Eddy,
I'm one of a number of owners coming to the end of a lease and working out options. The internet and legal advice I've seen suggests if you decide not to renew the lease you're looking at exit penalties equivalent to 2 years turnover presumably calculated by tantieme share of the whole plus any residual TVA liability. On the assumption that's roughly right I have a couple of questions.
Firstly the timing of lease renewal negotiations. I'm told that if you intend to leave you need to give 9 months notice ahead of the renewal date. I'm also told there is a 2 year grace period to allow for agreement to be reached on lease terms. So tactically are you better waiting for an offer from the tenant and then lodge a counter offer? And what happens if agreement can't be reached? Would you still be liable for an exit penalty if the tenant pitched a low offer and stuck to it?
Second question relates to property value. Do properties with no lease sell more easily and what is the price differential?
I'd welcome your thoughts and those of other contributors.
Harry,
I presume the residence / resort is a tourism residence? If so rules of property under tourism residence is for it to be managed by one unique management company / tenant to at least 55% of the residence. Under this percentage then you could be loosing the status of tourism residence but for this the town hall will have to give their authorisation and if they refuse they have the right to force owners of the said residence to find a management company and an agreement to manage the residence.
(Some rare town hall will accept the change of status).
As you can expect, all of this has to be worked between all owners and management before having to face the town hall. But what I mean is; you cannot take actions on your own.
You are saying you are coming to an end of the lease. I presume you mean the term of 9 or 11 years is coming to an end. This does not specially mean the lease is coming to an end as most of the commercial leases are renewable by "tacite reconduction" meaning renewed automatically until one party gives notice of end. One or the other party might propose new terms but it does not mean it can be forced upon. If either party refuse, the lease currently in place is repeated (1 year at the time - be careful some lease includes different terms and conditions at times).
If one party wants to end the lease then they need to send the notice. For the management company this is simple, they just have to send you a bailiff certified notice. For owners it is different as you will have the management company asking you for compensation. (Conditions of this compensation might differ from one or another lease but I have never heard of the 9 months notice or 2 years Grace). Notice of end of lease need to be sent 6 months in advance to the closing date. If it is not done, there is no end of the lease until a 6 months notice is respected. For the calculation of this compensation, the management companies often request far too much so legal support might be needed then.
Regarding the selling value. Yes, if you were owner of a property in a residence which the tourism status is gone, you would have a chance to get a better value (be careful you might also have VAT claw back to pay). BUT, if you are in a residence of tourism with the status remaining, you then have to sale the property which is part of tourism residence and therefore the buyer will look at values calculated on rental yield because they could not do anything with the property themselves. (You can't rent yourself or live in, in this case. Only spend a maximum of 120 days in maximum).
Now I have mentioned the rules and the way the majority of tourism residences are statued by town hall, it does not mean it is respected in all tourism residences or town and cities. It could be different for yours and of course a sentences or two in the lease, planning laws of town hall might change some conditions.
I hope this is not too confusing but one thing I can guarantee is that owners need to work together as numbers make the difference.
Regards,
Eddy
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I presume you mean the Syndicate company or Trustee (looking after the common areas), they are representing the owners so technically they do involve you as they respond to your demand to contact and negotiate with town hall.
If the town hall has refused then you are stuck in tourism residence with one unique management company to rent the properties. In this case it means no others rental are allowed and you cannot live in the property. (As mentioned before, it is not always like this and could be more flexible but what is mentioned before is as per the law).
Selling the property means you have to sell an apartment in a tourism residence and it needs to be stated on documents. If it is not sold as part of a tourism residence and issues happen in the future the sale could be cancelled.
Regards,
Eddy
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To change the status of the residence, it should normally be voted in agm and 100% of owners should be present or represented for this vote. The promoter/developer/Management company should not be the one approaching the town hall but the syndicate/trustee whom is representing the co-ownership.
Hope this helps.
Thank you for your response Eddie. I think I follow most of that and I understand the need for 55% to be available for tourism and the limitation to one management company. In our case having said that when built some of the apartments were sold as 'classique' apartments and a new annex has been added to the residence and all of the apartments there are also being sold without a lease so the balance of ownership is shifting. The leasehold apartments are still in a comfortable majority so in that sense nothing has changed but I understand that some owners let out their apartments themselves. I daren't ask whether that is strictly permissible or not!
I have also become aware recently of at least two residences who are, or were, in leases with the same management company but the lease has expired. Agreement has not been reached on new lease terms and owners have individually issued a conge, which I assume is a termination notice, via an avocate. There would appear now to be a 2 year period during which they can continue to negotiate before presumably they leave the lease and an eviction penalty becomes due?
You're right. It's all very confusing before we even get round to the Mairie.
Hello Eddy, we've not spoken for some time. I'm concerned about comments you've made under comment'8' above. Perhaps you and/or Seamus could clarify something.
My lease ended after 11 years on 31/12/2017. Notice had been given by the then operator (Odalys) so no problems in regard to compensation. Most of the owners on the site around 90% opted to sign up on a new long term lease with another operator. Myself and a few others decided to go it alone albeit rents haven't been great.
I'm now contemplating selling my property on the understanding that as it is not under lease, I'd firstly have to pay back some of the orginal TVA under the 20th's rule and any new buyer could rent it out short term or use it and/or occupy it as much as they wanted free from commercial lease encumbancy.
My concern is your reference to 'residence du tourisme'. Does the fact that the complex (approximately 60+) apartments has this classification and as said above, 80-90% (more than 55%) are still on long lease give me a problem with buyers and/or value?
As the property is freehold and I'm free from a long lease, I thought I was now just like any other owner of a private apartment i.e. free to use, sell or rent out short term subject to the TVA rule.
Can you or anyone help?
Thanks, Iain
Iain,
It is a bit more complex. It could be better to talk on the phone about because there are a number of points to verify.
Depending if the destination of the residence has been changed or not (which I believe is not the case) then the selling is possible but has to be acted as an apartment within a residence of tourism. As long as you have this in the act of sale then it will be left to the buyer to make a decision but you would have informed him/her.
Regarding the VAT I am not sure if you were renting furnished, short and with services but the amount will depend on what you have done after the end of the lease. If rented with services etc... then you will probably have to pay VAT back calculated on the selling date but if not rented with services you may have the VAT claw back calculated on the date when the commercial lease ended.
As you can see, it depends on few points and cannot give you exact answers without knowing the details. So there is still a lot to verify first.
Regards,
Eddy
Thanks Eddy