Has anyone any opinion on how the INSEE construction index is going to increase/decrease over the next year? In all this doom and gloom it would be nice to get some sort of positive outlook for the future.
Most new French business leases or 'bail commercial' now refer to the recently created IRLC index publishe by INSEE. The IRLC stands for Indice de reference des loyers commerciaux. Needless to say, IRLC and IRL are much more averaged that the Indice du cout de la construction (ICC). Part of the French leaseback properties' current problems lie with the fact that:
- ICC index was used, sometimes without any capping at all; - ICC shot up over the past few years. (But bear in mind that if the index had sharply gone down, leaseback companies would have not hesitated to lower your rent!); - Multiple factors, including the fact too many leaseback resorts were created in France - sometimes without any logic or economical sense - mis-management, the financial & economic crisis etc.
What makes the situation even worse is that these leaseback properties were often mis-sold by property agents that claimed rents were 'backed up by the French Govt'. In fact, nothing could be further from the truth: French leaseback schemes benefit from statutory tax advantages and French business leases are also very much a statutory matter, but at the end of the day payment of rents still only depend on leasback companies' solvency.
We were due a rental increase in line with the construction index at the start of this year. We were actually given an increase in line with the "indice de reference des loyers", which is considerably less than the construction index. On querying this with our management company, they say they are allowed to do this and have referred us to "Article L145 du code de commerce".
Maybe we should just be thankful that we got an increase and that we have received the rent more or less on time for 3 years ????
This is France,they can change the rules when they like!
When Eurogroup recently refused to pay the full Insee increase they told me,"in difficult economic times they could asked a judge to reduce the rent".I wondered if the same judge could also reduce my mortgage or pherhaps cancel my sale and get a full refund!
This is ridiculous. This is the English translation of my lease:
<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
The parties hereby formally agree that the rent shall be revised every three years on the anniversary date of the effective date of this lease based on 75 % of the plus or minus variation of the national construction cost index such as established by the Institut National de la Statistique et des Etudes Economiques (INSEE).
The base index shall be the latest index known on the day of the execution of the lease. To calculate the variation, it is formally agreed that the comparison index to be taken into consideration shall be the latest index known on the revision date.The rent revision shall take place by right and without the parties needing to send any prior notification other than those specified in articles L145.37, L145.38 and L145.39.
Here I am assuming I get the percentage over 3 years e.g. 12%, get 75% of it i.e. 9% and that is my increase. How can the lease be broken indiscriminately like this with the collusion of the legal system? If this is the case leasebacks should never be purchased by anyone.
English
Français
Most new French business leases or 'bail commercial' now refer to the recently created IRLC index publishe by INSEE. The IRLC stands for Indice de reference des loyers commerciaux. Needless to say, IRLC and IRL are much more averaged that the Indice du cout de la construction (ICC). Part of the French leaseback properties' current problems lie with the fact that:
- ICC index was used, sometimes without any capping at all;
- ICC shot up over the past few years. (But bear in mind that if the index had sharply gone down, leaseback companies would have not hesitated to lower your rent!);
- Multiple factors, including the fact too many leaseback resorts were created in France - sometimes without any logic or economical sense - mis-management, the financial & economic crisis etc.
What makes the situation even worse is that these leaseback properties were often mis-sold by property agents that claimed rents were 'backed up by the French Govt'. In fact, nothing could be further from the truth: French leaseback schemes benefit from statutory tax advantages and French business leases are also very much a statutory matter, but at the end of the day payment of rents still only depend on leasback companies' solvency.
Hi Juan Azur,
No idea what will happen but the next review is due to be published on 9 April.
See http://www.indices-pro.com/indices/affiche.php?var=INS
Regards
Sheridan
We were due a rental increase in line with the construction index at the start of this year. We were actually given an increase in line with the "indice de reference des loyers", which is considerably less than the construction index. On querying this with our management company, they say they are allowed to do this and have referred us to "Article L145 du code de commerce".
Maybe we should just be thankful that we got an increase and that we have received the rent more or less on time for 3 years ????
Mudds,
This is France,they can change the rules when they like!
When Eurogroup recently refused to pay the full Insee increase they told me,"in difficult economic times they could asked a judge to reduce the rent".I wondered if the same judge could also reduce my mortgage or pherhaps cancel my sale and get a full refund!
regards
John
This is ridiculous. This is the English translation of my lease:
<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
The parties hereby formally agree that the rent shall be revised every three years on the anniversary date of the effective date of this lease based on 75 % of the plus or minus variation of the national construction cost index such as established by the Institut National de la Statistique et des Etudes Economiques (INSEE).
The base index shall be the latest index known on the day of the execution of the lease. To calculate the variation, it is formally agreed that the comparison index to be taken into consideration shall be the latest index known on the revision date.The rent revision shall take place by right and without the parties needing to send any prior notification other than those specified in articles L145.37, L145.38 and L145.39.
Here I am assuming I get the percentage over 3 years e.g. 12%, get 75% of it i.e. 9% and that is my increase. How can the lease be broken indiscriminately like this with the collusion of the legal system? If this is the case leasebacks should never be purchased by anyone.