Indexation of lease contract

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Indexation of lease contract

The (11 year) commercial lease we have been offered as part of a ski apartment leaseback in the French Alps is supposedly indexed to the French Construction Index (CCI). However, there is no rental increase until yr6, and then annual increases are capped at 1%. This is way below what the CCI annual increase has been recently. Is this typical - what annual increase are you achieving/been offered?

mine has been frozen by the managment company for the rest of the leaseback contract (8 years remaining)!!


It is not legal!

srunner39562.8582407407

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Sorry I tried to scan in but could not convert to text to add in to posting.


It seems that some of the commercial leases may not be strictly legal, but they probably know its would be too expensive to take them to court. Our problem is that we have a combination of a) 6 years deferment of any increase, b) annual increase capped at 1%, c)baseline rent in 6 yrs is original rent at the start of the lease, i.e. the maximum rent increase over 11 years yould be 5% compound on the yr 1 rent. If we're stuck with that, we would not renew the lease and expect to do just as well, given its a ski area and has some summer letting potentiail.

I'll have another go tonight now I see I can add document scan as an image

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The relevant paragraph is set out below:


La revision du loyer sera bloquee pendant le cinq premieres annees la prise d’effet du bail. Au terme de al premiere periode quinquenniale , le loyer sera revise en function des variations de l’Indice connu a la livraison, et l’indice de reference celui du meme trimestre de chacune des annees de revision. Les revisions de loyer seront egales a la variation de la indices sus-indique plafonee, a la hausse mais non a la baisse, a 1% par an.

many many problems...


please have a look at


http://www.PetitionOnline.com/131007/
and sign it.


It is important we need power and every single signatures to fight against crooks...

Seamus,


You say that under french law rent has to be reviewed every 3 years yet in Nigelc contract he has no review until year 6.!


Whats the point of any review if they can cap it.?.


My own is every 3 years but is capped at 2%.


At the end of say the 9 year lease,i cant see much prospect of selling on to an investor.It would have to be a francophile looking for a holiday home.



Regards


John


Seamus,


Agree with most of what you say.


My point was that French law says minimun review of 3 years and Nigelc leaseback contract says no review until end of year 6.


I agree with you that your agent should explain in more detail when selling these leasebacks.In fact most of them don't,if they did who would buy them!


Regards


John




Seamus,


I am not suprised that you are selling few leasebacks.Anyone coming to this forum could not fail to see the problems with non payment of rent,exit strategy and dodgy management companies.


I agree with you that leasebacks could turn out to be good investments if you have chosen your location carefully but who new anything about the management company before they bought?.I know i did'nt.


Until recently i thought i was lucky to have a large management company called Eurogroup(i know that there has been negative comment about them on this forum) but due to a promlem with the swimming pool they are withholding the rent,in breach of there contract.


In this area (St.maxime) they rent from april to mid oct.,26 weeks.They charge 1388 euros in peak season after discount for my 2bed appartment.A very nice profit.So it takes them less than 6 weeks for them to recover the rent they pay me.


So if i had this appartment,after the first 9 year lease expired,i would be very confident of renting it and manageing it myself.


This is is much more risky than a Buy to let in the U.K. If a tenant defaults on rent in U.K. at least you no that the otside would be about four months loss of rent.Done & dusted!.


I appreciate that most buyers probably want an investment as well as a holiday home,which is why most people buy in.If your unlucky(and it seem quite a lot of us are) you could be suffering loss of rent and litigation for some considerable time.


Is it worth the hassle?



Regards


John




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I could scan the relevant parts of the lease contract but I'm not sure whether you can attach documents when you post a reply?